MENAP Oil Importers: Restore Macroeconomic Sustainability and Accelerate Growth

Despite political uncertainty, bouts of social unrest, and the escalation of the conflict in Syria, Arab transition governments have maintained macroeconomic stability. However, fiscal and external balances have deteriorated, and limited progress has been made in building consensus for needed economic reforms. MENAP oil importers’ growth in 2012 is expected to remain at low levels, associated with a weakening global economy, high food and fuel commodity prices, regional tensions, and continued policy uncertainty. A moderate recovery is expected in 2013. The depletion of fiscal and reserve buffers over the past year has left very little policy space and has heightened vulnerabilities. Prompt policy action—and timely and adequate international support—are essential for restoring macroeconomic sustainability, addressing long-running structural deficiencies to lay the foundations for inclusive growth in the medium term, and creating jobs for a young and growing population. Targeted social safety nets need to be put in place to ensure that the poor are protected during the transition.