30/11/2015 08:36 AST
The Middle East and North Africa (Mena) region needs to create more than 100 million jobs by 2020, a leading expert has said.
Barclays Bank head of research, Middle East and North Africa region Dr Alia Moubayed said youth unemployment in the region is four-fold higher than global average.
Dr Moubayed was speaking during the first plenary session of the International Institute for Strategic Studies (IISS) Bahrain Bay Forum being held at the Four Seasons Hotel Bahrain Bay. The IISS is a think-tank focusing on international security having its Middle East headquarters in Manama.
Identifying Egypt and Iraq as high-risk economies or economies on the brink, she said it was difficult to be optimistic about the region as a whole due to the domestic realities of deep sectarian divisions and the rise of political Islam, high youth unemployment and structural deficiencies.
While the region is caught between a rock and a hard place due to external challenges, domestic realities and regional tensions, the challenge and opportunity is to create high-skill jobs and build a knowledge-based economy, she said.
“Despite a strong banking sector, the region’s financial markets remain under-developed... what is most stark is the inability to mobilise domestic savings as also the fact that Middle East attracts least private flow of inward investment of all emerging economies.”
Dr Moubayed said challenges for the GCC economies as a subset of the Middle East were policy imperatives like subsidy and tax reform and making medium-term revenue and expenditure planning mandatory.
“Governments need to have a more transparent and open debate on such key issues as businesses need to know where government policy is heading so they can make their investment plans.”
Earlier, kicking off discussions, IISS director for geo-economics and strategy Dr Sanjaya Baru, acting as session chair, said concern about the global economy had changed from ‘It’s the economy, stupid’, to ‘It’s the politics, stupid’, to ‘It’s China, stupid’ – implying that China had a critical role to play in the global economy.
According to the first speaker Goldman Sachs global investment research division managing director Huw Pill, the nature of globalisation was changing and it was no longer about integrating China into global economy but managing its place within it.
While the unexpectedly large downturn of China’s economy this year has spilled over into other emerging economies, said Mr Pill, he expected China to successfully shift from exports and investments towards domestic and avoid a “hard landing”.
“China’s central government has the resources to manage risks from slowdown of the economy.”
A key theme for next year, he said, is the ongoing development of a “new oil order” due to technological advances which will lead to new ceiling for oil prices in the $50-55 per barrel range.
He, however, did not rule out a possibility of a crash to $20 per barrel in the short term due to oversupply and demand slump.
According to Mr Pill, divergence of monetary policy outlooks across the developed world was the new normal and the US, Europe, China and Japan were set to take different policy approaches.
In response to a question, he said the economic tigers of the future may very well be technologically-driven economic segments, rather than geographically-based.
Concurring with Mr Pill, the third panellist, IISS trustee Bill Emmott, a former editor of The Economist, said he was optimistic about global growth with the developed world hitting the point of sustained growth and rising wages, however there was a demographic risk.
China today was at the point that Japan’s economy was in 1970s, and could make the same adjustment and develop into an energy-efficient, modern economy, he said.
Elsewhere, I’m optimist
Gulf Daily News
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