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expert opinion

Objective analysis of the prevalent economic and social situation in these countries, and extensive discussions with constituencies and popular base of the political parties can help shed some light. For the majority of the people, the future of any political ideology will depend on how much those who are elected will deliver on both the political and economic demands of the people.

Domestic investors were willing to engage but were restrained by political uncertainty, social unrest and volatile security. Trade, though resilient in the first half of the year, declined thereafter. External accounts deteriorated. Foreign reserves declined, though for policy purpose, they still seem to be at reasonable levels but not for a long time. And most of all, available fiscal space at the beginning of the revolution was depleted, and fiscal deficits start soaring again (around 5% in Tunisia and Morocco, 8 to 10% in Egypt, Jordan, Yemen).

private sector, will further compound an already challenging economic situation of countries in the middle of difficult political transition. Therefore economic recovery in most countries, especially Tunisia, Egypt, Morocco and Jordan will be delayed. Once again, exports, tourism income, remittances,

and investment could be hard hit. The fiscal space will further shrink in a context of rising borrowing costs. This will seriously limit the capacity of the countries to deploy appropriate fiscal measures to stimulate growth and preempt economic recession at this very sensitive juncture. “I am afraid, the unbearable high levels of unemployment is posed to further aggravate. On another front, it seems to be clear that there is an issue of credible leadership with enough policy experience to assure private sector and who is able to stand up to popular demands and mobilise public and private sector capabilities to immediately start the implementation of a well designed development programme,� says Hedi.

We can debate the impact of the 2011 Arab Spring forever and under or overestimate the depth of its political transformation, but what happened in 2011 will have profound consequences for the future of the region, and beyond.

The prospects in 2012 remain very challenging if not worse than 2011. In addition to the huge pile of inherited political and economic problems, and those developed in 2011, the region will not be able to avoid the severe impact of the persistent global crisis, especially in Europe. Indeed, even under the best of assumptions, Europe is likely to see a shallow recession which will take many years to resolve and growth to recover. This will definitely affect the economies of the region for few years to come, especially North African countries, through the usual channels of trade, investments, tourism and remittances. In the absence of external financial support (which doesn’t seem to be forthcoming in spite of the repeated promises of the G8), the combination of the euro crisis and the persistent social unrest and risk factors perceived by the

Hedi Larbi

February 2012

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Private Sector Qatar - Feb2012  

English version - February 2012