Middle East and North Africa Economic Monitor, April 2015

WORLD BANK MIDDLE EAST AND NORTH AFRICA REGION

MENA ECONOMIC MONITOR

Towards a New Social Contract

ACKNOWLEDGEMENTS The MENA Economic Monitor is a product of the Office of the Chief Economist of the Middle East and North Africa Region of the World Bank. The report was prepared by a team, led by Shanta Devarajan, and including Lili Mottaghi, Farrukh Iqbal, Youssouf Kiendrebeogo and Isabelle Chaal Dabi. The country notes are based on reports by the following country economists, led by Auguste Tano Kouame: Ibrahim AlGhelaiqah, Dalia Al-Kadi, Jean-Luc Bernasconi, Jose Lopez Calix, Jean-Pierre Chauffour, Khalid El-Massnaoui, Shahrzad Mobasher Fard, Lea Hakim, Wissam Hirake, Ahmed Kouchouk, Sibel Kulaksiz, Eric Le Borgne, Raj Nallari, Nur Nasser Eddin, Guido Rurangwa, and Abdoulaye Sy. We are grateful to Hana Brixi, Elena Ianchovichina and Abdoulaye Sy for helpful comments.

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Middle East and North Africa Economic Monitor, April 2015

Published on Apr 18, 2015

World Bank Publications

The economic outlook for the Middle East and North Africa (MENA) region in 2015 is slightly more favorable than in 2013-14, when the region as a whole grew at 3 percent a year. The World Bank group’s latest MENA Economic Monitor projects MENA’s economic growth to average 5.2 percent in 2015 driven by domestic consumption, easing political tensions crowding-in investments in Egypt and Tunisia, and full resumption of oil production in Libya. However the violent conflicts in Syria, Iraq, Gaza, Yemen and Libya with their spillovers to Lebanon and Jordan could make MENA’s economic prospects bleak. The report has a special focus on the corrosive nature of the large energy subsidies in MENA. The MENA region is currently experiencing growth below potential, high unemployment, urban air pollution and congestion, and severe water scarcity that is undermining agriculture. The report shows how energy subsidies have contributed to these development challenges. Reforming these subsidies, therefore

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