Competitiveness and Job Creation in MENA · Competitiveness will need to improve Source: World...
Transcript of Competitiveness and Job Creation in MENA · Competitiveness will need to improve Source: World...
Ratna Sahay Deputy Director Cairo University Middle East and Central Asia Department January 23, 2011 International Monetary Fund
Afghanistan
Pakistan
Iran Iraq
Saudi Arabia
Yemen
Oman United Arab Emirates Qatar
Bahrain
Kuwait
Sudan
Libya Algeria
Morocco
Mauritania
Lebanon Syria
Jordan
Egypt
Tunisia
Djibouti
Competitiveness and Job Creation in MENA
1
Global outlook: Two-speed recovery in motion
Real GDP Growth (percent change from a year earlier)
Advanced economies
-6
-4
-2
0
2
4
6
8
10
12
2000 02 04 06 08 10P
Sources: IMF, World Economic Outlook, Fall 2010.
Emerging economies
Advanced economies
World Egypt
Global Outlook 2
Note: Egypt number is financial year basis.
2009 2010 2011
World -0.6 4.8 4.2
Advanced economies -3.2 2.7 2.2
Emerging economies 2.5 7.1 6.4
MENA 2.0 4.1 5.1
Egypt 4.7 5.1 5.8
Oil price (in US$) 61.8 76.2 78.8
(Percent change, unless otherwise indicated)
Projection
Global food prices are rising rapidly
Source: IMF, Commodity Price System. ¹ U.S. dollar price index rebased at 2005=100
Global Outlook
80
100
120
140
160
180
200
Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10
IMF Food Price Index (2005-10)¹
50
100
150
200
250
300
Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10
Cereals
Meat
Seafood
Vegetable oils
IMF Food Price Index Groups (2005-10)¹
3
4
Inflation has picked up from low levels
Sources: Haver Analytics; and IMF, World Economic Outlook.
Global Outlook
3.3
0.9
1.7
9.6
0
5
10
15
20
25
Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10
Emerging economies
Advanced economies
World
Egypt
Core Inflation 12-month growth, percent
-20
-15
-10
-5
0
5
10
15
20
25
Dec-06 Dec-07 Dec-08 Dec-09 Dec-10
Lehman Collapse
Net Monthly Flows to Emerging Market Equity Funds (billions of U.S. dollars)
-8
-6
-4
-2
0
2
4
6
Dec-06 Dec-07 Dec-08 Dec-09 Dec-10
Lehman Collapse
Net Monthly Flows to Emerging Market Bond Funds (billions of U.S. dollars)
9
Capital flows are recovering
Sources: IMF, World Economic Outlook. Global Outlook
5
-4
-2
0
2
4
6
8
2007 08 09 10 11
90% Confidence interval
70% Confidence interval
50% Confidence interval
Central forecast
World GDP Growth (percent change)
Risks to the global recovery tilted down
• Risks tilted to downside— but double-dip unlikely
• Advanced country banking systems still vulnerable
• Internal and external rebalancing needed
Sources: IMF, World Economic Outlook.
Global Outlook 6
Oil Exporters
Iran Iraq
Saudi Arabia
Yemen
Oman United Arab Emirates Qatar
Bahrain
Kuwait
Sudan
Libya Algeria
MENAP Oil Exporters 7
Global demand recovers, boosts activity in oil exporters
Sources: National authorities; and IMF staff estimates.
50
55
60
65
70
75
80
85
90
95
100
-6
-4
-2
0
2
4
6
8
10
2005 2006 2007 2008 2009 2010 2011
Oil GDP
Non-oil GDP
Oil prices (rhs)
MENAP Oil Exporters Real Growth (in percent)
4.6
4.3
78.8
MENAP Oil Exporters 8
Attracts large outward migration from oil importers
Source: World Bank.
Stock of migrants; percent of labor force, 2005
8
10
18
25
42
44
0 10 20 30 40 50
Syria
Egypt
Tunisia
Morocco
Jordan
Lebanon
MENAP Oil Importers 9
Oil Importers
Afghanistan
Pakistan
Morocco
Mauritania
Lebanon Syria
Jordan
Egypt
Tunisia
Djibouti
MENAP Oil Importers 10
4.8 5.2
7.1 6.4
2.7 2.2
5.1 5.8
-4
-2
0
2
4
6
8
10
2005 2006 2007 2008 2009 2010P 2011P
MENAP oil importers (excl. AFG, LBN, and PAK)
Emerging and developing economies
Advanced economies
Egypt 1/
(Annual percentage change)
Real GDP growth picking up across the region
MENAP Oil Importers
Source: National Authorities; and IMF staff estimates.. 1/ Financial year basis.
11
But growth and exports lag other regions
Source: IMF, World Economic Outlook.
Goods exports
(in percent of GDP)
5
10
15
20
25
30
35
1990 1995 2000 2005 2010
Emerging and developing economies
MENAP oil importers EM total
EGY
JOR
LBN
MRT
MARPAK
SYR
TUN
Emerging Asia
China
India
-2
0
2
4
6
8
10
-5 0 5 10 15
Volume of exports of goods and services per capita(average annual growth rate, 1990–2009)
Real G
DP
per
cap
ita
(avera
ge a
nnual gro
wth
rate
, 1990–2009)
MENAP Oil Importers 12
DJIJOR
MRT
MAR
PAK
SYR
EGY
LBN
TUN
EM average
20
40
60
80
100
120
140
-10 -8 -6 -4 -2 0
Pu
blic
de
bt (
Pe
rce
nt o
f G
DP
)
Fiscal balance (Percent of GDP)
2010
2011
Fiscal
consolidation
Fiscal consolidation in train, but may come under stress
Source: National Authorities; and IMF staff estimates and projections.
MENAP Oil Importers 13
Inflation is rising, reflecting sharp increase in food prices
Source: Haver Analytics; and national authorities.
7.1
15.9
10.3
4
6
8
10
12
14
16
18
Jun-09 Dec-09 Jun-10 Dec-10
Core Food Overall CPI
Including: EGY,JOR,LBN,MAR,PAK,TUN
Oil Importers: Consumer Prices (annual percentage change)
14
10.4
15.5
3.9
-4
0
4
8
12
16
20
24
28
Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10
Egypt
Pakistan
Other MENAP oil importers¹
Consumer Prices (annual percentage change)
Monetary policy dilemma, as inflation picks up
MENAP Oil Importers
Sources: Haver Analytics; and national authorities. 1Excludes Mauritania and Syria.
15
High unemployment is a long-standing problem
Sources: National authorities; IMF, World Economic Outlook; staff estimates; and International Labor Organization.
MENAP Oil Importers
12.0
10.9
66.0
107.1
32.1
51.8
0
2
4
6
8
10
12
14
0
20
40
60
80
100
120
140
1991 1993 1995 1997 1999 2001 2003 2005 2007
Unemployment rate (Percent, rhs) Working age population (mm)
Labor force (mm)
16
Youth unemployment is even higher
8.9
12.7
8
14.7
10.9
14.2
11.6
25.4
n/a
21.6
16.5 15.2
30.3
21.8
0
5
10
15
20
25
30
35
Egypt Jordan Lebanon Morocco 2/ Syria Tunisia MENA simple avg
Total Youth 1/
Unemployment rate, 2008 (percent)
Sources: National authorities; IMF, World Economic Outlook; staff estimates; and International Labor Organization. 1/ 2008, or most recent year for which data are available. 2/ Unemployment rate reflects data from Urban Labor Force survey.
MENAP Oil Importers 17
President Mubarak: The youth are “the most precious of all our resources and wealth”
Unemployment is high compared to other regions
Sources: National authorities; IMF, World Economic Outlook; staff estimates; and International Labor Organization. Note: MENA6 refers to Egypt, Jordan, Lebanon, Morocco, Syria, and Tunisia. Youth unemployment estimate for MENA6 excludes Jordan. Data refers to 2008 or latest available year.
MENA6
Central and South-Eastern
Europe (non-EU) and CIS
Sub-Saharan Africa
Latin America
Developed Economies
World
South-East Asia and the
Pacif ic
South Asia
East Asia
Egypt
5
10
15
20
25
30
4 6 8 10
Yo
uth
un
em
plo
ym
en
t (P
erc
en
t)
Total unemployment rate (Percent)
MENAP Oil Importers 18
Create jobs
Raise
competitiveness
Preserve macro
stability
Challenges going forward
MENAP Oil Importers 19
Labor Force: Unemployed and New Entrants
MENA6 Countries
Unemployed in 2008
(millions)
New Entrants (2008–2020)
(millions)
Egypt 2.3 7.1
Jordan 0.2 0.7
Lebanon 0.1 0.1
Morocco 1.7 2.3
Syria 0.8 2.0
Tunisia 0.5 0.5
Total 5.6 12.7
Source: Abdih,Yasser and Anjali Garg (2010), IMF.
Egypt
• 9.4 million jobs need to be created
• GDP growth rate needs to rise to 7 percent per annum to absorb only the new entrants
• GDP growth rate needs to rise to nearly 10 percent per annum to absorb the unemployed and new entrants
=> focus on labor- intensive growth
Competitiveness will need to improve
Source: World Economic Forum, Global Competitiveness Report, 2010–11.
Competitiveness Rankings, 2010–11¹
¹Economies are ranked from 1 to 139, with first place being the best.
MENAP oil importers is a simple average of Egypt, Jordan, Lebanon, Mauritania, Morocco, Pakistan, Syria, and Tunisia. Emerging Asia is simple
average of China, Hong Kong SAR, India, Indonesia, Korea, Malaysia, the Philippines, Singapore, Taiwan Province of China, Thailand, and Vietnam.
0
25
50
75
100
125
150Market size
Inf rastructure
Macroeconomic stability
Health and primary education
Higher education and training
Goods market ef f iciency
Labor market ef f iciency
Financial market sophistication
Innovation
Business sophistication
Technological readiness
Institutions
MENAP Oil Importers Emerging Asia Egypt
MENAP Oil Importers
Best
21
Skills mismatch?
Source: World Bank, Enterprise Survey Results.
3836
3331 31 30
21 2119 18 18
11
0
5
10
15
20
25
30
35
40
LB
N
SY
R
JO
R
MA
R
EG
Y
La
tin
Am
.&
Ca
rib
.
Wo
rld
E. A
sia
& P
acif
ic
E. E
uru
oe
& C
en
tr. A
sia
So
uth
Asia
Su
b-S
ah
ara
nA
fric
a
OE
CD
Firms identifying labor skill level as a major constraint; percent, most recent
MENAP Oil Importers 22
Labor markets are rigid
Source: World Bank, Enterprise Survey Results.
Firms identifying labor regulations as a major constraint; percent, most recent
38
34
27
18
1614 14 13
12
109 9
0
5
10
15
20
25
30
35
40
LB
N
SY
R
EG
Y
La
tin A
m.
& C
ari
b.
MA
R
E. A
sia
& P
aci
fic
JOR
So
uth
Asi
a
Wo
rld
OE
CD
E. E
uru
oe
& C
en
tr. A
sia
Su
b-S
ah
ara
nA
fric
a
MENAP Oil Importers 23
Egypt
• Firing cost is high (132 weeks of wages relative to 54 weeks in MENA)
• Top private sector positions filled often by relatives or friends
Source: The 7th Egyptian Competitiveness Report (2010)
0
2
4
6
8
10
Real GDP trends, annual percent change
90 1980 85 2000 10
Advanced economies
15 95 05
Source: IMF, World Economic Outlook database.
Note: 1980-2015 real GDP growth data are de-trended as 10-year backward rolling averages.
Asia
Latin America
Seek new economic partnerships
MENAP Oil Importers 24
Adapt education driven by private sector demand
Reduce labor market rigidities
Support labor-intensive private
sector
Seek partnerships with dynamic
emerging markets
Jobs and Growth
MENAP Oil Importers 25