Macroeconomic performance across the Arab countries tend to diverge between major oil and natural gas exporting countries in the Gulf Cooperation Council (GCC) and other countries in the region. In recent years, heightened social unrest, political uncertainty and violent conflicts have contributed to more pronounced deterioration in macroeconomic performance in a handful of countries including Syria, Iraq, Yemen and Libya. Fifteen million people have fled their homes, many to fragile or economically unstable countries such as Jordan, Lebanon, Djibouti and Tunisia, giving rise to the biggest refugee crisis since World War II. Other countries, such as Egypt and Tunisia, have been undergoing political transitions, while having to address heightened security concerns. Between July 2014 and April 2015, oil prices dropped by 50% reaching USD 32.2 per barrel in February 2016. In response to the decline in international oil prices, the GCC countries have been searching for new sources of revenues while attempting to further diversify their economies.
For the Arab region as a whole, the GDP (Purchasing Power Parity, constant 2011 prices) leveled at Int$ 6,056 billion in 2015, constituting 5.6% of the Word’s GDP. While the GDP in Saudi Arabia reached Int$ 1,586 billion in 2015, the highest in the Arab region, it reached Int$ 1 billion in Comoros. The Gross National Income (GNI) per capita of the Arab region averaged at Int$ 16,445 in 2015, with the highest value, of Int$ 70,57registered in the United Arab Emirates (UAE), and compared to a World average of Int$ 15,421 in 2015.
Regional disparities are also demonstrated by variances in economic growth. The GDP growth rate (constant 2005 prices) amounted to negative 28.1% and negative 6.4% in 2015 in conflict-affected Yemen and Libya, respectively. Also, the spillovers of conflicts in the form of refugee influx, deteriorating security and pressures on economic infrastructures and labor markets, have limited the growth potential of countries such as Lebanon and Jordan, limiting their GDP growth to 1% and 2.5%, respectively in 2015. The economies of Egypt and Tunisia have started recovering with an economy growth of 4.2% and 1% in 2015, up from 1.8% and negative 1.9% in 2011. For GCC countries, the drop in international oil prices have started to weigh heavily on their economic outlook with GDP growth rate (constant 2005 prices) declining from 7.7% to 0.9% in Kuwait and from 7.2% to 3.9% in UAE between 2012 and 2015. In 2015, the inflation rate remained at or below 4% in 13 out of 18 Arab countries; high values are recorded in countries such as Syria (38.5%) Yemen (30%) and Sudan (19.8%).
In the Arab region, fiscal deficits have generally been increasing since 2009. Except for Kuwait and Qatar, all the Arab countries registered a fiscal deficit in 2015 with the highest deficit of 79% of GDP recorded in Libya in 2015. Over the same period, total government revenues, as a percentage of GDP, were the highest in oil-exporting countries, namely Kuwait (at 54.8% in 2015), Qatar(43.4%) and Oman (39.3%). Tax revenues, as a percentage of GDP, constitute a humble share of total revenues in the Arab region, with the latest data on tax revenues showing the lowest levels in UAE (0.4% of GDP in 2013) and Kuwait (1.4% of GDP in 2015) and the highest in countries such as Algeria (37.2% of GDP in 2011), Morocco (18.7% of GDP in 2015) and Tunisia (21.1% of GDP in 2012). On the other hand, government expenditures, as a percentage of GDP, were the highest in conflict-affected Libya and Iraq at 76.7% and 44.4% in 2015, respectively. In general, the biggest component of government expenditures is channeled towards the wage bill of public sector employees, ranging from more than one-fifth in Oman and Lebanon (21.5% in 2012 and 22.0 % in 2014 of total expenditures ), up to 46% total expenditures in Jordan in 2012.
Financing of budget deficits linked to high and rigid expenditure commitments and the inability to mobilize revenues or reform the tax structure have contributed to public debt accumulation, particularly in recent years. In 2015, 12 out of 18 Arab countries registered a public debt-to-GDP ratio at less than 50%. Lebanon registered the highest value at 139% of GDP, followed by Egypt and Jordan (87.7% and 91.7% of GDP in 2015), while the public debt of Saudi Arabia and Oman reached 5.8% and 9.3% of GDP in 2015, respectively.
This overview has been drafted by the ADP team based on most available data as of 30 September 2016.