Countries affected by the Arab Spring uprisings that started in Tunisia in 2011 need as much as $120 billion to help overhaul their economies, economists at two international lenders said.
Newly established governments from Tunisia to Egypt, which saw their economies “decimated,” need $30 billion to $40 billion a year over three years to facilitate public investment and infrastructure projects, Erik Berglof, chief economist at the European Bank for Reconstruction and Development and Shanta Devarajan, the World Bank’s chief economist for the Middle East and North Africa, wrote for Project Syndicate.
“Without urgent action, there is a good chance that those who took to the streets -– indeed, risked their lives -– in the struggle for dignity and opportunity will have done so in vain,” Berglof and Devarajan wrote.
Combined economic output in Egypt, Libya, Syria, Jordan and Lebanon will have declined to about $2 trillion from $2.9 trillion over the four years through end-2014, HSBC Holdings Plc (HSBA) said in an Oct. 8 report. The International Monetary Fund this week cut its forecast for growth in the Middle East this year to 2.1 percent from 3.1 percent.
“Political assassinations and polarization in Tunisia, civil unrest and a military takeover in Egypt, terrorist attacks in Yemen, sectarian strife and an institutional vacuum in Libya, and civil war in Syria have contributed to a sharp fall in investment, tourism, exports, and GDP growth, aggravating macroeconomic imbalances,” Berglof and Devarajan wrote. “Most of the Arab Awakening countries lack buffers to withstand further economic shocks.”
The affected countries would benefit from technical support to make sure the funds are used for projects that create jobs, and assistance in the areas of trade and regulatory reform, such as free-trade agreements with the European Union.
The international response has been “piecemeal,” and beyond the removal of autocratic leaders, few of the issues, such as youth unemployment, that fueled the uprisings have been addressed, the economists said.
The aid that is required according to Berglof’s and Devarajan’s estimates must come on top of the $38 billion pledged through international development banks in 2011 and the $28 billion Gulf Cooperation Council countries have contributed to the Arab transition countries, they wrote.