Transcript The global crisis and trade in the ESCWA region

The global crisis and trade in the
Middle East and North Africa
region
Farrukh Iqbal
The World Bank
May 5, 2009
Features of crisis pertinent to
developing countries



Credit crunch
Growth collapse in OECD countries
Decline in investment flows to
developing countries
Credit crunch

Banks reduce lending to each other


Banks reduce lending to industry


Freeze in interbank markets in last
quarter of 2008
Loan to deposit ratio falling in most
countries
Banks reduce lending for trade

Shortage of trade finance facilities
Growth collapse in OECD countries
Growth of real GDP, Q1-2008 to Q3-2008, percent change annualized
4
2
0
-2
2008-Q1
2008-Q2
2008-Q3
-4
United States
Euro Area
Source: World Bank and National Agencies.
Japan
Decline in investment flows to
developing countries

Reduction in foreign investment
flows


Affected sectors include real estate,
large infrastructure projects, tourism
etc.
Reduction in portfolio investment

Stock markets crash around the world
Private capital flows to developing
countries
$ billions
Percent
Net private debt and equity flows
1990-2007, projected 2008-09
8
1000
800
Percent of GDP
(right axis)
6
600
4
400
2
200
0
0
1990
1993
Source: World Bank.
1996
1999
2002
2005
2008P
Implications for trade: sharp
deceleration


Trade volumes are declining globally
Latest available data from selected
MENA countries also show declining
trade
World trade to contract in 2009 for the
first timeannual
since
the early 1980s
percent change in trade
volumes
18
Developing country exports
15
12
9
6
3
0
World trade volume
-3
1981
1984
1987
Source: World Bank.
1990
1993
1996
1999
2002
2005
2008
Evidence from MENA countries


Data only available for selected
countries
Data mostly available for fourth
quarter of 2008


For Tunisia, first quarter 2009 available
Most countries show decline in
exports and imports


Compared to previous quarter
Compared to same quarter last year
Country specific evidence: exports







Compared to previous quarter
Egypt: down 26%
Iran: down 51% (includes oil)
Jordan: down 13%
Lebanon: down 7%
Morocco: down 28%
Tunisia: down 13%
Country specific evidence: exports

Compared to same quarter last year






Egypt: down 16%
Iran: down 29% (includes oil)
Jordan: down 19%
Lebanon: up 5%
Morocco: down 12%
Tunisia: down 19%
Link between investment and trade

Jordan case


FDI down by 69%; imports down by
19%; exports down by 14%
Morocco case

FDI down by 51%; imports down by
20%; export down by 28%
Medium term outlook

Latest projections by WB and IMF
show that several MENA countries
will have current account pressures
in both 2009 and 2010
Projected current account balances (as
percent of GDP) for selected countries
25
20
15
10
2008
5
2009
0
2010
-5
-10
-15
Egypt
Iran
Jordan
Lebanon

Thank you