[Excerpt: Economic growth in the region spanning Morocco to Iran surged an average 5.6 percent over the past two years, well above its 3.6 percent expansion rate during the 1990s, as soaring energy prices lined oil producers' coffers...Excluding gains from oil, the bank said the region's growth likely averaged 4 percent or less per year in 2003 and 2004.]
http://64.94.180.107/newsArticle.jhtml?type=reutersEdge&storyID=8203570 Oil Boom Masks Weak Middle East Growth--World Bank Sun Apr 17, 2005 01:30 PM ET By Laura MacInnis WASHINGTON (Reuters) - Exceptional rises in world oil prices that propelled export revenues in the Middle East and North Africa in recent years have also masked underlying weakness in the region, the World Bank said on Sunday. "Strong growth over the last two years does not change the fundamentals for this region," said Mustapha Nabli, the World Bank's chief economist for the Middle East and North Africa. "We are still talking about a region with limited private sector activity and employment creation, limited integration into the global economy, and strong dependence on volatile oil markets," he added. Economic growth in the region spanning Morocco to Iran surged an average 5.6 percent over the past two years, well above its 3.6 percent expansion rate during the 1990s, as soaring energy prices lined oil producers' coffers. Excluding gains from oil, the bank said the region's growth likely averaged 4 percent or less per year in 2003 and 2004. The World Bank said 97 percent of the growth gains in 2003 and 2004 were driven by just four countries: Saudi Arabia, Iran, Algeria and the United Arab Emirates. "In fact, nearly half of the region actually experienced growth downturns relative to the 1990s," it said in a report. The development lender said the most recent energy price surge, and the resulting windfall for the oil-rich Middle East and North African region, "in many ways evokes memories of the oil price booms of the 1970s and 1980s." "With those memories emerge questions of what the fallout of this current oil boom will be," it said. In a Washington press conference, Nabli praised governments across the region for showing restraint with their extra money, noting many have saved it or used it to pay down debt. This, he said, could soften the blow of any future energy price fall. "The management of the oil revenue has been more prudent," Nabli said. "There has been certainly more awareness this time around about the need to be more careful." he World Bank estimates Middle Eastern and North African countries need to create 100 million new jobs in the next 20 years to cope with fast-growing populations and persistent unemployment in the region. While jobless rates have fallen to 13.4 percent of the labor force from nearly 15 percent in 2000, senior economist Jennifer Keller said employment growth in the region remained too slow. Keller told the news briefing that the Middle East and North Africa needed to sustain 6 to 7 percent annual growth rates to meet the needs of its labor force, which is expanding more than 3 percent a year. "Even with the oil ... it is still not enough," she said. The World Bank forecast growth in the Middle East and North Africa would slow to 4.9 percent this year and moderate further to 4.3 percent in 2006 as oil prices ease somewhat. It also said the region was set to gain from reconstruction activity in Iraq following the 2003 war there. While the war itself had minimal economic impact for Iraq's neighbors, many countries in the region are now poised to benefit from increased trade and business with Iraq related to its reconstruction, the bank said. Jordan and Syria stand to gain the most, given their close economic ties to Iraq, it said, while Iraq itself needs a more secure environment to attract private sector investment and generate large economic gains. © Reuters 2005. 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