Growth in the GCC is projected by the World Bank at 4.4 percent in 2010, a performance it calls “a remarkable comeback”.
In a new report on the region, it says the rebound from “close to zero growth” in 2009 was likely to have a positive impact on other MENA countries.
The World Bank said the region had been “hardest hit by the crisis”, adding: “Accumulated reserves and other assets enabled governments to respond quickly with monetary and fiscal stimuli, preventing a deeper deceleration in growth, and supporting the growth rebound.”
It said that the Dubai World debt restructuring offer had “contributed to greater clarity about UAE’s prospects”, adding that the fiscal strength of Abu Dhabi could further help the recovery.
The report said: “The recovery in the GCC countries is expected to have a positive impact on other MENA and developing countries, mainly through increased flows of remittances and FDI.”
However, the World Bank is less optimistic on unemployment in the MENA region.
“High unemployment has been a problem in MENA for years, and the crisis has dimmed prospects for improvements in the near term,” it said.
“While the impact of the crisis on official unemployment rates has been negligible in most MENA countries, participation rates which were already low compared to other countries prior to the crisis, have declined as discouraged workers dropped out of the labour force and decided not to seek work in the official labour market,” it added.
The World Bank said high unemployment rates, particularly youth unemployment, low labour force participation, especially for females “translated into one of the world’s lowest formal employment rates”.
The report added that limited access to finance in the MENA region was among key long term growth obstacles, along with competitiveness issues.
“Ensuring access to finance without compromising financial stability will be a major challenge in MENA, although issues related to weak regulatory systems, corporate governance and overdependence on the banking system also loom large,” it noted.
The World Bank report also predicted that growth of developing oil exporters would accelerate to 4.2 percent in 2010 from 2.2 percent in 2009.