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Download The global crisis and trade in the ESCWA region
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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
