Growth Erosion in MENAP during 2000–2018: Reasons and Remedies

Kireyev Alexei ()
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Kireyev Alexei: IMF, Washington, USA

Review of Middle East Economics and Finance, 2025, vol. 21, issue 2, 127-155

Abstract: The paper examines the reasons for growth erosion in the Middle East, North Africa, Afghanistan, and Pakistan (MENAP) region in the period preceding the Covid-19 crisis. Over the past two decades before the crisis the regions’ growth has been lower relative to its peers, despite facing similar circumstances as those countries, such as low oil prices and weak external demand. The paper argues that key reasons for growth erosion in MENAP have been domestic, primarily negative total factor productivity, weak preparedness for shocks, insufficient fiscal buffers, unsystematic fiscal adjustment with arbitrary cuts in investment, and low investment efficiency. External factors—the decline in oil and other commodity prices, weak external demand, and geopolitical tensions—have also been important, but mainly for oil exporters. Key policy options to reinvigorate growth include leveraging technology and trade to improve productivity, developing a macroeconomic risk management system, implementing growth-friendly fiscal adjustment, improving growth inclusiveness, and fostering the private sector.

Keywords: growth; inclusiveness; technology; trade; oil price (search for similar items in EconPapers)
JEL-codes: D30 E21 E62 I32 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1515/rmeef-2020-0010

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