Growth slump expected in protest-hit Arab states

Reuters, Friday 16 Sep 2011

Growth rates in Arab countries are expected to slump in the wake of a wave of pro-democracy protests, the chairman of the Arab Monetary Fund told a meeting in Doha

Tunisia, Egypt and Syria economies struggle to balance growth and social justice. (Photo AP)

Countries hit by protests which toppled autocratic leaders in Tunisia and Egypt earlier this year "will see a slump if not a contraction in growth rates," Jasem al-Manaie, chairman of the Arab Monetary Fund, said at a meeting of governors of Arab central banks in Doha on Thursday.

"The reluctance of foreign investment and continued pressure on reserves and currencies combined with the possibility of increased unemployment... will increase the financial burdens on these countries," he warned.

The economic instability has emerged in the wake of popular uprisings that began in Tunisia and toppled its strongman leader before spreading to Egypt, Yemen, Libya, and Syria.

Tensions also prevail in Bahrain after a month-long protest movement was crushed by authorities there.

Governors of Arab central banks "emphasised the importance... of providing short-term financial support by international institutions to contribute to the overall financial stability in Arab countries affected by the recent events," in a statement after the meeting.

The governors also "expressed their confidence in the future of the Tunisian and Egyptian economies and the banking sector in both countries," and hoped that "Libya's central bank will return to play its role," said the statement.

On Saturday, G8 nations and institutions including the World Bank, the IMF, regional banks and the Arab Monetary Fund pledged nearly $80 billion in aid and loans over the next two years for Arab states who have ousted their dictators, doubling the amount promised earlier this year

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