World Bank says ratcheting up of food prices is of exceptional concern for Egypt (Photo: reuters)
The ratcheting up of food prices is a matter of urgent concern for the broader Middle East and North Africa region, notably in the Maghreb region and Egypt, says a recent report by the World Bank.
"The region is effectively still in recovery mode from the food crisis of 2008," adds the annual report entitled Global Economic Prospects January 2011: Regional Annex.
"Prices," it continues, "for all non-energy commodities have escalated of late, with fundamental pressures on cereals prices due to the loss of Russian and Ukrainian exports to the world market."
Yet the world’s most accredited report seems optimistic about the stance of the MENA countries when it comes to the GDP growth of the whole region.
"GDP growth for these countries is anticipated to accelerate to a 5.6 per cent pace by 2012. Growth approaches 6 per cent in Egypt, 5 per cent in Morocco and Tunisia, and averages 5.5 per cent in Jordan and Lebanon by 2012," the report expects.
The expected growth in GDP is, according to the Global Economic Prospects, attributed to the firming up of goods exports, stronger remittances and tourism receipts, return of stronger Foreign Direct Investment (FDI) inflows and domestic policies aimed at the opening up of trade and domestic service sectors.
"Developing countries contribute almost half of global growth," adds the same report. "These countries are expected to grow 7 per cent in 2010, 6 per cent in 2011 and 6.1 per cent in 2012. They will continue to outstrip growth in high-income countries, which is projected at 2.8 per cent in 2010, 2.4 per cent in 2011 and 2.7 per cent in 2012."
The report seems specifically satisfied with Egypt’s performance in terms of limiting its budget deficit dependence on external revenues.
"Egypt offers a prime example of the importance of ancillary external revenues (including FDI) as a financial offset to deficits in the balance of trade, and a support for growth in domestic demand and economic activity across sectors of the economy," the report reads adding that trade deficits averaging $20 billion per year are usually all offset by the aggregate of remittances, tourism, Suez Canal dues and FDI.
The report warned, however, of the slow growth among major trading partners, mainly members of the European Union and Gulf Cooperation Council (GCC), which would cause a "moderate easing of growth for the diversified economies of the region."
The affect of this can be seen on Egypt's growth. While the GDP improved from the 4.7 per cent gain of 2009—strong for a period of global recession—to 5.1 per cent in 2010, it is yet to return to its rates of near 7 per cent in the immediate pre-crisis period. Industrial production recovered sharply, growing at an annualized pace of 8.5 per cent between January and August 2010.
The report listed Egypt among the region's low-and middle income countries this year. The list also included Algeria, The Islamic Republic of Iran, Jordan, Lebanon, Morocco, Syria Arab Republic, Tunisia and Yemen. Bahrain, Kuwait, Oman and Saudi Arabia were listed as the high-income economies.
The bank classified the region’s oil importers into two main groups: those with strong links to the GCC – Jordan and Lebanon – and those with strong EU links – listing Egypt, Morocco and Tunisia in the latter.