International Monetary Fund. Middle East and Central Asia Dept.
This staff report for the 2014 Article IV Consultation on the Islamic Republic of Iran focuses on economic developments and policies. The IMF report had achieved considerable progress in raising per capita income and living standards. Large shocks and weak macroeconomic management have had a significant impact on macroeconomic stability and growth. The external environment remains uncertain and delaying domestic reforms raise the risk of entrenching the economy in a low-growth and high-inflation scenario, underscoring the need to address long-standing weaknesses in the policy framework and the economy.
International Monetary Fund. External Relations Dept.
With Dubai hosting the IMF-World Bank Annual Meetings this year, the Middle East and North Africa (MENA) region has received particular attention. Its economic performance and strategies to reignite growth were the theme of a pre-meeting IMF Economic Forum (see page 285). There were also press briefings on the region’s economies and on the West Bank and Gaza and Afghanistan. In addition, several seminars looked in greater detail at several high-profile issues, notably jobs for the region’s burgeoning workforce, greater integration of women in the labor force, the role of oil stabilization funds, and Islamic banking.
The population of the Middle East and North Africa is one of the fastest growing in the world, but jobs have not grown as fast as the region’s workforce. This paper addresses questions such as"Can current GDP growth generate more employment, or will higher GDP growth be required?"and "Will the current pattern of job creation-with much of the region’s workforce employed by the public sector-need to change?"
This Selected Issues paper for the Islamic Republic of Iran deals with the analytical considerations relating to the choice of the exchange regime. This issue came to prominence with the exchange rate unification of March 2002. The paper also examines the competitiveness of the non-oil economy, fiscal sustainability, and the labor market of Iran. The paper concludes that a degree of flexibility in the exchange rate is needed at this juncture, given Iran’s exposure to oil price shocks, and the desire of the authorities to promote the development of non-oil activities.
Ms. Rina Bhattacharya, Tarik Yousef, and Mr. Pierre Dhonte
The working age population is expected to grow faster in the Middle East than in any other region in the world between now and 2015—rising annually by 2.7 percent, or 10 million people. This demographic explosion presents the region with a major challenge in terms of providing jobs, incomes, and housing for the growing population, but the expanding labor force can also be seen as an opportunity to generate higher per capita income growth on a sustainable basis. The paper concludes by emphasizing the importance of market-friendly institutions in turning the challenge into opportunity.
This paper examines unemployment hysteresis in the Belgian labor market. It estimates models of wage determination using aggregate and firm-level panel data. The conclusions are: (i) the long-term unemployed do not exert a negative impact on wages; and (ii) the incumbent workers, the “insiders,” exercise market power in wage determination, taking greater account of their own interests than those of the unemployed “outsiders;” and (Hi) the wage indexation system can cause a downward rigidity in real wages. Recent initiatives, including programs aimed at the long-term unemployed and the young, are appropriate in view of the existence of insider power.
The population of the Middle East and North Africa is one of the fastest growing in the world. It has nearly quadrupled since 1950 and is expected to double over the next 50 years. But jobs have not grown as fast as the region’s workforce. Although employment growth was relatively strong in the 1970s, it failed to keep up with demographic pressures in the 1980s, when oil prices dropped and government-led growth strategies lost steam. The region entered the 1990s with relatively high unemployment rates, which have continued to climb in most countries. The average unemployment rate for the seven largest non-oil or diversified economies in the region—Algeria, Egypt, Iran, Jordan, Morocco, Pakistan, and Tunisia (hereinafter referred to as the MENA7)—rose from 12.7 percent in 1990 to 15 percent in 2000 (see Table 1). Moreover, underemployment (employment that does not fully meet workers’ capacity or demand for work) remains pervasive.