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The immediate outlook for Libya Dr. Nasser Saidi, chief economist, DIFC


appears daunting and its success in getting oil production up and running has been vital. Its output was virtually idle for many months and yet hydrocarbons make up 70 per cent of the country’s GDP and a massive 95 per cent of its exports. International sanctions, which were in place while Muammar Gaddafi resisted the desire for change, hit the non-oil segment of the economy and, according to the IMF, real GDP is expected to contract by more than 50 per cent in 2011. On-going political uprisings are occurring in Syria and Yemen, while Bahrain has been the scene of numerous protests and demonstrations and is far from pacified. The significant loss of life in Syria and Yemen suggests problematic


“Countries in which you get peaceful transitions tend to recover faster and the recovery tends to be permanent. And you have a greater restoration of civil rights, property rights, economic rights and therefore investment picks up.”


transitions, as and when there is regime change, and already both are suffering economic contraction. The IMF predicts that Yemen’s GDP growth, which was eight per cent in 2010, is likely to move into negative territory this year while its rate of inflation will spike to 18 per cent in 2012, by far the worst in the Arabian Gulf. Bahrain, another oil exporter and a GCC member, has suffered a severe slump in its hospitality sector due to the political tensions and its fiscal balance is well in the red at beyond minus seven per cent. But Masood Ahmed sees a distinct difference in its economic situation when compared to that of Libya. “The events in Bahrain earlier this year


have had an effect on economic activity and continue to do so. But, at the same time, the oil part of Bahrain’s economy, which is a large part of GDP and an even larger portion of government revenues and exports, has continued to function.” But the wider global economic worries could create extra challenges for the island state as its fiscal break-even oil price is now approaching $100 a barrel,


Hope seems a long time coming for the region's protestors.


70 / DECEMBER 2011


CoRBis


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