Estimating Potential Growth in the Middle East and Central Asia

By Pritha Mitra, Amr Hosny, Gohar Abajyan, Mark Fischer

March 20, 2015

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Format: Chicago

Pritha Mitra, Amr Hosny, Gohar Abajyan, and Mark Fischer. Estimating Potential Growth in the Middle East and Central Asia, (USA: International Monetary Fund, 2015) accessed December 24, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

The Middle East and Central Asia’s economic growth potential is slowing faster than in other emerging and developing regions, dampening hopes for reducing persistent unemployment and improving the region’s generally low living standards. Why? And is it possible to alter this course? This paper addresses these questions by estimating potential growth, examining its supply-side drivers, and assessing which of them could be most effective in raising potential growth. The analysis reveals that the region’s potential growth is expected to slow by ¾ of a percentage point more than the EMDC average over the next five years. The reasons behind this slowdown differ across the region. Lower productivity growth drives the slowdown in the Caucasus and Central Asia and is also weighing on growth across the Middle East (MENAP); while a lower labor contribution to potential growth is the main driver in MENAP. Moving forward, given some natural constraints on labor, total factor productivity growth is key to unlocking the region’s higher growth potential. For oil importers, raising physical capital accumulation through greater investment will also play an important role.

Subject: Commodities, Financial crises, Global financial crisis of 2008-2009, Labor, Oil, Oil prices, Prices, Production, Total factor productivity

Keywords: CCA oil importer, Central Asia., Central Asia1, Copyright page, Exporter, Global, Global financial crisis of 2008-2009, Growth estimate, Growth in the Middle East, HP filter, IMF staff estimate, Importer, MENAP region, Middle East, Middle East and Central Asia, Oil, Oil exporter, Oil importer, Oil prices, Output gap, Physical capital, Physical capital accumulation, Potential growth, Production function, Production function approach, Productivity, Total factor productivity, WP

Publication Details

Pages:

27
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2015/062
Stock No:

WPIEA2015062
ISBN:

9781475545364
ISSN:

1018-5941

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