Macroeconomic Effects of the (2008-09) Global Financial Crisis on the Arab Countries AlaaIhsan Salloom
Research Scholar in the Department of International Economy, Jilin University 2699, Qian Jin Da Jie, Changchun, P. R. China
Professor of International Economics, School of Economics, Jilin University 2699, Qian Jin Da Jie, Changchun, P. R. China
It is difficult to find an economy in the world that was not affected by the (2008-09) global financial crisis, even indirectly. No region has been able to shield itself from the impacts of the crisis, and Arab region is no exception. Arab Economies have been affected by the (2008-09) global financial crisis through extensive decline in trade, sharp fluctuations in the oil market, and reductions in financial investment, remittances and other capital flows. The main purpose in this paper is to explore the nature of the macroeconomic impacts of the (2008-09) global financial crisis on the Arab countries, and clarifies vulnerability of Arab economies to external shocks, and presents key policy implications for the Arab governments to lessen the effects of the financial crises in the future.
Keywords: The (2008-09) global financial crisis, Macroeconomic Impacts, External Shocks, Arab countries.
Despite financial crises are not new phenomena, the (2008-09) global financial crisis differ from previous financial crises in consequences. The (2008-09) financial crisis has been described as the worst global financial crisis have experienced since the Great Depression in the 1930s. Due to that it has caused a severe global recessionin most developed countries and has affected growth prospects in developing countries, and it was the largest financial loss in economic history. This worldwide economic recession led to a sharp decline in the demand of oil, food, and other commodities. Although their happened several financial crises in the past but the economist still not realize a lesson from them. “We all lived happily for a while — but not for ever after”.1 The global financial crisis began with the insolvency of major financial institutions in the United States in September 2008, it spread to theentire U.S. financial system and from there it started unfolding to the Europe, Asia and rest of the world.In general, the current literature suffers from a scarcity of research on the macroeconomic impact of the (2008-09) global financial crisis on the Arab countries. Much has been written on the impact of the (2008-09) global financial crisis on America, Europe and Asia but only little on the Arab countries. This paper makes an attempt to take effects of the (2008-09) global financial crisis on economic performance of Arab economies. From here comes the signification of this paper in the necessity of provides a regional perspective on how the crisis are impacting ofmacroeconomic conditions for the Arab countries, and to what external shocks effect on the Arab economies.The problem is raised by the fact that Arab economies depend on primary goods for exports. Indeed, the share of oil exports in total exports is about 75 per cent for the Arab region and some of the Arab GCC countries more than 79 per cent of total exports. The pre-crisis Arab Economic Performance
Many Arab countries have performed fast economic growth during the 2003–08 oil booms. According to the IMF’s Regional Economic Outlook: the oil boom in Middle East and Central Asia, led to an increase in reserves for Arab countries from 163.9 billion dollars in 2002 to 198.3 billion the following year, and which then reached 476 billion in 2006 and 591.1 billion in 2007. And the wealth of the Arab oil countries estimated to have reached USD 1.5 trillion in 2008.2 Between 2006 and 2008, annual GDP growth in real terms reached 5.9% for the Arab region as a whole (see Table 1.1). In broader terms, regional economic growth has been...
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