(MENAFN- Kuwait News Agency (KUNA)) The World Bank (WB) said here that it remains "cautiously optimistic" for the Middle East and North Africa (MENA) region in the coming two years, acknowledging that there is a "tough road ahead." During a regional economic update on the MENA at the WB, the Chief MENA Economist Shanta Devarajan said late last night "the problems that generated the Arab Spring remain unaddressed; unemployment levels are higher than they were before the Arab Spring." Yet, the WB remains optimistic for the MENA region because the global economy is on a recovery and is expected to grow at 3.2 percent, 0.8 percent more than last year
In its World Economic Outlook (WEO) released Tuesday, the International Monetary Fund (IMF) forecasted global growth to average 3.6 percent in 2014, up from three percent in 2013, and to rise to 3.9 percent in 2015
The latest WEO emphasized that growth remains "subpar and uneven across the globe." IMF Chief Economist Olivier Blanchard said in this regard that "the recovery which was starting to take hold in October is becoming not only stronger, but also broader." However, Devarjan thinks the Middle East can benefit from a pickup in demand of manufactured goods, oil, services and tourism that has been dormant for the last 3 to 4 years
"We project growth in this year 2014 to be 3.3 percent for the MENA region as whole and accelerating to 4.6 percent in 2015. That''''s a significant departure from previous years when we have see growth of 1 to 2 percent," said Devarajan
Yet he stressed that these numbers are still below the pre-Arab Spring average
Another reason why the WB remains optimistic is because, "there have been favorable political developments in our countries," stressed Devarajan
"This is the moment the MENA region can seize these opportunities to transform their economies," affirmed Devarajan
High on the WB''''s agenda for the MENA is reform of fuel subsidies
"Many of you know the people who benefit from these subsidies are not the poor. Its people who consume a lot of gasoline and drive cars," he noted
He proposed a system that targets subsidies to help the poor
"One of the reasons we have an unemployment problem could be because of these fuel subsidies. They actually give a preference to capital over labor," affirmed Devarajan
His next prioritized item is to "stimulate the investment climate." He hopes there is a way to reform the monopolies that control the system in order to create more competition and opportunities
His last point was that in many countries, a large portion of the budget is spent on civil servant salaries that create a "drain on the system." "In a country like Egypt, they just raised the minimum wage from 900 Egyptian pounds to 1,200 Egyptian pounds. We''''ve done some calculations to find that the people who are earning 1,200 Egyptian pounds in the public sector, they come from the 64 percentile of the income distribution. So this is above the median of the population," asserted Devarajan
He credited transparency, free information and the press as way to "empower citizens to hold their government accountable." "We have an agenda but we remain cautiously optimistic because the global economy and the political science in some countries are looking favorable. I am looking forward to a tough but favorable road ahead," concluded Devarajan
According to the World Bank, "while the region is going through a slight growth rebound, helped by a recovery in the global economy and easing political tensions in some of the countries in transition, the prospects for a full economic recovery remain uncertain, should necessary structural and economic reforms stall"
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