The World Bank has upgraded its predictions for economic growth in the Middle East over the next 10 years, but its message to governments is unchanged – if economic liberalisation does not move ahead more briskly, then growth will be too slow to provide jobs for the region’s masses of unemployed people.

The World Bank says in its 1997 annual report on the world economy, ‘Global Economic Prospects and the Developing Countries’, that the outlook for developing countries as a whole is better than it has been for years. Developing countries’ economies are growing at a rate of 5.6 per cent a year, their foreign trade is growing even faster and foreign direct investment is at record levels. The Middle East, however, is still lagging behind the rest.

‘Despite encouraging recent evidence, it is too early to say that the two regions which have lagged others in growth and investment in the past 10 years – sub-Saharan Africa and the Middle East and North Africa – are on a firm recovery path,’ the report says. The bank now expects the Middle East economies to grow at an average of 3.6 per cent over the next 10 years, compared to 2 per cent in the decade to 1996.

This latest forecast is about 0.5 per cent higher than last year’s World Bank prediction, but still not enough to deal with a regional unemployment rate estimated at 15 per cent of the workforce. ‘Real wages are back to their levels of the 1970s and poverty levels have increased in some countries,’ the report says.

In essence, the World Bank’s analysis is little changed from last year. It notes approvingly that Middle East countries’ formal links with Europe are improving: Morocco and Tunisia have both signed association agreements with the EU and Egypt and Jordan are hoping to follow suit. On the downside, oil prices are expected to decline over the next decade, further constraining the budgets of oil-producing states. The bank says that governments will have to make energetic, sustained efforts to cut red tape, reduce the state’s dominance of the economy through privatisation and do more to liberalise trade and investment.

The World Bank’s generally bullish views on the outlook for the developing countries are echoed by the IMF. A less optimistic voice is that of the UN Conference on Trade & Development (UNCTAD). UNCTAD has just brought out its own 1997 report, which warns that globalisation in its present form is benefiting the richest 20 per cent of the population in most developing countries, while the incomes of the poor have fallen in the last two decades. The world economy is not growing at a fast enough rate to reduce growing inequalities between the rich and poor parts of the world and between rich and poor people within developing countries.

The answer, UNCTAD says, is not for developing countries to go back on the reforms of recent years but to be more cautious about liberalisation, create more incentives for productive investment and set up income and employment policies which benefit the poor majority of the population.