Go to the Globe and Mail homepage

Jump to main navigationJump to main content

AdChoices

Report on Business

Economy Lab

Delving into the forces that shape our living standards
for Globe Unlimited subscribers

Entry archive:

The Kingdom of Libya flag flies in front of a refinery in Ras Lanuf in this March 8, 2011, file photo. A new study says the recent uprising cost the country about 28 per cent of its gross domestic product. (GORAN TOMASEVIC/GORAN TOMASEVIC/REUTERS)
The Kingdom of Libya flag flies in front of a refinery in Ras Lanuf in this March 8, 2011, file photo. A new study says the recent uprising cost the country about 28 per cent of its gross domestic product. (GORAN TOMASEVIC/GORAN TOMASEVIC/REUTERS)

Economy Lab

Cost of 'Arab Spring' more than $55-billion Add to ...

Peter Apps is Reuters' political risk correspondent



The uprisings that swept the Middle East this year have cost the most affected countries more than $55-billion, a new report says, but the resulting high oil prices have strengthened other producing countries.



A statistical analysis of International Monetary Fund (IMF) data by political risk consultancy Geopolicity showed that countries that had seen the bloodiest confrontations -- Libya and Syria -- were bearing the economic brunt, followed by Egypt, Tunisia, Bahrain and Yemen.



Between them, those states saw $20.6-billion wiped off their gross domestic product and public finances eroded by another $35.3-billion as revenues slumped and costs rose.



But as the major oil producers such as the United Arab Emirates, Saudi Arabia and Kuwait avoided significant unrest -- often through increasing handouts as oil prices rose -- they saw their GDP grow. Oil prices rocketed from around $90 a barrel of Brent crude at the start of the year to just short of $130 in May before retreating to around $113 now.



“As a result, the overall impact of the ‘Arab Spring’ across the Arab realm has been mixed but positive in aggregate terms,” the report estimated, saying overall the year to September saw some $38.9-billion added to regional productivity.



Libya looks to have been the worst affected, with economic activity across the country -- including oil exports -- halted at an estimated cost to GDP of $7.7-billion, or more than 28 per cent. Total costs to the fiscal balance were estimated at $6.5-billion, roughly 29 per cent of gross domestic product.



In Egypt, nine months of turmoil eroded some 4.2 per cent of gross domestic product with public expenditure rising to $5.5-billion just as public revenues fell by $75-million.



In Syria, where protests have continued throughout the year in the face of a bloody crackdown, the impact is hard to model but early indications suggested a total cost to the Syrian economy of some $6-billion or 4.5 per cent of GDP.



The report said the number of Yemenis below the poverty line was expected to be pushed above 15 per cent as a result of currency falls and protracted unrest. Total cost to the economy was estimated at 6.3 per cent of GDP, with the fiscal balance deteriorating by $858-million, 44.9 per cent of GDP.



Tunisia, where the protests began in late 2010, lost some $2-billion from its GDP, roughly 5.2 per cent, with negative impacts across almost all sectors of the economy including tourism, mining, phosphates and fishing. Tunisia’s government increased expenditure by some $746-million, pushing its fiscal balance some $489-million into the red.



Saudi Arabia’s newly instituted handouts and wider public investment program, the report estimated, amounted to some $30-billion -- perhaps seen by the kingdom’s rulers as a way of avoiding real reform. But increased oil prices and production helped boost gross domestic product by more than $5-billion and push up public revenues by $60.9-billion.



In Bahrain, oil helped cushion the impact of weeks of protest, with the fall in GDP relatively low at some at 2.77 per cent. Public expenditure rose some $2.1-billion, partly because of cash transfers of $2,660 to each family.



None of these steps, the report argued, addressed the underlying causes behind the unrest. A better solution, it said, was much broader international support through the G20 or United Nations aimed at much wider reform.



Report Typo/Error

Follow us on Twitter: @GlobeBusiness

In the know

The Globe Recommends

loading

Most popular videos »

Highlights

More from The Globe and Mail

Most popular