Population boom 'to spur ME growth'
Dubai, March 2, 2013
A population boom means a huge potential workforce for the Middle East, but only if governments invest in them, according to Institute of Chartered Accountants in England and Wales (ICAEW).
In its latest quarterly report, the accountancy and finance body says the huge increase in younger people will demand strategic decisions in how to direct public spending, reported the Gulf Daily News, our sister publication.
Economic Insight: Middle East is produced by Centre for Economics and Business Research (Cebr), ICAEW's partner and economic adviser.
The report provides its 140,000 members with a current snapshot of the region's economic performance. The Economic Insight undertakes a quarterly review of the Middle East focussing on the GCC member countries - the UAE, Bahrain, Saudi Arabia, Oman, Qatar and Kuwait - as well as Egypt, Iran, Iraq, Jordan and Lebanon.
The report shows that the population in the region has grown 52 per cent from 1990 levels and this is expected to reach 102 per cent by 2030. In Bahrain, Qatar and the UAE, the population has already more than doubled since 1990.
This should give the region an economic advantage by offering a growing labour supply and stimulating GDP, whilst offering a larger marketplace and attracting investment. However, it also raises the risk of more unemployment, and governments are responding by investing in education and skills.
"Growth in the Middle East is expected to slow in 2013, but still to outpace global growth as a whole thanks to resilient oil prices and booming public spending," Cebr's head of macroeconomics Charles Davis said.
However, rising populations should spur governments to think long-term about how to invest that money. Some non-GCC countries have high unemployment, whilst lower unemployment levels in GCC nations is partly thanks to public sector jobs.
If demand for crude oil slipped - for example because shale gas production took off across the globe - governments would have to cut their budgets quickly. If government remains the main driver of growth and crowds out the private sector, it could jeopardise future growth prospects.
"Spending which results in long-term productivity should therefore be a high priority. However, in the short term, the Middle East remains one of the best performing regions in the world with growth of 3.9 per cent predicted for 2013," Davis added.
"The population boom means it is more important than ever to invest in education, training and skills. This is critical for helping develop the skill base needed to diversify away from a purely hydrocarbon-driven economy whilst also guarding against unemployment," ICAEW's Middle East regional director Peter Beynon said.
"In order for economic growth to remain sustainable, governments need to make sure that young people are developing sound professional skills they can put to use by making the Middle East a great place to do business," he added.-TradeArabia News Service