The Economic Crisis

Effect of the crisis

Photo: UNDP/Radhika Chalasani
Yemen will be one of the Least Developed Countries to bear the worst burden of the crisis.

Despite its diversity, each country in the Arab region has been affected by the global crisis. A direct initial sign of the crisis was when suddenly the price of oil plunged, at exactly the same time as the local stock markets were cut in half, and investments in the global marketplace lost their value. This was felt mainly in the most globalized Arab countries, particularly the oil-exporters. The impact then spread to other countries, first through a decline in remittances as migrants to the Gulf lost their jobs, and now through reduced trade and investment, which are vital for job creation, and reduced government revenue, which curtails governments’ ability to provide social safety nets.

In Morocco, remittances, the highest foreign exchange earner, are expected to stagnate, given that in Spain unemployment among Moroccan immigrants is at all time high of 21 percent.  In Egypt, tourism revenues declined by 7.8 percent in the 4th quarter of 2008, compared to a growth of 38.3 percent in the same period in 2007.

Some middle income countries, such as Egypt and Jordan, have in recent years worked to diversify their economies and create jobs in new sectors – trying to become more competitive in textiles, for example, or building new resorts in the world’s fastest growing tourist destinations, or building new infrastructure to help small business connect to global markets.  The tight credit market and low growth prospects have arrested this growth.

But the Least Developed Countries - such as Yemen and Djbouti - and countries in conflict, for instance Somalia, are the ones that will bear the worst burden of the crisis.  Half of the populations in these countries are already living in poverty or extreme poverty, living precarious lives of shocking insecurity, which means that even more men, women and children may slip into poverty.

The burden of the economic crisis will fall most squarely on women. Despite tremendous progress in increasing their education over recent decades, this has not translated into increased economic empowerment which reduces their access to education, health and other services during hard economic times.

What are we doing?

The partnerships UNDP has developed through the Arab Human Development Report consultative and implementation process, allows UNDP access and credibility to steer the regional debate towards priority issues, such as economic security in the region. Our advocacy and technical assistance work with the League of Arab States, as an institution and with member states, helped define a regional commitment to poverty reduction and social development, including the announcement of a $2 billion fund to help small businesses get through the credit crunch. At the same time, UNDP continues its advocacy work with the international community and regionally for targeted spending on quality schools and health centres, basic services including water and sanitation, protecting the environment, and empowering girls and women.