Economy

Data obscurity keeps West Asia, North Africa from reaching growth potential: World Bank

Growth forecasts in the region more often inaccurate, overly optimistic than other places

 
By Madhumita Paul
Published: Thursday 21 April 2022
Data obscurity keeps Middle East, North Africa from reaching growth potential: World Bank Photo: iStock

Data opacity in the Middle East and North Africa (MENA) region has prevented countries there from reaching their growth potential, according to a new report. 

It hinders foresight and planning and makes it difficult for forecasters to accurately predict performance of MENA countries, the report by the World Bank stated. 

Economic forecasts are a valuable tool for governments as they prepare for the future, especially during times of uncertainty. Growth forecasts in the MENA region over the past decade were often inaccurate and overly optimistic when compared to those of other regions, the report found. 

The average forecast error (forecast minus realised growth) — using the World Bank’s January Global Economic Prospects forecast during 2010–2020 — was 2.5 percentage points for the MENA region and 1.3 percentage points globally. 

Reality Check: Forecasting Growth in the Middle East and North Africa in Times of Uncertainty was published April 11, 2022. 

MENA countries consist of Algeria, Bahrain, Djibouti, Egypt, Iran, Iraq, Israel, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Qatar, Saudi Arabia, Syria, Tunisia, United Arab Emirates and Yemen.

The report provides guidance about how to improve national data systems and suggests the following recommendations:

  • Increasing the frequency and quality of national accounts data can improve forecasts considerably. 
  • Consistent data are important to forecasts and consistency can be achieved through better communication between ministries and national statistical offices. 
  • Technical assistance to governments can help improve the quality of national statistics, which in turn will improve the information that is fed into forecast models. 
  • For countries in conflict, alternative data sources such as information from satellites (for example, night lights data) are crucial and in this regard, the World Bank can play an important role in facilitating access to such data.

World Bank country economists across the MENA region report several challenges they face in forecasting growth. Only 10 of the 19 MENA countries report monthly or quarterly information on industrial production, the analysis showed. For the remaining nine, information is not readily available. Only eight countries report quarterly unemployment data and none report data monthly. 

Economies in the MENA region are expected to grow by 5.2 per cent in 2022 — the fastest since 2016, according to the report. But there is heightened uncertainty around this forecast due to the war in Ukraine and ongoing threats from COVID-19 variants.

Inflationary pressures in these countries created by the pandemic have been exacerbated by the Ukraine war. They rely heavily on food imports, including wheat from Russia and Ukraine. Djibouti, Lebanon, Syria and Yemen saw sharp increases in food prices across the board. 

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