Economies of the Arab Spring

“Arab Spring Economics: Unfinished Business,” from the Economist:

ON a good day Abdenaceur Hammoudi takes home 15 dinar ($10) from selling fruit in the Tunisian coastal town of Tabarka. Since the overthrow of president Zine el-Abidine Ben Ali last January, municipal inspectors no longer demand a three-dinar-a-day bribe. But prices have risen sharply and Mr Hammoudi now pays wholesalers almost double for his supplies. Customers have become scarce and loans are as hard to come by as ever. “The government needs to build factories to bring us proper jobs,” he says.

A year ago the self-immolation of a Tunisian fruit seller, Muhammad Bouazizi, inspired uprisings that toppled the leaders of Egypt, Libya and Tunisia, and caused violent chaos in Bahrain, Syria and Yemen. The protests were motivated not just by demands for greater political freedom but also by popular frustration with unemployment and economic stagnation…

… Tunisia saw its GDP growth in 2011 go from 3% to 0%, according to the IMF—the Tunisian government says the economy actually contracted by 1.8%. Egypt saw a decline from 5% to 1%. Libya’s economy is thought to have contracted by more than 50% after its six-month civil war paralysed the oil industry. A former Libyan bank governor reckons the country suffered as much as $15 billion in damage during the conflict to oust…

Foreign investment has been hit hardest of all. A Tunisian analyst reckons 120 foreign firms shut up shop, cutting 40,000 jobs. Yazaki, a Japanese cable manufacturer, pulled out of a poor rural region. Overall foreign direct investment dropped by more than a quarter (see chart). In Egypt it plunged from $6.4 billion in 2010 to $500m last year; in Libya it dropped from $3.8 billion to almost nothing.

A few foreign companies have signalled an interest in coming back. Italy’s Eni, an energy giant, says it will invest $600m in Tunisia this year. Thanks to its existing investment in health care, the country also has hopes of attracting medical tourists from Europe and the rest of north Africa, where facilities are abysmal…

 

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