By Jamal Boubakri
By Jamal Boubakri
Morocco World News
Washington D. C., October 13, 2012
The International Monetary Fund (IMF) cut its forecasts for the second time since April, predicting that the global economic slowdown is worsening. Moreover, the IMF called on US and European policymakers to act rapidly to stop the slump and fix their economic slowdown.
Earlier this week, eurozone finance ministers unveiled a 500 billion euro rescue mechanism for lending to struggling economies. Experts agree that Spain is facing the highest risk of another recession that might have a negative impact on the eurozone as a whole. In addition, countries such as Greece, Portugal and Italy are facing increased economic slowdowns as well. The IMF is scrutinizing Greece’s compliance with its bailout terms and arguing that Athens is highly unlikely to keep its national debt down to a “sustainable” 120% of gross domestic product by 2020.
Forecasts show that Athens debt-to-GDP ratio will hit 135 to 140% of GDP by 2020 based on current trends.
Eurozone policymakers have to take actions necessary to tackle this issue and make sure to keep the IMF on their side. In order to do so, the eurozone needs to create growth that leads to more jobs and brings confidence to Europeans. As of today, Christine Lagarde of the IMF warns that without growth, the future of the global economy is in jeopardy.
Europe’s economic slowdown has had a tremendous impact on its partners especially developing countries. Northern African countries are facing an economic slowdown as well. Forecasts show a 3% GDP growth rate for the Moroccan Kingdom in 2012 compared to over 4% in 2011. Morocco’s slowdown is due mainly to the decrease in European demand of Moroccan products and services as most of Morocco’s exports go to Europe (France and Spain are Morocco’s main importers). In addition, a higher unemployment rate across Europe is affecting negatively the flow of money transfers from Moroccan immigrants to their home country.
There are several other factors influencing growth in North African countries such as the Arab Spring and higher energy prices.
Can African countries overcome this problem? Indeed, they do have opportunities to do so. They can invest heavily in renewable energy, health care and education. Young entrepreneurs and small businesses can be encouraged to create growth and jobs and make a difference.