A recent Arab Monetary Fund (AMF) report revealed that Arab countries experienced a 9.8 percent surge in total public expenditure, reaching $957.5 billion in 2022, compared to $878.9 billion in 2021. Despite this growth, several challenges continue to persist, shaping the economic landscape of the region.
Expenditure growth
The 43rd edition of the AMF’s Joint Arab Economic Report added that the combined current expenditures across Arab countries jumped 9.9 percent during this period. The total reached $824.6 billion in 2022, compared to $750.7 billion in 2021.
Notably, the region reported a budget surplus of $119.6 billion in 2022, marking a significant turnaround from the $62.5 billion deficit recorded in 2021. The report also highlighted a 3.6 percent increase in capital expenses among Arab countries, reaching $132.5 billion.
Economic indicators
Accompanying the surge in public expenditure, the average per capita gross domestic product (GDP) at current prices in Arab countries witnessed a 22.1 percent increase. It grew from $6,993 in 2021 to $8,563 in 2022. Additionally, the GDP of Arab nations at constant prices demonstrated a growth rate of 6 percent in 2022, up from a 3.6 percent increase in 2021.
In addition to the surge in public expenditure, sectoral growth rates in Arab countries revealed an improvement in the performance of several sectors. Notably, the extractive industries sector and the manufacturing sector saw growth in 2022. These developments signal resilience amidst adversity and concerted efforts towards economic recovery.
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Challenges and constraints
The economic performance of Arab countries, predominantly fueled by their status as leading exporters of oil and gas, saw improvement. That is due to sustained increases in global market prices for these commodities, particularly during the initial half of 2022. However, challenges emerged for certain Arab nations, grappling with escalating import bills for oil, gas, and food products, thereby impeding their recovery efforts.
Despite the overall positive trajectory of public expenditure, the report underscores prevalent challenges for Arab countries including financial strain, high public debt, and inflation. Those challenges have limited the region’s capacity to implement effective economic policies. Furthermore, the varying impact of international developments on global energy and food prices has led to varying recovery rates across economies. Hence, recovery depends on the structural characteristics of individual economies and the capabilities of their governments to implement expansionary financial policies.
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