MENA Economic Monitor, October 2016: Key Messages

October 5, 2016

Economic Update

  • This year is one of the toughest for the Middle East and North Africa (MENA) region as governments are facing major policy challenges.
  • The biggest challenge for oil exporters is managing their finances and diversification strategies with oil under $45 a barrel. For oil importers, the challenges are spillovers from conflict and fiscal consolidation in a difficult sociopolitical environment.
  • Growth in MENA is expected to slow down to an average of 2.3% this year, half a percentage point lower than last year.
  • Low oil prices have dampened growth among the oil exporters, especially the GCC countries (Saudi Arabia itself is growing at 1% in 2016), which are forecast to grow at only 1.6% in 2016. 
  • Four of the developing oil exporters—Syria, Iraq, Yemen and Libya—are mired in civil war or violent conflict with untold humanitarian cost. 
  • MENA’s oil importers, who would normally benefit from low oil prices, are also growing slowly (2.6% on average) because of spillovers from wars in neighboring countries or the effects of terrorist attacks on tourism and investor confidence. 
  • Regional growth is expected to improve slightly to 3.1 and 3.5% over the next two years, as governments across the region are taking the oil price decline as largely permanent and are undertaking reforms to diversify their economies away from oil.

Economic and Social Inclusion to Prevent Violent Extremism

  • Our research shows that Daesh did not recruit its foreign workforce among the poor and less educated, but rather the opposite. Instead, the lack of economic inclusion seems to explain the extent of radicalization into violent extremism.
  • 69% of recruits report at least a secondary education. Only 15% left school before high school and less than 2% are illiterate.
  • Foreign recruits from the Middle East, North Africa and South and East Asia are significantly more educated than what is typical in their region
  • Self-assessed religious knowledge: 53% report a “Basic” level, 20% an “Intermediate” level and 4%  an “Advanced” level
  • An important finding is that these individuals are far from being uneducated or illiterate. Most claim to have attended secondary school and a large fraction have gone on to study at university.
  • Notably, Daesh recruits from Africa, South and East Asia and the Middle East are significantly more educated than individuals from their cohort in their region of origin. The vast majority of them declared having an occupation before joining the organization.
  • This result is consistent with a number of other studies that come to a similar conclusion: poverty is not a driver of radicalization into violent extremism.
  • Looking at measures of economic inclusion shows a strong association between a country’s male unemployment rate and the propensity of that country to supply Daesh foreign recruits.
  • Unemployment among the educated leads to a greater probability to hold radical ideas.
  • Large Muslim-population countries that exhibit higher levels of religiosity are less likely to be the origin of Daesh recruits.