IMF Study on Spillover of Global Crisis on MENA Emerging Markets and GCC

The study finds that most of the slowdown in MENA Emerging Markets (Egypt, Jordan, Lebanon, Morocco, Pakistan, and Tunisia) and the GCC is due to the Global Crisis.  Or, as those of us who are less politically correct refer to it, the "Western" Financial Crisis.  

There is a logic here beyond the equations:  MENA is a samak saghir in terms of the world economy.  And in a variety of ways is linked to the Western/World economy. And so likely to be buffeted by storms in the West.

What I think is interesting about this study is what it says about the impact of the GCC in MENA Emerging  Markets.

Using the Financial Stability Index for his study, Moriyama-san finds that it increased from -0.3 (22005 through 3Q08) to 4.0 (4Q08 through 1Q09).

His analysis (Table 2) decomposes the latter FSI:

1. "Advanced" Economies Direct:  1.8
2. "Advanced" Economies Indirect through the GCC:  1.1
3. GCC Other than Advanced Economies:  0.3
4. Other Factors:  0.8   

No big surprise that Moriyama-san found that "Advanced" Economies were responsible for about 75% of the effect.  But, what's remarkable is that the GCC's role was about 35% - as the "Advanced" Economies fallout on its economy was transmitted to the MENA Emerging Markets countires as well as a lower amount for GCC factors not related to the "Advanced" Economies.  

Explaining in part Patrick Seale's comment about the center of political gravity in the Arab World shifting to the East, though one would also have to recognize the impact of the financial arrangements surrounding the Camp David Accords which have re-directed Egyptian foreign and economic policy.