Pan-Arab emergency fund sought to deal with fallout of global crisis

The global financial crisis could inflict cumulative losses of more than $5 trillion (Dh18trn) on Arab countries in terms of lower growth, aggravation in joblessness and a decline in oil exports, bourses and investments, an Arab official has said.

Ahmed Gowaily, Secretary-General of the Cairo-based Council of Arab Economic Unity (CAEU), said the loss should prompt member states to take counter-measures, including the creation of a pan-Arab emergency fund.

In a lecture published in some Arab newspapers yesterday, Gowaily urged regional countries to step up integration moves and set up a customs union to pave the way for the creation of a common Arab market.

"The global crisis is expected to cost the Arab nations nearly $5.2trn while this year growth could recede to only three per cent from about five per cent last year," Gowaily said in the lecture in Cairo.

"The losses will result from a decline in global demand for Arab exports and this will naturally lead to labour layoffs and consequently an increase in unemployment rates. The decline in oil prices has also sharply depressed the Arab financial assets abroad and prompted several institutions to revise down their forecasts for the Arab economic growth," he said.

"Arab capital markets have suffered from collapses and inflicted heavy losses on investors… but the most serious effect of the crisis on the Arab economies is that it will lead to a sharp drop in foreign investment flow into the region and this will further depress growth in the GDP."

Gowaily said such problems should prompt Arabs to hasten measures to complete the free trade zone in the region and set up a customs union to pave the way for "the creation of the common market and full Arab economic unity".

"The Arab countries should take other measures to mitigate the effects of the crisis, including the creation of a regional financial institution to fund private sector projects and an emergency fund to support any Arab economy that could face the treat of a sharp downturn for a long time… we need to work together to ease the impact of the crisis on our economies."

Gowaily, whose organisation is an affiliate of the Arab League, also urged member states to "improve their investment laws and introduce more incentives to encourage foreign capital inflow and inter-Arab investment".

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