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Report on World Economic Situation and Prospects 2007


Western Asian countries maintained their fourth consecutive year of robust growth as a result of rising oil prices in the first half of 2006. But the surge in oil export revenues will temper in 2007, and growth in the UN-ESCWA region (excluding Egypt) will likely moderate from 5.8% in 2006 to 4.9% in 2007, according to an annual UN report on the world’s economic situation.  This year’s Report was launched on 11 January under the title "World Economic Situation and Prospects 2007".


In this context, UN-ESCWA organized a press conference in cooperation with the United Nations Information Centre in Beirut on 12 January in which it focused on the economic situation in the Arab region and gave a PowerPoint presentation on this issue.


The report says that the overall regional gains, however, mask the growth disparities within the region as polarized development has continued—growth in the Gulf Cooperation Council (GCC) economies was further spurred by the oil-market momentum, while those economies impacted by conflict lost even more skilled people, investment, potential incomes, capital and welfare. Instability in Iraq and the Occupied Palestinian Territories, accompanied by the mid-year Lebanese-Israeli conflict, undermined growth prospects in those economies. In Lebanon, the robust growth registered in the first six months of the year was abruptly halted by the conflict, leading to a decline in output in the rest of 2006. But the UN report says reconstruction has moved rapidly, and economic growth is expected to rebound in 2007, provided no further political instability emerges.


The report finds that in the economies of countries in the Gulf Cooperation Council (GCC), the build up of foreign exchange reserves has frozen a portion of the fiscal surpluses while investment institutions have channeled their surpluses abroad.  The accumulated foreign surpluses can add up to about 20% of collective GDP. Saudi Arabia’s budget surplus doubled from $28.5 to $57.1 billion between 2005 and 2006 and on average, oil exporters have been saving about two thirds of increased oil revenues by adding to foreign-exchange reserves and oil-stabilization funds, as well as by paying down domestic public debt.


The World Economic Situation and Prospects report is produced by the UN Department of Economic and Social Affairs (UN DESA), the United Nations Conference for Trade and Development (UNCTAD) and the five United Nations regional commissions (Economic Commission for Africa (ECA), Economic Commission for Europe (ECE), Economic Commission for Latin America and the Caribbean (ECLAC), Economic and Social Commission for Asia and the Pacific (ESCAP), and Economic and Social Commission for Western Asia (UN-ESCWA).