Islamic countries hit hard by economic crisis

The economy of 57 Islamic countries was hit hard by the global financial and economic crisis, with the real GDP growth likely to drop to 1.2 percent this year against the impressive growth of 6.1 percent during the pre-crisis period from 2002 to 2006.

This is the statement made by Zafar Iqbal, senior economist from the Islamic Development Bank, during the senior officials meeting of the 25th session of the Standing Committee for Economic and Commercial Cooperation of the Organization of Islamic Countries (OIC), which opened here Thursday.

Meanwhile, Nabil Dabour, senior researcher and acting director of Economic Research Department of OIC's Statistical, Economic and Social Research and Training Center for Islamic Countries, said that projection for the year 2009 indicated that the total GDP of the Islamic countries will decline to 3.98 trillion U.S. dollars due to the negative effects imposed by the current global financial crisis.

Addressing about 400 senior officials from Islamic countries, Nabil said, their share in world GDP is estimated to decline to 7.2 percent from its peak level of 7.5 percent in 2007, and their share in total GDP of developing countries is projected to fall even further to 23.4 percent compared to 24.4 percent in 2007.

The Annual Economic Report on the OIC countries indicates that their population is projected to increase further to exceed 1.5 billion in 2009, their GDP per capita is estimated to sharply decline to 2,631 dollars.

The current 57 OIC countries are dispersed over a large geographical region spread out on four continents, extending from Albania in the north to Mozambique in the south, and from Guyana in the west to Indonesia in the east.

As such, the OIC countries as a group account for one sixth of the world area and more than one fifth of the total world population.

The OIC countries are well-endowed with potential economic resources in different fields and sectors such as agriculture and arable land, energy and mining, human resources, and they form a large strategic trade region.

Iqbal said at the meeting that the impact of the crisis has been increasingly felt in Islamic countries. The real GDP growth of oil-exporting member countries is likely to drop to 1.6 percent while non-oil exporting countries 0.8 percent in 2009.

Among various regions of OIC member countries, Middle East and North Africa countries were hit hardest as the region's real GDP growth dropped from normal growth rate of 5.9 percent to 0.3 percent in 2009. The region has been adversely affected mainly due to collapse in oil and asset prices, significant decline in domestic demand and foreign direct investment flows.

Islamic countries which exports manufactured goods like Indonesia, Malaysia, Turkey and some others are suffering from the decrease in global demand of durable goods.

The economists alerted Islamic countries that some member countries had already been affected by the high food and fuel prices and the global financial and economic recession has added to economic strains and seriously affected their socio-economic development.

With the global recovery and positive trends in commodity prices, growth is expected to pick up in 2010, Iqbal continued.

However, he said that both oil-exporting and non-oil exporting member countries will not be able to achieve the pre-crisis level of growth by 2014.

A number of major risks are also associated with medium-term recovery, including deteriorating current account balances, shrinking remittances and development assistance, and rising unemployment and poverty, he said.

The economic crisis has also imperiled the social stability, he noted, adding that the Millennium Development Goals appear to suffer a serious setback as the decade-long gains achieved by Islamic countries are under stress.

Source: Xinhua