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Determinants of Growth and Inflation in Southern Mediterranean Countries

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  • Leonor Coutinho
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    Abstract

    Despite significant economic reforms in many Southern Mediterranean EU neighbour countries, their growth performance has on average been subdued. This study analyses the differences in growth performance and macroeconomic stability across Mediterranean countries, to draw lessons for the future. The main findings are that Southern Mediterranean countries should benefit from closer ties with the EU that result in higher levels of trade and FDI inflows, once the turbulence of the ‘Arab Spring’ is resolved, and from the development of financial markets and infrastructure. They will also benefit in keeping inflation under control, which will depend in great part on their ability to maintain fiscal discipline and sustainable current accounts. One of the main challenges for the region will be to implement structural reforms that can help them absorb a large pool of unemployed without creating upward risks to inflation.

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    Bibliographic Info

    Paper provided by CASE-Center for Social and Economic Research in its series CASE Network Studies and Analyses with number 436.

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    Length: 51 pages
    Date of creation: 2012
    Date of revision:
    Handle: RePEc:sec:cnstan:0436

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    Keywords: Growth; EU neighborhood policy; Trade; FDI; Financial Development; Inflation;

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    Cited by:
    1. Robin Carruthers, 2012. "Transport Infrastructure for MED11 Countries," CASE Network Reports 0108, CASE-Center for Social and Economic Research.
    2. Tsani, Stella & Paroussos, Leonidas & Fragiadakis, Costas & Charalambidis, Ioannis & Capros, Pantelis, 2013. "Female labour force participation and economic growth in the South Mediterranean countries," Economics Letters, Elsevier, vol. 120(2), pages 323-328.

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