´In 2020, Saudi Arabia experienced a significant drop in its Gross Domestic Product (GDP), primarily due to the dual impact of the COVID-19 pandemic and a sharp decline in global oil prices since Saudi Arabia is a major oil-producing country, and its economy is heavily dependent on oil exports whre the global oil market experienced a sharp decline in prices due to a combination of factors, including reduced demand during the pandemic and a price war between major oil-producing nations.
´The above plot shows the sharp GDP drop from 840 billion dollars in 2019 to 730 billion dollars in 2020. According to several Saudi Arabia’s government, this was due to the decline of global oil prices.
Potential Solution
´The Solution is Diversifying the Saudi economy away from its heavy reliance on oil and investing in non-oil sectors like tourism, technology, and manufacturing and other sectors, Thus approaching the problem of GDP discussed, the government decided to invest in a non-oil sector that is the industrial sector and increase the manufacturing rate of several products which aims to diversify the economy of Saudi Arabia instead of only depending on oil and gas production.
KSA goverment invested in manufacturing such as petrochemical complexes: development of petrochemical complexes that can produce a wide range of products, including plastics, fertilizers,…
´This plot shows the increase in the manufacturing value from 93 billion dollars in 2020 to 163 billion dollars in 2022 after increasing the investment in this industry.
Findings
´After 2 years of applying diversification and investing in a non-oil industry we noticed a sharp improvement in the gross domestic product(GDP) which highlights the importance of the initiative we took.
Solution Validation
The Dashboard below shows that the solution proposed was a direct cause for GDP increase between 2020 and 2022.
Conclusion
Economic diversification is a multifaceted process that offers numerous advantages, including increased resilience, job creation, and sustainable development. While challenges exist, the potential long-term benefits make diversification a valuable strategy for countries seeking to build robust and adaptable economies
Lebanon has been ranked as one of the top countries with severe negative GDP growth. As shown in the below graph, Lebanon’s GDP growth is also lower than that of its neighboring countries, including Syria which has been facing a war since 2011.
In order to check for potential causes of this severe negative GDP growth, Lebanon was compared with other countries on the level of economic indicators. What is found interesting is that Lebanon has the highest external debt (expressed as % of GNI) compared to other countries, as the below figure shows.
Let’s dig deeper into the relationship between external debt and GDP growth in Lebanon. As the below figure shows, when Lebanon’s external debt made a big jump and increased by 130% (from 147% to 277.9%), GDP growth had a severe decline of 15.5% (from -4.2% to 19.7%).
This relation is validated by a study performed by The Monetary Fund that states that external debt shocks have a negative impact on GDP in both, the short- and medium-terms. This is further shown in bellow screenshot taken from the study (The Monetary Fund,2022).
For this reason, The Monetary Fund, in collaboration with the World Bank, has developed The Heavily Indebted Poor Countries (HIPC) Initiative that provides debt relief for qualifying countries if these countries develop a Poverty Reduction Strategy Paper (PRSP) to show how this relief would help them re-increase there GDP.
Cyprus’s GDP growth rate has been on a decline, with more recently negative growth rates. My team of reaserchers and I need to find out why, and the potential solutions to improving the GDP in the upcoming years whilst tackling the root cause.
GDP: Downward trend
Evidence for this decline in GDP growth rate is shown through visualising the data. I discovered that the decreasing growth rate is correlated to the increase % dependancy age of old people (65+) in the working force over the years . Hence the working force tend to come from senior workers who have a higher probabilty of retiring, overall affecting productivity and efficiency.
Solution : AUB Mediterraneo
Opening Universities such as AUB campus in Cyprus, to get Lebanese people out of the bad economical state of Lebanon whilst getting their education from Cyprus along with a stronger passport by the end of it. This also allows Cyprus to get a working force coming from the younger more revitalised workers hence improving efficiency and overall GDP.
Validation
The solution is validated by gathering data regarding the average age of the labor force , and noticing if theres a decrease in age range. Also by monitering the GDP, looking for any improvements that is a result of an increase dependancy on our younger labour force.
Further recommendations
Moreover due to the decrease of birth rate seen in the visualisation, I recommend that the government incentivises the locals to reproduce. Through offering assistance allowance for parents with more children.Therefore when old enough to work they can contribute to the GDP. Cyprus’s working age is 15, they can reduce it to 13 to get more efficient workers whilst improving the overall GDP.
Wassim, Nathalie, and Imad; three individuals who were pushed out of work by the deteriorating economic conditions in Lebanon. Tens of thousands of people like them have been suffering daily for the past 3 years living from paycheck to paycheck up until they were forced out of it (work). Lebanon has witnessed what no other country has. Unemployment rates doubled in only a decade, COVID-19 took out thousands, and inflation bankrupted hundreds of businesses.
According to Okun, a very low or negative growth in GDP leads to a rise in unemployment. By observing this visual, we can see how unemployment skyrocketed while GDP growth took a deep dive. Comparing the years 2008 and 2009, GDP growth increased 10.23 percentage points while unemployment rates decreased by 6.35 percentage points. We can conclude an inverse correlation between GDP growth and unemployment. Another observation is that between years 2020 and 2021, GDP growth increased by almost 15 percentage points. Despite this growth, unemployment remains significantly high at 14.49 percentage points. Importantly, this project is action-oriented in that it shows the nexus between unemployment and GDP growth #SDG8, which are intrinsic to an economy, from more “policy-driven” factors that can be addressed, improved or mitigated.
Here, a question rises? What is the cause for the disproportionality between GDP growth and unemployment rates? There are 3 possible causes for its inverse relation:
• The decrease of Foreign Direct Investment (FDI) which reached 3.98 percentage points in 2019 due to the lack of security and political tension
• Another possible cause is the low diversification in economic sectors due to scarcity of resources. Looking at this visual, we can see the focus of employment shift mainly to the service industry which witnessed an increase by 65.10 percentage points while the agricultural and industrial sectors are left behind increasing by under 30 percentage points in 2019.
• The third and final possible cause is the over-dependence on food and fuel imports. Lebanon possesses the second highest food and energy imports in 2019.
What should be done?
Drawing upon decades of empirical literature on drivers and predictors of lack of growth, this project proves Okun’s law using visualizations for the case of Lebanon. According to International Labor Organization (ILO), not just growth, but quality of growth is the key anchor in the SDGs 2030 agenda. Sustainable economic growth will require societies to create the conditions that allow people to have quality jobs that stimulate the economy while not harming the environment.
1. Creating greater opportunities for women and men to secure decent employment and income. Closing the employment gap is at the heart of the decent work agenda, this can be through promoting voluntary private initiatives and corporate social responsibility.
2. Instating policies to enhance knowledge, skills and employability for men and women since gender remains a source of labor market inequalities and inadequately utilized human resources. Women continue to be employed in a narrower range of occupations than men and to be concentrated in lower-paid, insecure, and unprotected jobs.
3. Promoting employment through reconstruction and employment-intensive investment.
4. Increasing access to financial services to manage incomes, accumulate assets and make productive investments.
Findings and Recommendations
A shift in economic thinking and planning towards economic structural transformation is necessary for the Arab region to develop on SDG 8 (ESCWA, 2021). The post-pandemic SDG agenda must leverage the lessons learnt to reinforce national social safety nets and employment policies. This strengthens economic resilience and allows developing countries to absorb shocks. A continued lack of decent job opportunities, insufficient investments, and under-consumption slows down economic growth. The average growth rate GDP is increasing after the pandemic; however, it still did not reach pre-pandemic levels of growth and developing countries such as Lebanon are moving farther from the 7% growth rate set for 2030. Therefore, as labor productivity decreases driven by low productivity and unemployment rate rises, standards of living decreases and overall economic growth decreases.
Governments must join forces and formulate policies to promote better job opportunities through active labor market programs, corresponding to important SDGs: Economic Growth and Decent Work, as well as Partnerships to Achieve the Goals.
Sustainable economic growth will require societies to create the conditions that allow people to have quality jobs that stimulate the economy while not harming the environment. Job opportunities and decent working conditions are also required for the whole working age population. There needs to be increased access to financial services to manage incomes, accumulate assets and make productive investments. Increased commitments to trade, banking and agriculture infrastructure will also help increase productivity and reduce unemployment levels in the world’s most vulnerable regions.#SDG8 #SDG16
Not exclusively to BRICS (Brazil, Russia, India, China, and South Africa), the world economy suffered greatly in the years spanning the COVID pandemic. Even though the pandemic is a subject of the past, its consequences generate a ripple effect perceived until this day, especially in developing countries. #SDG8 #SDG8.1
This issue becomes evident when glancing over the BRICS’ GDP growth per annum alongside that of other economies. Ever since its emergence, the countries comprising the BRICS have shown sustainable growth in their GDP throughout the years. However, in 2019-2020, the BRICS experienced a substantial decrease in their GDP growth, with Brazil reaching a negative GDP growth.
One can expect a decrease in GDP growth given the circumstances of the pandemic. Nonetheless, most countries in the BRICS managed to hold their ground away from the zero mark in GDP growth, while others were not so fortunate. However, what could possibly explain this discrepancy? One of the indicators of healthy GDP growth lies in the amount of export to import ratio, and this was the lens through which the analysis was drawn. The difference between Brazil and China, both developing countries, lies in the ‘what’ is exported. The fact that China exports high-technology products and services, which is not the case in Brazil, is a major contributor to this discrepancy. #SDG 8.0 #SDG81 #SDG8.2
A means to mitigate this predicament is to increase the incentive for developing countries to produce and sell high-technology services or products by means of long-term credit availability and fiscal incentives. In more detail, the promotion of long-term credit is crucial to medium and small-sized exporters as they make up most exporters in developing countries, and to the elimination of long, bureaucratic, and inefficient regulations that deter the entry of new exporters. Lastly, provide fiscal incentives to nurture innovation.
Supporting evidence is found in the fact that countries that provide the greatest credit for the private sector also experience the higher export of technology, and consequently, greater GDP growth per annum.
It is recommended that developing countries establish special economic zones (SEZ) close to industrial or port areas. Like in China, SEZ should offer fiscal incentives, and motivation to innovate, and remain close to the port and the manufacturing regions to speed up the export process with minimal bureaucracy.
