Organization of Islamic Cooperation The Statistical, Economic and Social Research and Training Centre for Islamic Countries (SESRIC) OIC ECONOMIC OUTLOOK 2018 Challenges and Opportunities towards Achieving the OIC-2025 © October 2018 | Statistical, Economic and Social Research and Training Centre for Islamic Countries (SESRIC) Kudüs Cad. No: 9, Diplomatik Site, 06450 Oran, Ankara –Turkey Telephone +90–312–468 6172 Internet www.sesric.org E-mail [email protected] The material presented in this publication is copyrighted. The authors give the permission to view, copy, download, and print the material presented provided that these materials are not going to be reused, on whatsoever condition, for commercial purposes. For permission to reproduce or reprint any part of this publication, please send a request with complete information to the Publication Department of SESRIC. All queries on rights and licenses should be addressed to the Publication Department, SESRIC, at the aforementioned address. ISBN: 978-975-6427-75-0 Cover design by Savas Pehlivan, Publication Department, SESRIC. For additional information, contact Research Department, SESRIC through: [email protected] Contents Acronyms ........................................................................................................................ iii Foreword .......................................................................................................................... v Acknowledgements ......................................................................................................... vi Executive Summary .......................................................................................................... 1 PART I: RECENT DEVELOPMENTS IN THE WORLD ECONOMY ................................................. 11 1 World Economic Trends and Prospects ................................................................... 12 PART II: RECENT ECONOMIC DEVELOPMENTS IN OIC COUNTRIES ........................................ 27 2 Production, Growth and Employment ........................................................................... 28 2.1 Production and Growth ........................................................................................... 29 2.2 Employment and Prices ........................................................................................... 38 3 Trade and Finance ............................................................................................................ 47 3.1 Trade in Goods and Services ................................................................................... 48 3.2 Investment and Finance .......................................................................................... 54 PART III: CHALLENGES AND OPPORTUNITIES TOWARDS ACHIEVING OIC-2025 ................... 67 4 Efforts towards Strengthening Intra-OIC Cooperation and the Importance of the OIC- 2025 ........................................................................................................................................... 68 4.1 Ten Year Programme of Action (TYPOA) ............................................................... 69 4.2 OIC-2025 ................................................................................................................... 70 SESRIC | OIC ECONOMIC OUTLOOK 2018 i Challenges and Opportunities towards Achieving the OIC-2025 4.3 What’s Next ............................................................................................................. 73 5 OIC-2025: Poverty Alleviation .......................................................................................... 75 6 OIC-2025: Trade, Investment and Finance ...................................................................... 86 6.1 Intra-OIC Trade and Investment.............................................................................. 87 6.2 Islamic Finance Development ................................................................................. 92 7 OIC-2025: Agriculture and Food Security ........................................................................ 96 8 OIC-2025: Employment, Infrastructure and Industrialization ...................................... 109 8.1 Industry ................................................................................................................... 110 8.2 Transport ................................................................................................................. 116 8.3 Energy...................................................................................................................... 120 8.4 Tourism .................................................................................................................... 124 8.5 Labour, Employment and Social Protection .......................................................... 129 8.6 Entrepreneurship and SMEs development............................................................ 134 9 OIC-2025: Other Priority Areas ....................................................................................... 139 9.1 Environment, Climate Change and Sustainability .................................................140 9.2 Education ................................................................................................................ 151 9.3 Science, Technology and Innovation ..................................................................... 157 Annex: Country Classifications ....................................................................................... 161 References ................................................................................................................... 164 SESRIC | OIC ECONOMIC OUTLOOK 2018 ii Challenges and Opportunities towards Achieving the OIC-2025 Acronyms ADB Asian Development Bank AfDB African Development Bank CEE Central and Eastern Europe DOTS Direction of Trade Statistics EC European Commission EIB European Investment Bank EU European Union FDI Foreign Direct Investment GCF Gross Capital Formation GDP Gross Domestic Product GFCF Gross Fixed Capital Formation GMTI Global Muslim Travel Index GNI Gross National Income HIPC Heavily Indebted Poor Countries IADB Inter-American Development Bank ICT Information and Communication Technology IDB Islamic Development Bank IFS International Financial Statistics ILO International Labour Organisation IMF International Monetary Fund IPR Intellectual Property Rights ISIC International Standard Industrial Classification KILM Key Indicators of Labour Market LAC Latin America and the Caribbean LDC Least Developed Countries LIFDCs Low Income Food Deficit Countries MDB Multilateral Development Bank MDG Millennium Development Goal SESRIC | OIC ECONOMIC OUTLOOK 2018 iii Challenges and Opportunities towards Achieving the OIC-2025 MENA Middle East and North Africa MVA Manufacturing Value Added ODA Official Development Assistance ODI Overseas Development Institute OECD Organisation for Economic Cooperation and Development OIC Organisation of Islamic Cooperation PPP Purchasing Power Parity R&D Research and Development RER Real Exchange Rate RTA Regional Trade Agreement SDG Sustainable Development Goal SME Small and Medium-sized Enterprise SSA Sub-Saharan Africa STI Science, Technology and Innovation TOT Terms of Trade TPS-OIC OIC Trade Preferential System TRWR Total Renewable Water Resources TYPOA Ten-Year Programme of Action UAE United Arab Emirates UN United Nations UNCTAD United Nations Conference on Trade and Development UNDP United Nations Development Programme UNECA United Nations Economic Commission for Africa UNIDO United Nations Industrial Development Organization UNRWA United Nations Relief and Works Agency for Palestine Refugees UNSD United Nations Statistics Division USA United States of America USD United States Dollar WB World Bank WDI World Development Indicators WEF World Economic Forum WEO World Economic Outlook SESRIC | OIC ECONOMIC OUTLOOK 2018 iv Challenges and Opportunities towards Achieving the OIC-2025 Foreword Recent global economic developments and prospects show that global economy is relatively healthy, less vulnerable, and steadily growing. Global economic growth rate was recorded at 3.8% by the end of 2017, fastest rate since 2012. Global economic growth will slightly improve but remain broadly stable over the coming years with expected growth rates of 3.9% in 2018 and 2019. However, growing tensions over tariffs in the world trade negatively affects projections and predictions related to export, investment and private consumption levels. With around 5% growth rates, the developing countries are projected to grow slightly faster in 2019, but still below the average growth rates achieved in the period from 1999 to 2018. However, though they constitute a substantial part of the group of developing countries, the average economic growth rates of the group of the OIC member countries remain below the average of developing countries. The average growth rate of the group of OIC countries has slowed down to 3.8% in 2017, compared to 4.2% in 2016. The average rate of growth in the OIC countries will likely to increase, with average growth rate forecasted to be around 4.1% in 2018 and 4.2% in 2019. However, while increase in oil prices are supporting recovery in domestic demand in oil exporting OIC countries, many of them are still under the influence of harsh austerity measures that were taken during the sharp decline in oil prices in 2014/15. This requires greater cooperation among the OIC countries to achieve economic