Arab states must create 100 million jobs in the next 15 years to keep unemployment down and prevent further instability in the Middle East and North Africa, the head of a leading Arab fund said on Tuesday.
Abdellatif Youssef al Hamad, managing director of the Arab Fund for Economic and Social Development (AFESD), told a gathering of finance ministers and central bank governors that Arab economies must grow by six to seven percent to churn out about seven million new jobs a year.
"I must underline the danger of the unemployment situation in the Arab region where the average rate of unemployment is 15 percent, the highest level compared to other regions in the world," Hamad said.
The region needs bold reforms, including better education and a more friendly business environment, to lure more foreign investment to expand business and job creation, he added.
Economists say unemployment rates vary from more than 30 percent in some Arab states to very low levels in others, especially small nations in the Gulf region with huge oil wealth and a small population.
Hamad said average economic growth in the Arab world is still shaky despite the windfall of soaring oil prices that benefited even non-oil exporting countries through Arab investment, tourism and expatriate worker remittances.
"(to create a total 100 million jobs by 2020) the region's economies must grow by rates of between six and seven percent. These rates are well higher than the real growth achieved by Arab countries in the past years," he added.
Hamad and the heads of four other Arab funds, including the Arab Monetary Fund, were holding a two-day annual meeting in which finance ministers and central bank governors from 20 Arab states also take part.
The five funds were set up by Arab states to promote trade, investment and other economic co-operation within the Arab world in the hope of building a common market sometime in the future.
"To take up these challenges (of strong growth and job creation), Arab governments must continue financial and structural reforms as well as institutional and legal ones to create a business environment able to attract more investment, spur job creation and economic diversification," Hamad said.
Jasem al Manai, the head of the Arab Monetary Fund, warned governments in the region of what he called the "challenges of the current stage" including price instability and higher inflation.
Manai gave no precise figures but said inflation and prices instability will make the region less competitive in attracting foreign investment unless governments take action to tackle the problem.
"At this stage of economic boom the danger of inflation and higher domestic prices are not the only challenges facing the countries of the region. Excess liquidity led to waves of speculation in real estate and stock markets," he said.
Analysts said a struggle between regulators and wealthy speculators in the Arab Gulf region caused stock markets in that region to swing over the past few months.
"The increase in inflation and the pace of speculations in stock markets and real estate markets showed the need for action by governments in the region to sustain the momentum of growth and bolster its competitiveness," Manai added.