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IMF: Structural Reforms Necessary for Growth, Job Opportunities

A session on structural reforms in the MENA region during the meetings of the International Monetary Fund and the World Bank in Marrakesh (Asharq Al-Awsat)
A session on structural reforms in the MENA region during the meetings of the International Monetary Fund and the World Bank in Marrakesh (Asharq Al-Awsat)
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IMF: Structural Reforms Necessary for Growth, Job Opportunities

A session on structural reforms in the MENA region during the meetings of the International Monetary Fund and the World Bank in Marrakesh (Asharq Al-Awsat)
A session on structural reforms in the MENA region during the meetings of the International Monetary Fund and the World Bank in Marrakesh (Asharq Al-Awsat)

The International Monetary Fund (IMF) and the Middle East Institute (MEI) co-hosted an exclusive panel on the sidelines of this year's Annual IMF/World Bank Meetings in Marrakech on the topic of economic structural reforms in the Middle East and North Africa region (MENA).

The "Structural Reforms to Reinvigorate Growth in MENA" session discussed on Tuesday the recent succession of economic shocks to the MENA region and the actions taken to mitigate their impact.

It also explored the impact of these actions on the MENA countries with a tight macroeconomic policy space amid a continued uncertain external environment.

The report addressed a chapter on structural reforms titled "From Setbacks to Comebacks: Reforms to Build Resilience and Prosperity."

Several participants referred to the Saudi reforms in empowering women and enhancing their participation in the labor market as a model.

They asserted that a small structural reform in the Kingdom was enough to transform the economic scene, and women now have a significant role in the labor market.

IMF's Director of the Middle East and Central Asia Department, Jihad Azour, explained that the primary goal must be to provide job opportunities for young people.

Azout indicated that structural reforms offer a way to increase potential growth and establish growth in the near term.

He noted that the reforms would be an influential factor in accelerating the pace of economic diversification among oil-exporting countries, stressing that most structural reforms help raise output, with their impact increasing over time.

The expert added that governance reforms, mainly enhancing the rule of law and government effectiveness, are especially important and can also generate positive output effects during periods of weak growth or relatively limited policy space.

Amid high public debt and inflation, fiscal consolidation and tight monetary policy are needed in many countries in the region.

In this context, structural reforms offer a way to increase potential growth and accrue near-term growth benefits.

However, Azour noted that merely maintaining macroeconomic stability will not achieve the required transformative change.

He indicated that stability represents the foundation, not the building, adding that structural reforms will also be necessary to accomplish comprehensive growth for all segments of society.

Some participants discussed the need to strengthen the role of the private sector and pave the way for it to create confidence, which in turn contributes to the arrival of investments.

Improving the government's ability to implement policies and regulations to promote private sector development also fosters growth through improved investment and productivity.

Economic and policy expert Alia Moubayed explained that the region suffers from weak growth due to high inflation.

Moubayed explained that the region can benefit significantly if it implements structural reforms, which is its only way to improve the situation.

She referred to Oman, which implemented reforms and improved its situation after several credit rating agencies lowered its rating.

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China’s Factory Activity Snaps Record Slump on Festive Stockpiling

People walk down steps near a residential building area with a view of China Zun, the tallest skyscraper in Beijing, Tuesday, Dec. 23, 2025. (AP)
People walk down steps near a residential building area with a view of China Zun, the tallest skyscraper in Beijing, Tuesday, Dec. 23, 2025. (AP)
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China’s Factory Activity Snaps Record Slump on Festive Stockpiling

People walk down steps near a residential building area with a view of China Zun, the tallest skyscraper in Beijing, Tuesday, Dec. 23, 2025. (AP)
People walk down steps near a residential building area with a view of China Zun, the tallest skyscraper in Beijing, Tuesday, Dec. 23, 2025. (AP)

China's factory activity unexpectedly grew in December, snapping a record eight straight months of decline, lifted by a rise in pre-holiday orders ​as officials seek to spur the $19 trillion economy's manufacturing sector without worsening deflation.

The official purchasing managers' index (PMI) rose to 50.1 in December from 49.2 in November, the National Bureau of Statistics' survey showed on Wednesday, topping the 50-point mark separating growth from contraction and beating a forecast of 49.2 in a Reuters poll.

"Assuming the improvement in the PMIs is borne out in the hard data, we think it will likely be a short-lived upturn in activity on the back of month-to-month swings in fiscal spending rather than the start of a more sustained pick-up," said Julian Evans-Pritchard, head of China economics at Capital Economics.

"The big picture is that the structural headwinds from the property ‌downturn and industrial ‌overcapacity are set to persist in 2026," he added.

Still, the data should ‌give ⁠policymakers ​cause for ‌optimism after choosing to see out 2025 without major additional stimulus to meet the full-year growth target of around 5%.

The production sub-index jumped to 51.7 from 50.0 in November, while new orders climbed to 50.8 from 49.2, marking their strongest performance since March. Supplier delivery times also improved, pushing the production and activity expectations component to 55.5, its highest reading since March 2024.

New export orders remained sluggish, however, edging up to 49.0 from November's 47.6, underscoring the need for officials to boost domestic demand and rely less on US demand, the world's top consumer market, in the face of President Donald Trump's ⁠tariffs.

Huo Lihui, an NBS statistician, said confidence appeared to be improving due to pre-holiday stockpiling, as the world's second-largest economy prepares to celebrate the Lunar ‌New Year in February, pointing to an uptick in the agricultural, food processing ‍and food and beverage sectors.

A separate private-sector PMI ‍published on Wednesday also showed marginal expansion in activity in December, driven by stronger production and domestic demand ‍in the absence of more foreign orders.

DEPRESSED DOMESTIC DEMAND

Ginning up domestic manufacturing without taking further steps to boost consumer demand risks worsening deflationary pressures, however.

In separate data released last week, Chinese industrial firms saw their profits fall 13.1% year-on-year in November, the steepest drop in over a year, suggesting households are not stepping in to pick up the shortfall as a slowing global economy weighs ​on exports.

At an agenda-setting gathering in early December, the ruling Communist Party leadership promised to boost income and stimulate consumption, although similar pledges in the past have struggled to deliver results.

Chinese consumers ⁠have so far been reluctant to spend, held back by an uncertain employment outlook and as a prolonged property crisis drains household wealth.

The official non-manufacturing PMI, which includes services and construction, was at 50.2, after shrinking in November for the first time in nearly three years.

Beijing's policymakers have come to recognize the need to rebalance the economy and transform its production-driven model as tensions with key export markets mount.

"The country's economic development still faces many old problems and new challenges; the impact of changes in the external environment is deepening, and the contradiction between strong supply and weak demand is prominent domestically," the readout of the Central Economic Work Conference said.

In an article published by the flagship party magazine Qiushi Journal in mid-December, President Xi Jinping said there was "overall capacity excess" and that "ultimately consumption is the sustainable driver of economic growth."

Beijing had previously rejected "overcapacity" as unfair criticism by Western governments towards China's industrial policies.

In a nod to those concerns, authorities ‌have this year vowed to crack down on price wars, prune production in some sectors and step up so-called "anti-involution" efforts.

The NBS composite PMI of manufacturing and non-manufacturing was 50.7 in December, compared with November's 49.7.

Business

China Will Push More Proactive Macro Policies in 2026, Xi Says

Pedestrians walk along a street in the Central Business District of Beijing, China, 31 December, 2025. (EPA)
Pedestrians walk along a street in the Central Business District of Beijing, China, 31 December, 2025. (EPA)
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China Will Push More Proactive Macro Policies in 2026, Xi Says

Pedestrians walk along a street in the Central Business District of Beijing, China, 31 December, 2025. (EPA)
Pedestrians walk along a street in the Central Business District of Beijing, China, 31 December, 2025. (EPA)

China will implement more proactive ​macroeconomic policies next year, President Xi Jinping said on Wednesday, according ‌to state ‌media.

The ‌Chinese ⁠economy ​is ‌expected to achieve about 5% growth for 2025, to about 140 ⁠trillion yuan ($20 trillion), ‌Xi said.

The ‍country ‍will promote ‍effective qualitative improvement and reasonable quantitative growth in ​the economy, Xi said at ⁠a New Year's tea party of top Chinese Communist Party officials.

Business

India Overtakes Japan as World's 4th Largest Economy

 A man walks at the seafront as scattered clouds are seen over Mumbai's skyline, India, June 10, 2015. (Reuters)
 A man walks at the seafront as scattered clouds are seen over Mumbai's skyline, India, June 10, 2015. (Reuters)
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India Overtakes Japan as World's 4th Largest Economy

 A man walks at the seafront as scattered clouds are seen over Mumbai's skyline, India, June 10, 2015. (Reuters)
 A man walks at the seafront as scattered clouds are seen over Mumbai's skyline, India, June 10, 2015. (Reuters)

India has overtaken Japan as the world’s fourth largest economy and officials hope to pass Germany within three years, the government’s end-of-year economic review revealed.

Official confirmation, however, depends on data due in 2026 when final annual gross domestic product figures are released, with the International Monetary Fund (IMF) suggesting India will cross over Japan next year, reported AFP.

“India is among the world’s fastest-growing major economies and is well-positioned to sustain this momentum,” read the government economic briefing note, which was released late on Monday.

“With GDP valued at $4.18 trillion, India has surpassed Japan to become the world’s fourth largest economy, and is poised to displace Germany from the third rank in the next two-and-a-half to three years, with projected GDP of $7.3 trillion by 2030.”

IMF projections for 2026 put India’s economy at $4.51 trillion, compared with Japan’s $4.46 trillion.

The upbeat assessment comes despite economic worries after Washington in August hit India with huge tariffs over its purchases of Russian oil.

New Delhi said continued growth reflects its “resilience amid persistent global trade uncertainties”. But other measurements offer a less rosy outlook.

In terms of population, India overtook neighboring China as the most populous nation in 2023.

India’s GDP per capita was $2,694 in 2024, according to the latest World Bank figures, 12 times smaller than Japan’s $32,487, and 20 times smaller than Germany’s $56,103.

Government figures show that more than a quarter of India's 1.4 billion people are aged between 10 and 26. Creating enough well-paid jobs for millions of young graduates is an upcoming hurdle, but the report offered a rosy outlook.

“As one of the world's youngest nations, India's growth story is being shaped by its ability to generate quality employment that productively absorbs its expanding workforce and delivers inclusive, sustainable growth,” a note in the review said.

India’s Prime Minister Narendra Modi this year unveiled sweeping consumption tax cuts and pushed through labor law reforms after growth slowed to a four-year low in the 12 months ending March 31.

Currency pressures have also mounted.

The rupee hit a record low against the dollar in early December, after falling about 5% in 2025.

That came amid concerns over the lack of a trade deal with Washington and the impact of higher levies on Indian goods.

India became the world's fifth largest economy in 2022, when its GDP overtook that of former colonial ruler Britain, according to IMF figures.