The global crisis and the Arab countries
First of all, the euro crisis is something totally new, but what matters is the global financial situation and financial and economic crisis that began in 2008.
The Arab countries do not represent a homogeneous economic group. If the Gulf countries have economies based on export of hydrocarbons, the Maghreb countries have diversified economies. Consequences vary by country. The European Union, Mediterranean states and Gulf countries have strong economic relations. Indeed, the EU is one of the first economical partners for Arab countries.
The decline of the euro
For the Arab states, whose main products are hydrocarbons, theirs exports are in dollars. Thus, when the price decreases, these countries see their buying power decline.
However, if the Arab states sell in dollars, they buy in Euros. Consequently, a low euro is good for these countries ‘economies and for European countries because it helps increase their exports.
The global crisis
The financial crisis and the global economic crisis had an impact on all countries’ economies, including European countries and the United States.
Regarding the Arab countries, their economies have generally been less affected. For some, it is the banking and property sectors which have suffered the most. No Arab Bank has been in bankruptcy.
Generally, the Arab countries have taken less risk at the bank level than the Northern countries. Moreover, their banking system is different and their monetary policy does not allow them to make risky decisions.
In Arab countries, no negative growth was recorded. Globally, economic growth was around 8%. With the crisis, it declined to reach 3 or 4%.
Of course, the Tunisian economy has been affected by the global crisis. It is mainly exports which have declined. The services sector and industry have also suffered from the economical climate. It is tourism which, as in Morocco and Egypt, has experienced a significant drop.
Concerning the Kingdom of Morocco, the trade balance has been affected by the crisis and the trade deficit has been aggravated. But globally, the crisis’ effects remain limited. Morocco has a young, strong, dynamic and very diverse economy. And its advanced status with the European Union gave advantages for exporting certain products.
Moreover, the country’s incomes come from its workforce, its agriculture and Moroccans living abroad. Although they observed a decline in their purchasing power in Europe, they continue to invest in their country of origin.
With the global crisis, raw materials are experiencing an increase in their prices. In addition, Morocco is the third largest exporter of phosphate and this sector has not been touched.
However, it is tourism industry which has suffered from a significant decline.
Euro-Arab relations in times of crisis
Today with the Greek crisis, several questions are raised including the Union for the Mediterranean (UfM). This crisis shows that Europe is facing real difficulties. Moreover UfM is based on economic projects, thus, we can think about what consequences this crisis is going to have on the Euro-Mediterranean partnership.
The trading partners of Europe, such as Morocco, will necessarily undergo trade and financial effects.