Partnerlanden van de EU in Middellands Zeegebied bereiken economische groei van 3,5 procent (en)

A Commission report published today shows that the Mediterranean region experienced a resumption in growth in 2003, resulting in an aggregate growth rate of around 3.5% (1.6% in 2002), while the regional inflation rate receded to around 2%. A number of Mediterranean countries have faced difficulties in meeting their fiscal targets for 2002 and 2003, leading to a further deterioration in their fiscal position. A pick-up in export growth has led to a mild improvement in the average trade and current account balances, to around -3.4% and +2% of GDP respectively. Since 2000, reform progress has been observed in some countries and in selected domains, notably trade liberalisation, fiscal management, privatisation and labour market policies. However, the fragile security situation, low economic growth and a variety of domestic factors seem to have adversely affected the economic reform momentum.

The second edition of the report "Economic Review of EU Mediterranean Partners" was prepared by the Commission's Directorate-General for Economic and Financial Affairs. The report gives an overview of recent macroeconomic and structural reform developments for the Mediterranean Partner countries. In addition, the publication includes two horizontal articles on Fiscal consolidation and Financial system development in the region. Some of the highlights of this issue are the following:

• In 2003, most Mediterranean countries experienced a resumption in growth, resulting in an increase in the regional growth rate to around 3.5%, up from 1.6% in 2002. However, a more substantial recovery was constrained by low external demand from the EU, regional security concerns and a variety of domestic factors. In 2003, the average regional inflation rate receded to about 2.2% compared to 3.3% in 2002, as price pressures have diminished throughout the region, in particular in Israel.

• A number of Mediterranean countries faced difficulties in meeting their fiscal targets in 2002 and 2003, due to lower than expected growth, depressed revenues and, in some cases, higher expenditures. Most countries have experienced higher deficits, especially Jordan, Israel and Syria. The average regional fiscal balance excluding grants has deteriorated further to around 6% in 2003, calling for a reinforcement of fiscal consolidation efforts.

• Although all countries have embarked on reforms of their fiscal systems, further efforts need to be made to enhance the effectiveness and efficiency of expenditures and to strengthen the quality and sustainability of public revenues. Additional progress is also necessary to strengthen the budgetary process and financial management. The most noteworthy measures taken so far relate to the introduction of VAT in Lebanon, public administration reform in Morocco, and the establishment of a Single Treasury Account in the West Bank and Gaza.

• Some progress in other selected reform domains have been noted in the Mediterranean region in the period 2002-03. With regard to trade liberalisation, particular progress has been observed in Morocco and Tunisia. The privatisation process yielded mixed results, however, with a number of successful operations in Jordan and, more recently, in Israel. Finally, labour market regulations changed for the better in Egypt and Morocco through the adoption of a "Unified Labour Law" and the "Labour Code", respectively.

• Regarding financial sectors, while diverse and at different stages of development across the region, they are generally still dominated by banking sectors, foreign ownership tends to be low, and heavy state involvement and weak institutions tend to prevent efficient intermediation of financial resources. Progress has been made, but more needs to be done to make financial systems efficient and competitive. Key issues are an improved institutional and regulatory environment, and better access to finance for small and medium sized enterprises.

• In general, efforts need to be intensified to turn the Mediterranean countries into well-functioning market economies, driven by the private sector, and supported by efficient public administrations. Further improvement is important regarding the enforcement of legal frameworks, an enhanced institutional environment, the promotion of good governance and the reform of the role of the state.

Relations between the Mediterranean Partners and the EU are governed by the Euro-Mediterranean Partnership, of which the bilateral Association Agreements (AA), concluded with almost all Partners, are an essential feature. In the economic domain, the Partnership's goal is to create an area of shared prosperity through the progressive establishment of a Euro-Mediterranean Free Trade Area, with financial support provided by the MEDA financial instrument of the EU.

The European Neighbourhood Policy launched in 2003 will further intensify relations between the EU and the Mediterranean countries. Building on existing relations, the Policy aims to develop a zone of prosperity and a friendly neighbourhood. In the economic domain, this is to be achieved through additional trade and market opening, the prospect of the neighbours gaining a stake in the EU's Internal Market, and enhanced financial and technical assistance. The provision of these incentives will be linked to concrete progress demonstrating shared values and effective political, economic and institutional reforms by the neighbours.

The process of stabilisation and structural reforms has also been extensively supported by the International Financial Institutions (IFIs), in particular through World Bank programmes and technical assistance, while only one IMF programme is currently in place (Jordan).

The full report is available on:

http://europa.eu.int/comm/economy_finance/publications/occasional_papers/occasionalpapers6_en.htm

For further information on the Mediterranean region:

http://europa.eu.int/comm/external_relations/med_mideast/intro/index.htm