The Middle East:

An economic comparison
International Comparative Economics

Daniela Mantese

Isabella Scotto

Maria Chiara Maggio

Giacomo Antista

1
Index:
1. Introduction to the Middle East
2. Methodology
3. Brief economic analysis of each country
3.1 United Arab Emirates
3.2 Bahrain
3.3 Iran
3.4 Qatar
3.5 Egypt
3.6 Kuwait
3.7 Lebanon
3.8 Libya
3.9 Saudi Arabia
3.10 Turkey
3.11 Yemen
3.12 Israel
3.13 Iraq
3.14 Jordan
4. Economic comparison
4.1 GDP
4.2 GDP per capita
4.3 Trade balance
4.4 Oil rents (% of GDP)
4.5 Unemployment rate
4.6 Inflation rate
4.7 National Debt
5. Our Conclusions
6. Bibliography

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 1. Introduction

The Middle East is a geopolitical region encompassing the Arabian Peninsula, the Levant,
Turkey, Egypt, Iran, and Iraq. According to the International Monetary Fund, the Middle
East's economic landscape is diverse and dynamic, ranging from impoverished nations like
Syria and Yemen to exceptionally wealthy ones such as Qatar and the UAE. The economic
structure of Middle Eastern nations is also diverse, as some countries are heavily reliant on
oil exports (e.g., Saudi Arabia, UAE, Kuwait), while others boast diversified economies (e.g.,
Israel, Turkey, Egypt). The Middle East region’s industries include oil and oil-related
products, agriculture, textiles, defense equipment, and tourism, with banking gaining traction
in recent years, especially in countries like the UAE and Bahrain. However, the region is
mostly known for its rich oil and natural gas resources, contributing significantly to the
global energy market. The Middle East currently produces more than a fifth of the world's oil
output, yet still holds two-thirds of the world’s proven reserves of liquid oil.
As we will see in the following paragraphs, each country in the Middle East reveals a
different economic trajectory based on factors such as the availability of natural resources,
economic policies and geopolitical tensions. However, rapid urbanization, advancements in
technology, and efforts towards economic diversification are reshaping the socioeconomic
landscape in several Middle Eastern nations.1

2. Methodology

Our research aims to assess and compare the economic systems and development potentials
of Middle Eastern countries with the goal of identifying a potential leader in the region. Our
analysis focuses on seven key economic indicators: GDP, GDP per capita, trade balance, oil
rents (% of GDP), unemployment rate, inflation rate and national debt. These metrics provide
valuable insights into the overall well-being and performance of each country's economy,
helping us analyze economic trends and changes, along with the government's fiscal health.

3. Brief economic analysis of each country

3.1 United Arab Emirates

The United Arab Emirates is the Middle East's third largest economy, and one of the
wealthiest countries in the region on a per capita basis. In only about 50 years, the UAE’s
economy has managed to become the second largest economy in the GCC (after Saudi
Arabia), demonstrating an impressive and steady economic growth. The economy of the
United Arab Emirates is reliant on oil, which accounts for the majority of its exports and
represents the country’s main source of wealth. At present, the UAE has the seventh largest
proven natural gas reserves and 6% of the world's oil reserves, with a production of around 4

1
Beydoun, Z. R. (1988). The Middle East.
Cleveland, W. L. (2018). A history of the modern Middle East. Routledge.
https://en.wikipedia.org/wiki/Middle_East
https://www.britannica.com/place/Middle-East

3
million barrels of oil a day, most of which is exported to Asia and the Pacific region. Due to
the UAE’s oil wealth, GDP per capita is comparable to the average GDP per capita of Europe
as a region. However, to mitigate the risks related to fluctuating oil prices, the UAE is trying
to reduce its oil monopoly by diversifying its economy, starting from the tourism industry. In
2021, the UAE launched 50 new economic initiatives to boost the country's competitiveness
and attract US$150 billion in foreign direct investment over the next nine years. Over the
years, the UAE has become a global trading center thanks to the country’s free trade zones
which attracted many foreign investors. The UAE’s main economic partner is Australia, with
which on 13 December 2023 signed the Comprehensive Economic Partnership Agreement. In
2022, UAE investment in Australia was estimated at $12.6 billion.2

3.2 Bahrain

Bahrain is a rich country in the Middle East. Its economy heavily relies on oil and gas.
Petroleum is Bahrain's most exported product, accounting for 60% of export receipts, 70% of
government revenues, and 11% of GDP. However, as many other Middle Eastern countries, it
has always sought to diversify its economy to reduce the risks associated with oil
dependence. Therefore, since the late 20th century, Bahrain has heavily invested in the
banking and tourism sectors, particularly in the capital, Manama, which became a hub for
large financial structures. Bahrain’s finance industry has flourished over the years, peaking in
2008, when Bahrain was recognized as the world's fastest-growing financial center.
Additionally, the Bahraini Dinar became the second-highest-valued currency unit in the
world. The Index of Economic Freedom ranks Bahrain as the fourth-freest in the Middle East
and North Africa, and it is the 40th-freest economy globally. The World Bank has also
recognised Bahrain as a high income economy. The diversity of exports, including
aluminium, finance, and construction materials, contributed to the country's economic
resilience and have positioned it as a significant player in the region. Thanks to the non-oil
sector’s expansion, Bahrain’s annual real growth accelerated to 4.9% in 2022. In contrast, the
oil sector saw a slight decline of 1.4%. However, in July 2023, Bahrain's national exports
decreased by 23%, while imports fell by 6%, resulting in a trade deficit of BD68 million. 3

2
https://www.dfat.gov.au/geo/united-arab-emirates/united-arab-emirates-country-brief

Shihab, M. (2001). Economic development in the UAE. United Arab Emirates: a new perspective, 2, 249-258.
Alsuwaidi, A. R., Al Hosani, F. I., ElGhazali, G., & Al-Ramadi, B. K. (2021). The COVID-19 response in the
United Arab Emirates: challenges and opportunities. Nature immunology, 22(9), 1066-1067.
3
https://www.bahrainedb.com/app/uploads/2023/04/CI2315-Bahrain-Economic-2022-EN.pdf
https://country.eiu.com/bahrain
https://thedocs.worldbank.org/en/doc/65cf93926fdb3ea23b72f277fc249a72-0500042021/related/mpo-bhr.pdf

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3.3 Iran

Iran's economy is characterised by its reliance on hydrocarbon, agriculture, and services, with
notable state involvement in manufacturing and financial services. As the world's
second-largest holder of natural gas reserves and the fourth-largest in proven crude oil
reserves, Iran's economy has historically been vulnerable to fluctuations in global energy
prices. Despite efforts to diversify, economic activity and government revenues continue to
be influenced significantly by the oil sector. The impact of external shocks, such as sanctions
and commodity price volatility, has been evident in a decade-long stagnation, with a
contraction in oil exports placing considerable pressure on government finances and leading
to periods of high inflation. In recent years, Iran has shown signs of economic recovery,
supported by post-pandemic service sector rebound, increased oil sector activity, and policy
adjustments. However, challenges persist, including climate change-related issues affecting
agriculture, inflationary pressures, and risks associated with geopolitical tensions and
diplomatic uncertainties.4

3.4 Qatar

Qatar boasts one of the world's highest GDP per capita, consistently ranking among the top
ten wealthiest nations. Despite facing sanctions from neighbouring countries, including Saudi
Arabia and the United Arab Emirates, Qatar's resilient economy has continued to grow. The
country's strategic export focus on Japan, South Korea, India, and China has rendered the
sanctions largely ineffective. With petroleum and natural gas as economic cornerstones,
contributing over 70% of government revenue, 60% of GDP, and 85% of export earnings,
Qatar holds the world's third-largest proven natural gas reserve and is the second-largest
exporter of natural gas. The transition from a pearl-diving economy to oil and gas exploration
in 1939 significantly elevated Qatar's economic status. Following a downturn from 1982 to
1989 due to OPEC quotas and lower oil prices, the 1990s witnessed a recovery, attracting a
growing expatriate population. While oil production is expected to decline by 2023, large
natural gas reserves will continue to fuel Qatar’s economic development. However, the
country has always sought to diversify its economy through heavy industrial projects,
including refineries, petrochemical plants, and steel production. The U.S. is the major
equipment supplier for Qatar's oil and gas industry. 5

4
https://www.worldbank.org/en/country/iran/overview
https://www.heritage.org/index/country/iran
5
https://en.wikipedia.org/wiki/Economy_of_Qatar
https://www.ashghal.gov.qa/en/AboutQatar/Pages/Economy.aspx
https://www.focus-economics.com/countries/qatar/

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3.5 Egypt

Egypt is one of the most populous countries in Africa and the Middle East, ranking as the
14th most populous in the world. The Egyptian economy traditionally relies on oil, which has
been a significant source of government revenue, contributing to the development of industry
and services. Egypt stands among the largest economies in Africa. Middle Eastern countries'
economic systems are characterized by a strong dependence on natural resources, particularly
oil and natural gas. These sectors constitute a significant portion of the GDP and exports,
serving as crucial revenue sources for governments. Egypt's vulnerability to oil price
fluctuations has negatively impacted its economy in the past. However, the government has
launched initiatives, investing in sectors such as innovation, technology, and education. If
successful, these efforts could lead to significant economic development and an improvement
in the quality of life for its population.6

3.6 Kuwait

Kuwait, situated in Western Asia, discovered commercially viable oil reserves in 1938, and in
1946, crude oil was first exported. As of 2024, Kuwait's economic situation is characterized
by moderate growth, supported by high oil prices. Besides the oil sector, other contributors to
Kuwait's economic growth include the financial sector, services sector, and industrial sector.
The financial sector is one of the most developed in the Middle East, with a strong presence
of local and international banks. The services sector, encompassing tourism, trade, and
transportation, is growing due to Kuwait's strategic position in the Persian Gulf. The Kuwaiti
government is taking measures to diversify the country's economy and reduce dependence on
oil, including investments in clean energy, education, and healthcare. Overall, Kuwait's
economic situation is positive, with moderate growth and low inflation.7

3.7 Lebanon

Lebanon, located in the Middle East along the Mediterranean Sea, relies heavily on banking
and financial services, traditionally supported by a free-market and competitive economic
system, as well as tourism. The country is currently facing an economic crisis caused by a
combination of factors, including political corruption, economic mismanagement, and the
Syrian civil war. People are struggling to find employment, earn enough to live, and access
basic necessities, leading to increased violence and crime. The Lebanese government has
implemented measures to address the crisis, but these have not had a significant impact.
International support has been provided, but it has not been sufficient to revive the economy.
6
https://en.wikipedia.org/wiki/Egypt
7
https://en.wikipedia.org/wiki/Kuwait
https://www.heritage.org/index/country/kuwait

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The Lebanese economic crisis is one of the most severe in the contemporary world, having a
devastating impact on the Lebanese population with potential long-term consequences for the
country.8

3.8 Libya

Libya is a North African state, and its economic situation has been severely affected by the
civil war that devastated the country since 2011. The Libyan economy is heavily reliant on oil
and gas exports, and the war has led to a drastic reduction in the production and export of
these products. In addition to the civil war, Libya has also faced a global decline in oil prices,
further worsening its economic situation, making it challenging for the government to fund
public services and support the population. However, recent protests have led to the
withdrawal of General Haftar's forces from Tripolitania and the formation of a new national
unity government. Despite this, the situation remains fragile and uncertain, with the new
government facing the challenging tasks of national reconciliation and economic
reconstruction. The success of the government depends on the ability of different Libyan
factions to reach an agreement and the willingness of the international community to provide
support.9

3.9 Saudi Arabia

Saudi Arabia has an oil-based economy with strong government controls over major
economic activities and it is the world's largest oil exporter, exporting 14.5% of the world's
oil in 2021 and plays a leading role in the Organization of the Petroleum Exporting Countries
(OPEC). 10 Currently, Saudi Arabia's economy is changing as a result of reforms being put in
place to reduce reliance on oil, diversify sources of income, and boost competitiveness.
Strong domestic demand, especially from private non-oil investment, contributed to the
economy's non-oil growth. Maintaining the momentum for reform and adhering to sound
macroeconomic policies are necessary to sustain this performance, regardless of changes in
the oil markets.11

8
https://en.wikipedia.org/wiki/Lebanon
9
https://en.wikipedia.org/wiki/Libya
10
https://www.opec.org/opec_web/en/about_us/169.htm
https://www.investopedia.com/articles/company-insights/082316/worlds-top-10-oil-exporters.asp
11
https://www.imf.org/en/News/Articles/2023/09/28/cf-saudi-arabias-economy-grows-as-it-diversifies

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3.10 Turkey

Turkey is an example of a mixed economy that combines characteristics of a market and

command economy, in which there is a growing price sector followed by government
regulation to address economic problems.12 Turkey has a small-scale production of oil from
fields in the southeast of the country, this provides for only a fraction of the country’s needs
and for this reason Turkey is dependent on imported petroleum products from Russia due to
proximity to Russian ports grants Turkey substantial savings on transport costs.13 Even if
Turkey doesn’t have significant revenues deriving from oil, the main sectors in which the
country invests are tourism where in 2022 Turkey ranked 4th in the world in terms of number
of international tourist arrivals, banking and finance, transport in particular air transportation
and manufacturing in the automotive field.14

3.11 Yemen

Yemen is one of the poorest countries in the Middle East and currently is facing one of the
world’s worst humanitarian crises. The conflict has severely damaged the nation and its
citizens' social and economic well-being and further divided the nation into two distinct
economic zones with widening gaps between them. Currently, Yemen's economic situation
deteriorated further due to a blockade on oil exports imposed by Houthi that had a significant
impact on foreign currency liquidity and worsened existing economic challenges.15

3.12 Israel16

Israel is one of the most important nations in the Middle East, due to its history. In this
precise historical period it is one of the most visible nations in the Word due to the war
conflict with Hamas (a political organization that controls Palestine). This conflict is mainly
determined by two factors:

1. The first is the claim for Palestinian statehood in the Gaza Strip and the West Bank.
2. The second is the conflicts over the attribution of the few energy resources scattered
across the territory of these two states.

The strong point of the Israeli economy is the high technology industry, in particular Israel is
an important exporter in the world for exports of defence industry products.

12
https://www.investopedia.com/ask/answers/100314/whats-difference-between-market-economy-and-command
-economy.asp
13
https://www.britannica.com/place/Turkey/Settlement-patterns
14
https://en.wikipedia.org/wiki/Economy_of_the_Middle_East
15
https://www.worldbank.org/en/country/yemen/overview#1
16
https://www.treccani.it/enciclopedia/israele/
https://it.wikipedia.org/wiki/Israele

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Another very important technology sector is diamond cutting: Israel is one of the most
important countries in the world in the trade of cut diamonds.
In the Dead Sea area of ​Eilat almost the entire population is involved in agriculture,
growing: dates, figs, tomatoes, melons and grapes. This sector is very developed thanks to
technological progress, because to solve the drought problems typical of the area,
micro-irrigation and drip irrigation techniques have been developed.
Israel has serious shortages of petroleum and gas. In recent times, Israel has discovered large
offshore fields of natural gas, which have allowed it to become an exporting country and
reduce its energy dependence. Regarding petroleum, Israel is the Middle Eastern state with
the fewest deposits and for this reason it has always depended on foreign supplies, for this
reason it was a very vulnerable country.

3.13 Iraq17

After the proclamation of the republic, at the beginning of the 1980s Iraq could be considered
the Arab country with the greatest development potential, thanks to its huge oil resources,
relatively large population and availability of force. However, every economic development
project and program was canceled by the conflicts that occurred within a few years. In
particular, the consequences of the first Gulf War were very serious, as the country not only
suffered the almost complete destruction of its infrastructure, but was also subject to
international sanctions applied by the ONU for failure to comply with the government of
Baghdad, of the peace agreements.
Regarding the various production activities, despite the growing food needs, agricultural
production is recording a slow but constant decline and the number of livestock animals is
also decreasing, with the exception of sheep. The secondary sector contributes a modest part
to the GDP and employs less than a fifth of the workforce; it is represented by heavy
industries (all state-owned), military production and light industries.
The country's main resource remains oil, whose reserves amount, according to one
estimate, to more than a tenth of the world's oil reserves and are equal to those of Saudi
Arabia; and considering the negligible internal consumption, the majority is exported.

3.14 Jordan18

Jordan is a country in the Middle East that has managed to create stability thanks to alliances
(the main ones with the USA and Saudi Arabia) which have allowed it not to suffer serious
crises following civil wars and conflicts that have occurred for decades in this region.
As for the economy, it is struggling to take off due to the geographical isolation of the
country caused by the conflicts in Iraq and Syria. Furthermore, Jordan needs to import
almost all consumer goods, starting with food, up to the most sophisticated industrial
17
https://www.treccani.it/enciclopedia/iraq/
18
https://www.treccani.it/enciclopedia/giordania/
https://www.wired.it/article/giordania-palestina-israele-hamas-conflitto/

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products. Without significant natural resources, Jordan's most developed sector is in fact
tourism (which however has suffered a sharp decline in recent years due above all to the
instabilities that have characterized the Levant). To balance its balance of payments, the
Jordanian government has therefore traditionally resorted to economic aid from its allies, a
dependence that has become even more chronic in recent years. But the aid flows are no
longer enough to meet the needs of the country, which has had to resort to the support of
international organizations such as the IMF, which in exchange for subsidized loans has
imposed on Jordan an agenda of economic reforms aimed at reducing public spending.
Regarding the current conflict between Israel and the Palestinians, Jordan finds itself in an
awkward position because on the one hand it is pushed by the Palestinian refugees present
in its territory to enter into conflict against Israel, on the other it does not want to attack Israel
because it is an ally of the United States.

4. Economic comparison

4.1 GDP

Analysing economic data based on GDP, Saudi Arabia stands out with an impressive figure
of 1.1 trillion, highlighting its substantial economic ability. Following closely are nations like
the United Arab Emirates and Turkey, boasting GDPs of 507.06 billion and 907.12 billion,
respectively. Qatar, with a GDP of 236.26 billion, also showcases considerable economic
strength. On the other side, countries such as Lebanon, Libya, and Yemen have more modest
GDP figures ranging from 21.61 billion to 48.65 billion.

Saudi Arabia has the highest GDP among Middle Eastern countries primarily due to its vast
oil reserves and the significant role of the petroleum sector in its economy. The country
possesses one of the world's largest proven oil reserves and is a major global oil exporter. The
oil industry has historically been a crucial driver of Saudi Arabia's economic growth,
contributing substantially to government revenues, export earnings, and overall GDP. Oil

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exports and Saudi Arabia's position as a key player in the global energy market have allowed
the country to accumulate substantial wealth. Additionally, Saudi Arabia has undertaken
economic diversification initiatives aimed at reducing reliance on oil and developing other
sectors like tourism, entertainment, and technology. These efforts, coupled with strategic
investments and economic reforms, contribute to the country's economic strength and its
position as the leader in GDP among Middle Eastern nations.

4.2 GDP per capita

The provided data illustrates the evolution of GDP per capita for each Middle Eastern country
from 2007 to 2022. As we can see from the graph, each country reveals a distinct economic
trajectory, showing how the Middle East's economic landscape differs based on factors such
as resource abundance, geopolitical events and national economic policies. Notably, Qatar
stands out with the highest GDP per capita (87,661.5 US dollars), underscoring considerable
economic strength and growing development over the years. Similarly, the United Arab
Emirates and Kuwait demonstrate substantial economic wealth with GDP per capita figures
of 53,708.0 and 41,079.5, respectively. Saudi Arabia, as a populous country, maintains a
noteworthy GDP per capita of 30,146.9, reflecting its economic strength on a per-person
basis. Conversely, Yemen records the lowest GDP per capita, emphasising the economic
challenges faced by the country during these years. In the list of the least wealthiest countries
there are also Iraq and Yemen, both showing fluctuations in GDP per capita indicating
periods of instability or economic downturns.

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4.3 Trade Balance

In economics, the trade balance or net exports, is the difference between the monetary value
of a country's exports and imports in a given period of time. A distinction is sometimes made
between a trade balance for goods and one for services. The trade balance measures the flow
of exports and imports over a given period of time. If a country exports a greater value
than it imports, it has a trade surplus or a positive trade balance, and vice versa, if a country
imports a greater value than it exports, it has a trade deficit or a negative trade balance.
The trade balance reveals whether the country is generating extra resources beyond its local
capacity to create value. As a leading indicator of economic growth potential and an
important part of (GDP).

Balance of trade (BHD

Import Export million)
United Arab 121600
Emirates 0 1506300 290300
Bahrain 11353 14453 3100
Iran 16424 11681 -4743
Iraq 25188,9 84331 59142,1
Israel 7502,5 5472,7 -2029,8
176390
Jordan 2 897921 -865981
Kuwait 2807 6640,6 3833,6
Lebanon 486,84 89,84 -397
Libya 19982,4 39117,7 19135,3
Qatar 9803 26530 16727
Egypt 6379 3233 -3146
Saudi Arabia 73904 104305,6 30401,6
Turkiye 29110 23000 -6110
Yemen 4715,96 23,79 -4692

Table created with data acquired from: https://it.tradingeconomics.com/

Regarding the countries of the Middle East, as can be seen in the table, they present
somewhat different situations.
Among the countries that recorded a surplus in their trade balance in 2021, those that stand
out are:
The United Arab Emirates (surplus of $290,300 million), has been recording trade
surpluses since 2000, mostly due to shipments of oil and natural gas (40% of total exports).
Main imports are: pearls and other precious metals and stones; machinery, and so on. The
United Arab Emirates’ main trading partner is India (14 percent of total exports and 17
percent of imports). Others include: Japan, South Korea, China, United States and Iran.

12
Then there are Iraq, Bahrain, Kuwait, Libya, Qatar and Saudi Arabia, which record
surpluses in their trade balances. They all have oil and natural gas in common as the clearly
predominant component of their exports.

Regarding the trade deficits present in the table, the most significant is that of Jordan
(865,981 million dollars) Jordan's exports rely on the mining and manufacturing sectors.
Jordan's main trading partners are Saudi Arabia, the United States, India, Iraq and China.
Also worth mentioning is Israel, it has been recording trade deficits since 1959 mostly due to
a lack of natural resources. Indeed, Israel's major imports are: oil and other mineral fuels
and uncut diamonds. Main exports are: cut diamonds, pearls and other precious metals and
stones; electrical machinery and equipment, mechanical machinery and appliances and
electronics. Israel´s main trading partner is the United States (28 percent of total exports and
12 percent of imports).

4.4 Oil rents (% of GDP)

The graph presents the percentage of revenues deriving from the oil sector in relation to the
Gross Domestic Product (GDP) of some Middle Eastern countries in the period between 2007
and 2021. 19In general, a trend emerges towards a reduction in oil revenues as a percentage
compared to GDP, starting from the year 2014. This dynamic is influenced by several
factors, including the decrease in oil prices, the diversification of the economies of
oil-exporting countries and a lower dependence of oil-importing countries on imports.
Among Middle Eastern nations, Qatar marked the highest peak in oil revenue as a percentage
of GDP in 2013, reaching 94%. In contrast, Lebanon recorded the lowest value of oil
revenues as a percentage of GDP, with a high of 12% also in 2013. There is a clear

19
https://www.indexmundi.com/facts/indicators/NY.GDP.PETR.RT.ZS/rankings

13
correlation between oil revenues and GDP in the countries considered. Nations with more
substantial oil revenues as a percentage of GDP, such as Qatar and Saudi Arabia, also have
higher GDP. On the contrary, countries with lower oil revenues as a percentage of GDP, such
as Lebanon and Yemen, show a more modest GDP. The graph highlights the importance of
oil revenues for the economies of Middle Eastern countries. However, the trend of decreasing
oil revenues as a percentage of GDP could generate negative impacts on the economic growth
of these nations20.

4.5 Unemployment rate

Source: own work based on data from: https://it.tradingeconomics.com/

The unemployment rate is one of the most important indicators that measure the health of an
economy and it is the percentage of people in the labour force who are unemployed. When
the economy grows and businesses hire more people to satisfy rising demand, unemployment
tends to be cyclical and decline, while when economic activity declines, unemployment
typically rises.21
In this graph we have compared the unemployment rate of the chosen countries. As we can
see, the nation that has the highest unemployment rate is Jordan with 22,30% followed by
Libya with 20,70% and Iraq with 15,55%.
In Jordan this increase in the unemployment rates and, consequently, the deterioration in
working conditions is caused by the multiple interventions in the restructuring of the
Jordanian economy undertaken by the International Monetary Fund. In particular, these
choices have increased its dependence on foreign loans and grants and they have failed to
guarantee the country's economic independence, weakening some productive sectors and the
20
https://data.worldbank.org/indicator/NY.GDP.PETR.RT.ZS?locations=ZQ&view=map

21
https://www.britannica.com/money/unemployment-rate#
https://www.focus-economics.com/economic-indicator/unemployment-rate
/

14
national economy's capacity to create new job opportunities, decreasing every year. This
decline is even more serious among young people and women, with unemployment rates of
48,5% and 30,7%, respectively. Moreover, the cost of living has increased, but wages and
minimum wages have not increased, this has therefore contributed to an increase in the
number of people living in poverty and has encouraged many job seekers from participating
in the national labour market.22
In Libya, the percentage of unemployment has reached the highest value during the last 20
years and it has one of the highest unemployment rates in the world, but this may appear a
little paradoxical considering the nation's high levels of educational achievement, which
include a nearly 99.9% literacy rate for youngsters in Libya between the ages of 15 and 24
and high enrollment rates in postsecondary education.This is a major obstacle to employment
for young people because fewer positions mean more competition for available positions,
which deters many applications. An important cause of this high unemployment is its
dependence on crude oil exportation that causes a lack of diversification in the economy and
limits the creation of job opportunities. 23
On the other side, the country with the lowest unemployment rate in the Middle East and the
world is Qatar with 0,10% and the main cause is that the country has the capacity to absorb
young nationals into public sector jobs. Qatar is guided by the National Vision 2030 that
serves as a roadmap and highlights the importance of having a strong workforce that upholds
a commitment to corporate ethics in addition to being knowledgeable and capable. In
addition, the vision encourages the development of new occupations and the integration of as
many diverse skilled workers into a wide range of jobs as feasible. This rate is led by
different factors: first of all workers are protected by the government's rights and it prioritizes
raising the standard of living for its people by making sure that every member of the working
class has access to a job that is well-suited to their knowledge and abilities and pays well.
Qatar is the country among the Gulf Cooperation Council countries where workers are paid
the most and don't even have to pay taxes, this makes the country even more conducive to
having a career.24
The other states analysed in the graph have a normal level of unemployment, between 3%
and 7%.

22
https://arabtradeunion.org/news/new-agreement-between-jordan-and-the-imf-false-good-news-for-the-jordanian-economy
23
https://www.worldbank.org/en/country/libya/overview
24
https://www.arabnews.com/node/2295186/business-economy
https://qatarofw.com/low-unemployment-rate/?expand_article=1

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4.6 Inflation rate

Source: own work based on data from: https://it.tradingeconomics.com/

Inflation is the rate of increase in prices over a given period of time; while excessive inflation
may indicate an overheated economy, moderate inflation is linked to economic growth. 25
In the graph we have analyzed the inflation rate of the chosen country of the Middle East, and
as we can see very clearly, Lebanon is the country with the highest inflation rate, at 192,30%.
The main cause contributing to Lebanon’s inflationary crisis was the severe depreciation of
the Lebanese pound against the US dollar. In just 4 years (from 2019 to 2023) the currency
devalued by 5.176% and this caused a shock wave in the economy affecting, in particular, the
cost of imports and causing an increase in prices and, consequently, the purchasing power has
eroded.26
Always in the graph we can see that most of the countries have an inflation rate between
3,98% as for Iraq and 1,50% of Saudi Arabia, in particular there is also a country with a
negative inflation rate that is Bahrain with -0,30%. This means that the country is in a
situation of deflation that occurs when prices of goods and services generally decrease,
typically associated with a contraction in the supply of money and credit in the economy. The
softening of Bahrain's inflation rate was mainly due to the contraction of some of the
sub-indices in the general Consumer Price Index. In particular, the Bahrain's Clothing and
Footwear sub-index have seen the largest contraction among the other sub-index at -11,7%. It
is followed by alcoholic and Beverages index, transport and housing and utilities. Bahrain has
one of the lowest projected inflation rates among the Gulf Cooperation Council. In some
cases we can notice that the inflation rate is low yet the cost of living is high: this is the case
of Israel and, according to the OECD, it ranks first as the developed country with the highest
cost of living with prices 38% higher than the average of other members.27

25
https://www.imf.org/en/Publications/fandd/issues/Series/Back-to-Basics/Inflation
26
https://blog.blominvestbank.com/48204/inflation-in-lebanon-during-the-crisis/
27
https://www.investopedia.com/terms/d/deflation.asp#:~:text=Deflation%20is%20a%20general%20decline,of%
20currency%20rises%20over%20time. https://tradingeconomics.com/bahrain/inflation-cpi

16
The Middle East has experienced the most considerable increase in consumer price inflation
worldwide in the past few years, and the Ukraine war has strongly impacted food prices due
to it being a main supplier of grain for the region. In the following years, there are concerns
that the current war in the Middle East could have an impact on the supply of oil and
therefore lead to an impact on global inflation.28

4.7 Public Debt

The graph shows that in 2022 the level of public debt in Middle Eastern countries will be
quite diversified. Kuwait is characterised by the lowest public debt, which corresponds to
2.9% of GDP. This situation can be attributed to the strong dependence of the Kuwaiti
economy on the oil sector, which is used to finance public spending. On the contrary,
Lebanon appears at the top of the ranking with a public debt equal to 151% of GDP, a
consequence of the serious economic crisis that has hit the country in recent years,
determined by the increase in public spending and the release of profit. Other countries with
high levels of public debt include Bahrain (120%), Libya (83%), Egypt (87%) and Turkey
(31.7%). These countries have a combination of factors that contribute to the growth of
public debt, including increased government spending, revenue distribution and asset
buybacks. Overall, the public debt data in 2022 highlights the importance of Middle Eastern
countries taking action to reduce their debt, which is essential to achieving long-term
sustainability of public finances and economic growth.29 30

https://www.mosaico-cem.it/attualita-e-news/israele/israele-e-al-primo-posto-al-mondo-per-il-costo-della-vita-lo
-dice-loecd/
28
https://www.statista.com/topics/11829/inflation-and-cost-of-living-in-mena/#topicOverview
29
https://www.focus-economics.com/economic-indicator/public-debt/
30
https://it.investing.com/rates-bonds/middle-east-government-bonds

17
5. Our Conclusions

GDP per
GDP Oil rents
capita Trade Unemploy Inflation Public
(current (% of
(current balance ment rate rate debt
US$) GDP)
US$)
United
507.06
Arab 53,708.0 290300 15,67% 2,75% 3,28% 38,30%
billion
Emirates
Bahrain 44.38 billion 30,146.9 3100 10,93% 5,50% -0,30% 120,00%
413.49
4,669.6 -4743 18,26% 7,60% 40,20% 34,00%
Iran billion
236.26
87,661.5 16727 15,27% 0,10% 1,65% 46,90%
Qatar billion
476.75
Egypt billion 4,295.4 -3146 2,98% 7.10% 33,70% 87,20%
175.36
Kuwait billion 41,079.5 3833,6 0 2.50% 3,37% 2,90%
23.13
Lebanon billion 4,136.1 -397 0 12,60% 192,30% 151,00%
45.75
Libya billion 6,716.1 19135,3 56,37% 20,70% 1,80% 83,00%
Saudi
Arabia 1.1 trillion 30,447.9 30401,6 23,70% 5% 1,50% 30%
907.12
Turkey billion 10,674.5 -6110 0,10% 9% 64,77% 31,70%
Yemen 21.61 billion 650.3 -4692 4,50% 13,59% 0,77% 68,66%
Israel 525 billion 54930,9 -2029,8 0,01% 3,10% 3,00% 60,70%%
264,18
59142,1
Iraq billion 52937,2 42,79% 15,55% 3,98% 43,30%
48,65
-865981
Jordan billion 4311 0,01% 22,30% 1,64% 89,40%

Throughout the paper we have analysed the economic development of each Middle Eastern
country using a temporal range of 15 years, from 2007 till 2022. A wide temporal range in
economic analysis provides a comprehensive understanding of a country’s long-term trends
and transformations, useful for identifying which country is the most economically stable.
The gathered data indicates that nations such as the United Arab Emirates, Qatar, and Saudi
Arabia have successfully sustained a remarkable degree of economic stability, primarily
attributable to their persistent efforts in economic diversification. Over the years, these
countries have strategically expanded their economic activities beyond traditional sectors,
such as oil and gas, by focusing on initiatives aimed at promoting tourism, real estate,

18
finance, and other non-oil industries. This diversification approach has contributed
significantly to maintain a more balanced and stable economic outlook.
However, to identify the actual potential leader in the region, we have decided to narrow our
focus to the latest available data, specifically that pertaining to the year 2022. The table above
shows the data updated to 2022 for each country in the Middle East, with the exception of
those relating to oil revenues, which relate to the year 2021. Out of the seven economic
indicators considered, we have chosen to place less emphasis on current GDP and inflation
rates, as they provide only a general overview of the country's economic condition and have
a relatively lower impact on our conclusive analysis. For example, relying solely on the
inflation rate for our analysis is insufficient because inflation, while indicative of the overall
price level increase, does not provide a comprehensive understanding of the economic health
or developmental potential of a country. For example, a low inflation rate alone, as observed
in countries like Libya, Israel or Jordan, does not necessarily indicate a high standard of
living if the overall cost of living remains high. For this reason, when choosing the country
with the best performance, we decided to focus only on GDP per capita, trade balance, oil
revenues, unemployment rate and public debt. With these indicators, the identification of the
best performing countries has been easier.
As shown in the table, Qatar is the country with the highest GDP per capita (87,661.5 US
dollars), which suggests a higher standard of living, as there is more economic output
available on average for each individual. Regarding the trade balance, the UAE has emerged
as a leader of the Middle East, showcasing a significant surplus in its trade activities. This
positive trade balance can be attributed to the UAE's economic diversification and oil
exports. The UAE also shows a very good unemployment rate, which stands at around 3%
(considered by economists as the natural rate of unemployment). Moreover, the debt-to-GDP
ratio for the UAE stands at approximately 7.55%, indicating that the country's public debt is a
relatively small proportion of the country's GDP. This suggests a healthy economic condition,
meaning that the country's economic output is sufficient to cover its debt obligations.
After a comprehensive evaluation of the economic data, it becomes evident that the United
Arab Emirates (UAE) stands out as the potential economic leader in the Middle East.
However, Qatar and Saudi Arabia also hold substantial influence in the overall regional
economy. Our analysis highlights in fact that Saudi Arabia boasts the highest GDP, while
Qatar leads in terms of GDP per capita. Despite these noteworthy performances by these
other two countries, the UAE's well-diversified and robust economy positions it as the
primary driving force in the Middle East. This is evidenced by its superior performances in
trade balance, unemployment rate, and public debt, along with favourable figures for GDP
and GDP per capita.

19
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