MENA REGION AMID THE GLOBAL FINANCIAL CRISIS 2007-2008: CHALLENGES AND RECOVERY

Abstract

This paper explores the impact of the 2007–2008 Global Financial Crisis (GFC) on selected MENA economies, focusing on the contrasting experiences of oil-exporting and oil-importing countries and the policy measures they adopted to mitigate economic and financial disruptions. Oil-exporting GCC countries, benefiting from substantial fiscal and financial buffers, implemented large-scale liquidity support, deposit guarantees, and expansive fiscal measures to stabilize their banking systems and maintain economic growth, despite sharp declines in oil prices and asset values. Non-GCC oil exporters, such as Algeria, relied on targeted public investment programs and fiscal interventions to support key sectors, although their smaller, state-dominated banking systems limited broader credit expansion. Energy-importing countries—including Egypt, Jordan, Lebanon, Morocco, and Tunisia—faced minimal direct financial-sector shocks due to limited exposure to U.S. subprime assets but were strongly affected by declines in trade, remittances, tourism, and FDI. In response, these governments pursued countercyclical fiscal and monetary policies, infrastructure and job-creation programs, and targeted support for key sectors to sustain domestic demand and employment. Overall, the region demonstrated resilience through prudent fiscal management, conservative banking practices, and timely policy interventions, while structural vulnerabilities—such as dependence on commodity exports and limited financial market integration—highlight the need for ongoing economic diversification and strengthened financial and social safeguards.