.Economy of the Muslim World

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By Muhammad Arif

The very first thing you will see if you take a look at Muslim countries is that; “Muslim countries are poor.”

But, it is growing. GDP of OIC (Organization of Islamic Conference) is growing at the rate of 5 percent a year. For example, total GDP of Muslim countries constituted %6.81 of World GPD in 2012 but this number rose to %8.3 in 2013.

There are 57 countries on the World considered to be Muslim countries and all of them are the members of OIC.

The total population of Muslim countries is 1.47 billion and this number constitutes%22.8 of total World population. Total GDP of these countries is $5.7 Trillion, equals to %8.3 of World GDP.

Also, total export of Muslim countries makes up %13.47 of total World export, which is very low considering many of them exporting oil and gas.

Average GDP per capita in Muslim countries is 3.019 USD; which is again, very low.

It is easy to see that even if they constitute almost the quarter of World population; their economic indicators are very poor looking considering that great amount of population.

Muslim countries are classified as;

Low Income Country : 26

Middle Income Country : 25

High Income Country : 6

Top 10 Muslim Countries
country by Population country by GDP USD country GDP per capita USD In thousand
Indonesia 238 Millions Indonesia 1.21 Billion Qatar 122
Pakistan 181 Millions Turkey 1.12 Billion UAE 57
Nigeria 167 Millions Iran 1 Billion  Brunei 51
Bangladesh 153 Millions Pakistan 475 Million Kuwait 48
Egypt  83 Millions Saudi Arabia 446 Million Bahrain 35
Iran 76 Millions  Malaysia 357 Million Saudi Arabia 24
Turkey 75 Millions Bangladesh 330 Million Oman 23
Algeria 37 Millions Egypt 304 Million Turkey 17.5
Morocco 33 Millions Algeria 288 Million Libya 16
Iraq 32 Millions Nigeria 175 Million Gabon 15

One of the important area of Muslim world is Mena. The Mena region is defined to cover the economies of the Arab League (Algeria, Bahrain, Djibouti, Egypt, Iraq, Jordan, Kuwait, Lebanon, Libya, Mauritania, Morocco, Oman, Palestine, Qatar, Saudi Arabia, Somalia, Sudan, Syria, Tunisia, the UAE, and Yemen) and Iran and Israel. The region possesses abundant natural resources, and on average a reasonable standard of living. However, individual countries differ widely in their natural resources, economic and geographical size, population, and standard of living.

The economic preconditions for integration in Mena (Middle East and North Africa) are improving for an increasing number of countries. The key to increasing integration now lies at country level. Some Mena countries have made considerable headway in stabilizing, reforming, and opening up their economiesDespite such achievements, the Arab countries as a group still operate below their potentials.

Successful integration efforts are more likely to come first among sub-sets of countries in the region, rather than in the region as a whole. As more countries in the Mena region progress in deregulating and liberalizing their economies, cross-links among these groupings will strengthen economic ties within Mena as a whole.

On the economic front, Mena is remarkable for its lack of integration—The scale of intra-regional merchandise trade is limited, amounting to only some 7-8 per cent of total exports and imports; this compares to over 60 per cent in the EU, over 30 per cent in Asia and around 20 per cent in the Western Hemisphere Capital transactions have also been relatively limited, with the exception of large official flows from the oil-exporting economies to other Arab countries, particularly after the 1973–4 and 1979–80 oil-price increases. Tourism and other non-factor service-flow patterns have been quite segmented. Some countries—primarily Egypt, Jordan, Lebanon, Morocco and Tunisia—have received substantial tourist flows from within Mena. For others, particularly Israel, regional tourism has been inhibited by political and security considerations. Labor flows have been important, taking the form of (i) flows from non-oil economies to the GCC economies, and (ii) Palestinian labor working in Israel.

Irananother country’s economy is a mixture of central planning, state ownership of oil and other large enterprises, village agriculture, and small-scale private trading and service ventures. Iran is ranked as an upper-middle income economy by the World Bank. In the early 21st century the service sector contributed the largest percentage of the GDP, followed by industry (mining and manufacturing) and agriculture. Economicsanctions against Iran, such as the embargo against Iranian crude oil, have affected the economy. Sanctions have led to a steep fall in the value of the rial, and as of April 2013 one US dollar is worth 36,000 rial, compared with 16,000 in early 2012. The government doesn’t recognize trade unions other than the Islamic Labor Councils, which are subject to the approval of employers and the security services. The minimum wage in June 2013 was 487 million rials a month (US$ 134). Unemployment has remained above 10% since 1997, and the unemployment rate for women is almost double that of the men.In 2006, about 45% of the government’s budget came from oil and natural gas revenues, and 31% came from taxes and fees.

Turkey another country has mostly adhered to a quasi-statist approach with strict government planning of the budget and government-imposed limitations over private sector participation, foreign trade, flow of foreign currency, and foreign direct investment.

Turkey has gradually opened up its markets through economic reforms by reducing government controls on foreign trade and investment and the privatization of publicly owned industries, and the liberalization of many sectors to private and foreign participation has continued amid political debate. The public debt to GDP ratio peaked at 75.9% during the recession of 2001, falling to an estimated 26.9% by 2013.

Pakistan another Muslim country is a rapidly developing country and is one of the Next Eleven, the eleven countries that, along with the BRICs, have a high potential to become the world’s largest economies in the 21st century. However, after decades of war and social instability, as of 2013, serious deficiencies in basic services such as railway transportation and electric power generation had developed . It is South Asia’s second largest economy, representing about 15 percent of regional GDP.

Goldman Sachs economist expects that by 2050, Pakistan would become the 18th largest economy in the world with a GDP of US$ 3.33 trillion. The foundation for sustainable and equitable growth is yet to be developed. On January 2014, a survey conducted by the Japan External Trade Organization placed Pakistan just behind Taiwan in terms of business generated by Japanese companies. Pakistan’s data was generated from 27 Japanese firms doing business here. The results found that 74.1% of the Japanese companies estimated operating profit in 2013

Pakistan is one of the largest producers of natural commodities, and its labor market is the 10th largest in the world. The 7 million strong Pakistani diaspora, contributed US$11.2 billion to the economy in FY2011. According to the World Trade Organization Pakistan’s share of overall world exports is declining; it contributed only 0.128% in 2007. The trade deficit in the fiscal year 2010–11 was US$11.217 billion.

Bangladesh is a developing nation. However, the poverty rate has declined by 25% since 1990, and per-capita GDP has doubled from 1975 levels. Dhaka and Chittagong, the country’s two largest cities, as well as other urban centers, have been the driving force behind much of the recent growth. Goldman Sachs named it one of the “Eleven”. Bangladesh gradually decreased its dependency on foreign grants and loans from 85% (In 1988) to 2% (In 2010) for its annual development budget. Its per capita income as of 2013 is US$1,044 compared to the world average of $8,985. Bangladesh has seen a dramatic increase in foreign direct investment. In order to enhance economic growth, the government set up several export processing zones to attract foreign investment. These are managed by the Authority. The insufficient power supply constitutes an obstacle to growth.

Malaysia is a relatively open state-oriented and newly industrializedmarket economy. The state plays a significant but declining role in guiding economic activity through macroeconomic plans. Malaysia has had one of the best economic records in Asia, with GDP growing an average 6.5 per cent annually .The economy recovered from the 1997 Asian financial crisis earlier than neighboring countries did, and has since recovered to the levels of the pre-crisis era with a GDP per capita of $14,800. Economic inequalities exist between different ethnic groups.

International trade, facilitated by the shipping route in adjacent Strait of Malacca, and manufacturing are the key sectors. Malaysia is an exporter of natural and agricultural resources, and petroleum is a major export. Malaysia has once been the largest producer of tin, rubber and palm oil in the world. Manufacturing has a large influence in the country’s economy, although Malaysia’s economic structure has been moving away from it. Malaysia remains one of the world’s largest producers of palm oil.

Indonesia has a mixed economy in which both the private sector and government play significant roles. The country is the largest economy in Southeast Asia and a member of ASEAN. According to World Trade Organization data, Indonesia was the 27th biggest exporting country in the world in 2010, moving up three places from a year before. Indonesia’s main export markets (2009) are Japan (17.28%), Singapore (11.29%), the United States (10.81%), and China (7.62%). The major suppliers of imports to Indonesia are Singapore (24.96%), China (12.52%), and Japan (8.92%).. The country has extensive natural resources, including crude oil, natural gas, tin, copper, and gold. Indonesia’s major imports include machinery and equipment, chemicals, fuels, and foodstuffs. And the country’s major export commodities include oil and gas, electrical appliances, plywood, rubber, and textiles.The tourism sector contributes to around US$9 billion of foreign exchange in 2012.

Brunei is a small, wealthy economy and is a mixture of foreign and domestic entrepreneurship, government regulation, welfare measures, and village tradition. Crude oil and natural gas production account for about 90% of its GDP. About 167,000 barrels (26,600 m3) of oil are produced every day, making Brunei the fourth-largest producer of oil in Southeast Asia. It also produces approximately 25.3 million cubic meters (890×10^6 cu ft.) of liquefied natural gas per day, making Brunei the ninth-largest exporter of the substance in the world.

 

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