Post-Crisis Economic Recovery in OIC Member States: Is It Sustainable?

Due to the global financial crisis of 2008, the economic performance of OIC member states was adversely affected in 2009 in terms of decelerating economic growth and deteriorating current account balances. However, in the post-crisis period, the OIC member states have recovered rapidly. In the medium-term scenario (2011–2015), the economic recovery in OIC states is projected to be robust but real GDP growth and is likely to remain below the level achieved in the pre-crisis period (2000–2007). Among OIC regions, SSA and Asia are projected to achieve pre-crisis growth while MENA and CIT will take a relatively longer period to reach the pre-crisis level of growth. With regard to individual OIC member countries, it appears that 31 out of 57 OIC states are projected to achieve their pre-crisis growth during the medium-term period. Current account balances of the OIC member states were also hit hard by the global economic crisis. Recovery in the current account balance of OIC states (as a group) remained modest in 2010. In the medium-term scenario, with the expected revival of the global economy and increase in oil and non-oil commodities prices, current account surplus of OIC member states is projected to improve, but it will not be able to achieve the pre-crisis level by 2015. In the medium-term, among four regions, current account balances of SSA and CIT are projected to improve much faster and they are expected to remain significantly above the pre-crisis levels while MENA and Asia will not be able to achieve the pre-crisis level of current account surpluses by 2015. Due to excess capacity and slow economic recovery, the inflationary pressure is expected to remain moderate in OIC states in the medium-term. However, the recent rise in food prices is a source of concern, which is expected to build inflationary pressures in the coming years.