Djavad Salehi-Isfahani on the Price of Oil and the Youth Employment Challenge

Djavad Salehi-Isfahani, Nonresident Guest Scholar with the Middle East Youth Initiative, is following the effects of the global economic slowdown on the Middle East’s oil-exporting economies. He argues that both “spenders” like Iran and “savers” like Saudi Arabia and the United Arab Emirates will need to implement fiscal adjustments. However, while the savers may be able to prolong the adjustments due to the accumulation of foreign exchange reserves, the spenders do not have this luxury. In fact, Iran will face both an external trade deficit and a shortfall in the government budget. Salehi-Isfahani recently presented these ideas in a guest seminar series on March 12 at the International Monetary Fund (IMF)’s Middle East and Central Asia department.

In an interview with 6 News, Salehi-Isfahani notes that there may be a silver lining to the crisis for domestic industries in some countries which had previously been flushed out by the oil boom: “if the economies are flexible, then people can switch jobs and go work in these new industries ... But if the economies are very rigid, then that may not happen in the short run: all you will see will be declines in employment and real wages.”

Djavad Salehi-Isfahani on 6 News >>