A Study on the Potential Growth Rate and GDP Gap of Arab Countries

Abstract

The purpose of this study is to estimate the potential growth rates of Arab countries from 1992 to 2019 based on the production function approach, and to analyze the GDP gap of each country. According to the estimates, the potential growth rates of all three selected Arab countries entered an upward phase in the 2000s, however, turned downward phase after the global financial crisis in the late 2000s and a series of geopolitical instabilities in the early 2010s. In addition, it was estimated that in Egypt and Saudi Arabia, the GDP gap was frequent and significantly large, while in Jordan, potential growth rates and real growth rates, in general, showed similar trends.