Vol. 5 No. 2 (2022): Pakistan Journal of International Affairs


Published 2022-06-29


The Muslim World's economic situation started to deteriorate in the 2010s due to a number of factors, including rising oil and other commodity prices, increasing domestic political instability, continuous intra-regional wars, stagnating economic and governance changes, and the COVID-19 epidemic. Although real GDP growth had already slowed after the 2008- 2009 financial crisis, the COVID-19 shock caused it to turn negative in 2022. Even in oil-exporting countries, fiscal balances have worsened, and state debt has increased significantly. Long-term socio-economic and institutional issues include high unemployment (particularly among young people), inadequate education, low female labour-market participation, costly and ineffective public sectors, high energy subsidies, excessive military and security spending, and trade protectionism. These problems can't be solved without extensive, long-term reform programmes. The European Union is one of the two greatest sources of FDI and a major assistance provider to the Muslim World, behind only the Muslim World itself. Given the region's critical importance to the EU's security and stability, the EU's participation in conflict resolution and in helping economic and political growth in the Muslim World area is now insufficient and should be increased. The European Union should revise and improve the free trade rules of the association agreements it has already signed with the nations of the Eastern and Southern Mediterranean and South Asia. Afghanistan, Turkey, Tunisia, Pakistan, and Saudi Arabia are among the Muslim World nations that are examined in detail in this research on the financial crisis.