BEIRUT: Arab countries that experienced drastic political changes need economic and financial support to weather the transition period to democracy, Economy Minister Mohammad Safadi said Friday at the 5th Annual Arab Banking conference in Beirut.

“Countries in turmoil need a full-blown financial and economic support on their way to growth and during the transition period to preserve stability and avoid falling prey to chaos,” Safadi told participants at the forum on its second and final day.

Safadi said Arab states suffered weakness in the productive sector, which slows growth and increases unemployment rates.

A solution to such crises requires large investments in the productive sector, according to Safadi.

“This requires a skilled and experienced labor force despite the fact that the educational systems in the Arab world have failed to graduate a qualified labor force,” Safadi added.

If oil revenues are excluded, Safadi said, the size of the economy of Arab states combined wouldn’t equal the economy of one European-Mediterranean state.

“To illustrate this fact, statistics say that unemployment rates in Arab countries exceeded 16 percent according to the Arab Labor Organization,” Safadi said.

Other speakers saw an opportunity to enlarge the size of the Arab economies in the aftermath of the Arab revolutions.

“Despite the current gloomy economic situation, the Arab world could benefit from change toward democracy to ameliorate free market systems,” secretary-general of the Union of Arab Banks Imad Amin Shehab said during one of the forum’s sessions on the economic future of the Arab world.

Speaking at an afternoon session on Mechanism and Opportunities for the Return of Arab and Foreign Investments to the Region, Shehab said the Arab world should capitalize on the spread of democracy to boost its productive and investment sectors.

The recent popular uprisings and political crises that swept the region triggered a drop in Arab GDP growth from 4.84 percent in 2010 to 3.76 percent in 2011.

“Although it is too early to predict the time needed for states that witnessed revolutions to restore stability, the developments will unveil many investment opportunities, particularly if attempts to limit corruption and financial squandering succeed,” Shehab said.

While Gulf countries are expected to grow as oil-producing states benefit from a rise in prices due to political and economic uncertainty, most countries in turmoil will see a decrease in investments by the private sector.

Egypt lost private investments worth $16 billion in early 2011, the Institute of International Finance said last June.

The IIF said foreigners withdrew around $16 billion in private capital from Egypt this year in the wake of the political turmoil that ended with the ouster of ex-President Hosni Mubarak.

Shehab said Arab banking sources estimated lost investment opportunities in four Arab countries comprising Egypt, Syria, Tunisia and Jordan to a total of $43 billion.

The estimated loss of $43 billion is divided between $9 billion in lost banking deposits, $17 billion in lost tourism revenues and $11 billion lost in foreign direct investments, according to Shehab.

Head of the Association of Lebanese Banks Joseph Torbey said Thursday foreign investments inflow to the region for 2011 decreased by about 83 percent from more than $20 billion to about $4.8 billion.

“The role of Arab Banks in Accommodating the Change” was the subject of discussions at an earlier session in the day.

BLOM Chairman Saad Azhari said Arab banks would cope with change in the Arab world by adopting certain procedures that would safeguard its assets and its mounting financial and developmental impact on the economy.

Azhari said the Arab banking sector, which comprises 430 institutions manages around $2.5 trillion in assets and more than $1.3 trillion in deposits with a capital base of $270 billion.

In Lebanon, the size of Lebanon’s banking sector amounts to triple that of the Lebanese economy with a growth rate of 7 percent in 2011, Prime Minister Najib Mikati said Thursday.

Azhari added that banks could play an important role in the financing of small to medium enterprises while seeking to reform laws regulating their work.

“Banks could play a role to develop reform programs by making the private sector the main driving engine of Arab economies with what it entails in the separation between politics and the economy as much as possible.”