ROME - Arab bankers painted a sobering picture of the economic results of political upheaval in their region at a conference in Rome, saying tourism has plunged and capital flight is on the rise.

Capital flight is running into the hundreds of millions of dollars per week and budget stability is under pressure as governments are forced to increase subsidies and salaries to keep social stability, they said.

But participants at the International Arab Banking Summit held last week said they were hopeful in the long-term as long as the region's leaders move quickly to enact economic reforms that will help small businesses, boost trade and create jobs.

"These countries have significant potential" and the revolutions in the region will ultimately "show the benefits of democratic change," Adnan Ahmad Yousif, chairperson of the Lebanon-based Union of Arab Banks, told the meeting. He warned however that there will be short-term economic costs to pay for the upheaval in the Middle East and North Africa (Mena) region.

"There are clear challenges... Inflation is up and unemployment has risen because of the revolts. It could reach 12% next year," he said.

A wave of protests in Tunisia earlier this year led to the ouster of president Zine El Abidine Ben Ali on January 14 and set in motion a dramatic popular upheaval in autocratic regimes across the Arab world.

Hosni Mubarak was forced out of power in Egypt in February.

Western countries and international financial institutions have promised multi-billion dollar aid programmes to help new governments in the region, with European states calling for a new economic partnership with North Africa.

But economic turbulence has persisted, particularly as the uprisings in Bahrain, Libya, Syria and Yemen have been violently repressed.

Tens of thousand of young Tunisians have also fled the country in the wake of the revolution in the hope of finding a better life in Europe.

Joseph Torbey, head of the World Union of Arab Bankers, said: "We need an economic framework for sustainable and equitable growth... bridging the gap between rich and poor and empowering the middle class." "Stability is the name of the game."

Shamshad Akhtar, a senior World Bank official for the region, said: "The future of Mena is very promising but it depends on how effectively the region can unleash its resources including social and human capital."