The International Monetary Fund (IMF) said that it foresees a 4 percent GDP for the Middle East and North Africa (MENA) in 2021 and 3.7 percent in 2022.
In 2020 the projections were at -3.4 percent and 3.1 percent in IMF’s October regional outlook forecast for 2021.
According to IMF’s April regional report released yesterday, MENA importers in 2021 will record a GDP of 2.3 percent and 4.5 percent in 2021 a rise from -0.8 percent in 2020.
Speaking during the sidelines of the World Bank’s and IMF’s meeting, the Director of the Middle East and Central Asia Department, Jihad Azour said that “Our region reacted swiftly and with resolve, implementing measures that helped contain the pandemic spread and cushion the economic blow. Now, a year later, the novel coronavirus (COVID-19) vaccine and favorable external environment, offer hope that the end of the crisis is within sight.”
He said that the path to recovery in 2021 is expected to be long and divergent with many countries falling behind because vaccine rollout varied across the region. Some countries are in the advanced stage such as the Gulf Cooperation Council (GCC) while others are still behind and widespread vaccination is not expected until 2022 to 2023.
With the ongoing pandemic, vaccination and availability of policy space, which all have an important effect on each country’s forecast, the outlook remains highly uncertain Azour added.
Azour also noted that the economies in the region heavily rely on sectors such as tourism which have been hit hard by the pandemic and will recover slowly. He also said that countries affected by conflict and especially those with low incomes will have a difficult path ahead given the ongoing instability and their limit in accessing the vaccine.
“Lastly, countries that did not implement strong policy support in the wake of the pandemic, are now further behind on the road to recovery. Meanwhile, the rise of oil prices helping the fiscal and external balances of oil exporters and supporting the recovery of the non-oil sector, although OPEC plus cuts are limiting their impact on overall growth.” Said Azour.
He said that the pandemic has exposed the economic challenges in the MENA region and the much work needed to be done to protect the most vulnerable and to create jobs as well as reduce poverty and provide equal opportunities to young people and women.
Speeding vaccinations by 2022 could boost GDP growth by one percent, Azour said adding that regional and international cooperation will be critical in ensuring that low-income countries are not left behind.
Debt management strategy and developing medium-term fiscal frameworks will help reduce debt burden while providing maximum support to growth.
“Finally, to build forward better, countries will need to start addressing deep-seated transformation challenges, such as persistent unemployment, inequality, and climate change, capitalizing on lessons learned during the pandemic and leveraging digitalization,” he said, “This will help prepare the economies for the future, and improve the efficiency of social safety nets, health and education, which are so critical to reducing poverty and inequality.”
In its report also, IMF foresees a rebound in Egypt’s economy in the 2021/2022 fiscal year(FY) due to the rollout of the covid vaccine.
Taline Koranchelian, Deputy Director at the IMF’s Middle East and Central Asia Department also noted that public investments will also drive the rebound.
The report also noted that Egypt’s economy will continue growing FY 2021/2022 despite recording 2.5 percent down from 2.8 percent from its October’s world economic outlook projections.
According to the report, Egypt’s economy in FY 2021/2022 will grow to 5.7 percent and to 5.8 in FY 2025/2026 compared to 3.6 percent growth recorded in FY 2019/21.
In 2020 IMF supported the MENA region with over $17 billion in funding, it also offered capacity development and technical assistance to the region.
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