Some MENA economies see turnaround, others may take time to recover: IMF

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  • Oil-producing countries will post positive growth, while economies dependent on tourism will struggle to stay afloat

  •  IMF report says curbing the coronavirus and rolling out vaccination could uplift the economies

The International Monetary Fund (IMF) has forecast a turnaround for some economies in the Middle East and North Africa (MENA) region in its latest report “Regional Economic Outlook: Arising from the Pandemic: Building Forward Better.”

However,  the report goes on to caution that the outlook for most economies of MENA would be influenced by many factors. “The outlook will vary significantly across countries, depending on the pandemic’s path, vaccine rollouts, underlying fragilities, exposure to tourism and contact-intensive sectors, and policy space and actions.”

Speaking on CNBC Jihad Azour, director of the IMF’s Middle East and Central Asia department said that recovery will be “divergent between countries and uneven between different parts of the population.” Key variables include the extent of vaccine rollout, recovery of tourism and government policies to promote recovery and growth.

The numbers range from Oman’s growth at 7.2% and the West Bank at 6.9%, to Lebanon receiving no projection and Sudan at the bottom of the range with a 1.13% real GDP growth rate. Yet, so much can impact those numbers, from Oman’s heavy debt burden to continuing turmoil in intra-Palestinian and Palestinian-Israeli affairs.

The good news is that real GDP is expected to grow by 4% in 2021, up from the projection last October of 3.2%. Much of the lift has come from two factors: a more optimistic trend line for the oil producers and the rate of vaccinations in countries that will promote business recovery.

In oil-producing countries, real GDP is projected to increase from 2.7% in 2021 to 3.8% in 2022, with a 5.8% rise in the region’s sector driven by Libya’s return to global markets. In countries with no oil though growth rate is projected to reduce from 2.7% to 2.3%. The countries like Jordan, Morocco and Tunisia, which are highly dependent on tourism, have been downgraded in light of continuing COVID-19 issues such as vaccination rollout and coverage.

The numbers for Oman look positive. Its economy is expected to grow at more than seven percent, while the West Bank is projected to grow nearly seven percent. But the report warns that the buoyancy in the economies of countries like Oman can be affected by their heavy debt burden and continuing turmoil in the relationship between Palestine and Israel.

The report further adds, “2021 will be the year of policies that continue saving lives and livelihoods and promote recovery, while balancing the need for debt sustainability and financial resilience. At the same time, policymakers must not lose sight of the transformational challenges to build forward better and accelerate the creation of more inclusive, resilient, sustainable, and green economies. Regional and international cooperation will be key complements to strong domestic policies.”

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