COVID-19 is the third major crisis that the Arab world has faced over the past decade, and the second wave of the pandemic, if it starts, will be the fourth crisis the region will face, said the vice president for studies at the Carnegie Endowment for International Peace, Marwan Muasher, at a virtual panel on Thursday.
The panel was held by Carnegie Middle East Centre in collaboration with the International Monetary Fund (IMF), the London School for Economics and Political Science, and Abu Dhabi Commercial Bank to discuss the recent IMF’s update to its Middle East and Central Asia (MCD) Economic Outlook report.
Muasher said that Arab countries have to work on five pillars to recover successfully from the ongoing crisis and to perform better over the long run, including drafting a new social contract, adopting different model of economic activity based on productivity, dealing with the increasing population as a potential not a crisis, heading to a true Arab integration economy, and adopting inclusion in all sectors.
He also said that the trade between Arab countries represents only 7 percent of their total trade with other countries.
Chief economist at the Abu Dhabi Commercial Bank, Monica Malik, said that the region has been severely hit by the dual shocks of the COVID-19 crisis and the volatile global oil prices, and she expects that oil prices will touch $50/barrel by the end of 2020 or the beginning of 2021.
She added that reductions in remittances and in foreign indirect investment into the region are key challenges, and countries should adopt policies that foster economic resilience and depth.
Director of the London School of Economics and Political Science, Minouche Shafik, said that the region must move toward a more flexible labour market that allows the informal sector to get access to fair finance resources and safer work conditions.
Jihad Azour, the director of the IMF's Middle East and Central Asia Department, said that the region is facing a significant challenge to avoid recession and to recover from the pandemic and its severe consequences.
Azour added that the expected increase in the region’s debt to 95 percent of GDP will hamper countries’ efforts to recover, and that the decrease in remittances will also be a problem, as they constitute 50 percent of the region’s GDP.