The International Monetary Fund (IMF) has revised the Middle East and North Africa (MENA) region’s growth by 1.2 percent to an overall contraction of 3.8 percent in 2020, before rebounding to 3.3 percent in 2021 and jumping to 4.2 percent in 2022.
The figures came within the IMF’s update on the Middle East and Central Asia (MCD) region’s economic growth, released on Thursday, through a blog drafted by Jihad Azour, the director of the IMF’s Middle East and Central Asia Department.
For MENA’s oil importers group, where Egypt is classified, the IMF estimated a 0.7 decline in its growth in 2020, while expecting it to bounce back in 2021 to 2.6 percent, reaching 4.6 percent in 2022.
In October, the IMF expected the MENA region to attain an economic growth of 2.2 percent in 2021.
The IMF has not announced its projections for each country in the region.
The IMF attributed the region’s growth revision largely to a stronger-than-expected performance among oil exporters, as the absence of the second wave in some countries boosted non-oil activity.
It also said that the impact of the pandemic’s first wave was lower than expected.
For 2021’s projections, the IMF said that they are relative to October’s, but reflect significant differences among countries.
“Countries with diversified vaccine providers and production have more favourable or broadly unchanged forecasts, while the outlook for those with more limited access to vaccines and those harder hit by the second wave looks weaker”, said the IMF.
Additionally, countries that adopted stronger fiscal and monetary policies in response to the pandemic are also expected to have a stronger recovery, supported by a shallower trough in 2020, according to the IMF.
It also added that recovery in the MCD region’s emerging markets is projected to lag behind their peers’ elsewhere, with most countries not recouping 2019 GDP levels until 2022.
Fragile and conflict-affected states will be especially battered, with 2021 GDP levels projected at 6 percent lower than in 2019, according to the IMF.
Touching upon the region’s recovery from the pandemic, the IMF said that risks remain high as renewed infections could delay recovery in the absence of vaccines and policy space.
“Recent mutations of the virus could pose additional challenges. Further spending needs could exacerbate debt sustainability concerns in several countries, especially if a sharp rise in global risk premia or higher-than-expected increase in global interest rates tighten financing conditions and raise roll-over risks.”
It added that delays in or mismanagement of vaccine distribution along with the higher vulnerabilities caused by the pandemic could lead to social unrest.
“Access to the COVID-19 vaccine will play a critical role in the region’s recovery ahead,” said the IMF.
In October, the IMF expected Egypt to be the only country in the Middle East to witness positive real GDP growth, expected at 3.5 percent, in 2020, projecting other countries to see negative growth in 2020, with a rebound to 2.2 percent growth in 2021.
It also said that weaknesses in Egypt’s growth during the second half of 2020 are reflected in lower projections for FY2020/2021 (which started as of July 2020), as the IMF expected real GDP growth to drop to 2.8 percent.
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