The International Monetary Fund has revised upwards its growth forecast for the Middle East and North Africa as countries recover from the coronavirus crisis that began in 2020.
Real GDP in the MENA region is now expected to grow by 4% in 2021, compared to the fund’s forecast in October of 3.2%.
However, the outlook will vary considerably in countries, depending on factors such as the impact of vaccines, exposure to tourism and policies put in place, the IMF said in its latest local economic report published on Sunday.
(The) vaccine is a major variable this year, and the acceleration of vaccination could contribute to almost one percent of GDP in 2022.
Jihad Azour
IMF Director Middle East and Central Asia
Jihad Azour, director of the IMF’s Middle East and Central Asia department, said the recovery would be “diverse between countries and unequal between different sections of the population.”
He told CNBC’s Hadley Gamble that the growth will be driven primarily by oil exporting countries that will benefit from the acceleration of vaccination programs and the relative strength in oil prices.
Vaccines an ‘important variable’
Azour said the ability of each country to recover by 2021 varies greatly.
“(The) vaccine is a major variable this year, and the acceleration of vaccination could contribute to nearly one percent of GDP in 2022,” he said.
Some countries in the region – such as the states of the Gulf Cooperation Council, Kazakhstan and Morocco – started vaccinations early and should be able to vaccinate a significant part of their population by 2021, the IMF said.
Other countries, including Afghanistan, Egypt, Iran, Iraq and Lebanon, have been classified as ‘slow inoculators’ that are likely to vaccinate a large part of their population by mid-2022.
Copper wearing protective masks walks on Wednesday 27 January 2021 near the Dubai Mall and the Burj Khalifa skyscraper in Dubai, United Arab Emirates.
Christopher Pike | Bloomberg | Getty Images
The last group – the “late inoculators” – are not expected to get a full vaccination until 2023, according to the report.
It added that early vaccination is expected to reach GDP levels of 2019 in 2022, but countries in the two slower categories will recover to pre-pandemic levels between 2022 and 2023.
Look ahead
Azour said innovative policies have helped accelerate the recovery, but it is “very important to build better going forward.”
This could include measures to improve the economy, attract investment, increase regional cooperation and address the scars of the Covid crisis.
“All of these elements are silver liners that can help accelerate the recovery and bring the region’s economy to the level of growth that existed before the Covid-19 shock,” he said.