DUBAI, United Arab Emirates – The International Monetary Fund has increased its economic outlook for growth in the Middle East and North Africa by 1.2 percentage points in 2020 to an overall contraction of 3.8%, showing that despite any progress since the coronavirus pandemic began was still a cruel year.
The recovery will be varied and largely based on countries’ investments and vaccine distribution strategies. But the Gulf states in particular were one bright spot – the lifting of Qatar’s political and economic blockade by other GCC countries, IMF director Jihad Azour told CNBC on Wednesday in the Middle East and Central Asia.
While the full details of the reconciliation agreement between blocking states – Saudi Arabia, the United Arab Emirates, Bahrain and Egypt – and Qatar are not publicly known, Azour told CNBC’s Hadley Gamble that ‘any improvement in terms of the opening borders, improving the economic relationship will offer an additional potential for growth. ‘
“This will obviously improve trade, especially at prices in goods and services,” he added. “For example, it will reduce the cost of purchasing for Qatar, it will also help the airlines by lowering the cost. Therefore, there is always benefit from improving economic relations, especially as we are now entering a new phase in terms of globalization. . ”
A security guard is monitoring the temperature of the man who arrives at a shopping mall in the Saudi capital Riyadh on May 4, 2020, while the shopping malls reopen after authorities began a partial lifting of the closure.
Fayez Nureldine | AFP | Getty Images
The news, which puts an end to a dramatic 3-year dispute, is also likely to bode well for investment, Azour said. “I think it’s good for business in the short term, but also in the long term, to provide more space for investors. And that’s something that will be appreciated.”
Qatar’s financial center alone aims to attract $ 20 billion in foreign direct investment inflows by 2022 as a result of the approach, CNBC reported in January. Airlines, manufacturing and food production are among the other areas that are likely to get big boost.
Vaccination strategy will be crucial
In the wider region, the improvement in the outlook was based on stronger-than-expected performance among oil exporters, as the absence of the second wave in some countries increased non-oil activity, and the impact of the first wave was lower. was as expected, ”the IMF wrote in its local outlook report.
The recovery prospects are rather volatile and will depend heavily on governments’ vaccination plans. It ranges “from countries with very well-diversified vaccine contracts and production capacity to fragile and conflict-ridden states that are largely dependent on COVAX,” Azour wrote in its report. COVAX is a global scheme led by an international vaccine alliance and the WHO, established to ensure equitable access to vaccines for every country in the world.
The differences are obvious: wealthy Middle Eastern states, such as the UAE and Israel, are on track to vaccinate half of their population by March, boasting the fastest vaccination campaigns in the world, while poorer countries and territories such as Palestine mainly dependent on COVAX. and have not yet received vaccinations for their general population.
“Our analysis shows that countries that have invested heavily in acceleration and accelerate vaccination will make the recovery move faster,” Azour said.
“Countries that applied stronger fiscal responses to the Covid-19 crisis are also expected to have a stronger recovery in 2021, aided by a shallower trough in 2020,” the IMF report wrote.
It added that although there are now different vaccines in the market, the battle is far from over.
“While vaccines shine a light of hope, the road will be long and winding,” the report said. “In the short term, the top priority remains to ensure that healthcare systems have adequate resources, including the purchase and distribution of vaccines.”