CAIRO (AP) — The coronavirus pandemic and a collapse in oil prices have affected all aspects of the Middle East and North Africa, with the region’s economies projected to contract by 5.2% in 2020, the World Bank said Monday.
The current projection is 4.1% below the forecast in April, and 7.8% worse than that of October 2019, according to the World Bank’s latest regional economic update.
The numbers reflect an increasingly pessimistic outlook for the region as a result of the coronavirus pandemic and a collapse in oil prices, the report said.
“The MENA region was already lagging behind economically before the COVID-19 pandemic struck. Six months into it, we can see — with stark clarity— the severity of the devastation on lives, livelihoods, and region-wide prosperity,” said Ferid Belhaj, World Bank vice president for MENA.
The outlook for the region’s account and fiscal balances also deteriorated sharply, with the 2020 forecast at minus 4.8% and minus 10.1% of GDP respectively, much worse than the forecasts in October 2019, the World Bank said.
The region’s public debt is projected to rise significantly in the next few years, from about 45% of GDP in 2019 to 58%, it said.
The bleak numbers are driven largely by lower oil export revenue, a drop in fiscal revenue, and the large increase in fiscal expenditures required to respond to the health crisis.
The pandemic has profoundly affected livelihoods and is causing many people in the region to fall deeper into poverty, the report said.
It offers, however, an opportunity for MENA countries to rethink social and economic policies amid strengthening trade integration while reducing oil dependency, according to the World Bank.
The report said leveraging that regional integration to enable domestic reforms could become a new source of growth, jobs and stability in the region.