IMF: Worst MENA slump in 50 years

DUBAI: The International Monetary Fund yesterday again sharply lowered its Middle East and North Africa economic forecast, to its lowest level in 50 years, over the “twin shock” of the coronavirus pandemic and low oil prices.

“The region’s economy will contract by 5.7% this year, and shrink by as much as 13% in countries torn by conflict,’’ the Washington-based organisation warned.

“The economic malaise will see poverty and unemployment rise, stoking social unrest, and send budget deficits and public debt surging,’’ it said.

In its regional economic outlook update, the IMF projected the economies of the Middle East and North Africa to contract by 5.7% this year, 2.4 percentage points lower than its April forecast.

The projection is the lowest in over 50 years, according to World Bank data, and comes after the region posted modest growth last year.

The battered energy-based economies of the Gulf Cooperation Council (GCC) states are forecast to shrink by a hefty 7.1%, 4.4 percentage points lower than April.

“The region has been facing a crisis like no other — a twin shock that affected the normal functions of their economies during the confinement measures,” Jihad Azour, director of IMF Middle East and Central Asia Department, told AFP.

Mideast countries applied some of the most stringent lockdowns and measures against the coronavirus, halting most economic activities.

Oil prices plunged by about two-thirds in a freefall as the global economy ground down to prevent the spread of the coronavirus. They have partially recovered to around $40 a barrel.

“The region’s oil-exporting countries are expected to lose around $270 billion of energy revenues, which is a big drop,” Azour said. “The hardest-hit countries will be those that are fragile and in conflict situations, with their economies forecast to contract by as much as 13%.’’