Covid-19: IMF sees multilevel shock for Arab economy
Countries in the region need to think long-term and strategically because the oil market is changing structurally
dubai — Arab economies are facing a multilevel shock from Covid-19 and will have major challenges in addressing the direct impact of the ongoing slowdown, starting with long-term structural problems, the regional head of the International Monetary Fund (IMF) said.
Dr Jihad Azour, director of the IMF Middle East and Central Asia Department, said despite the prompt responses by many governments in the region low oil prices have impact on both oiland non-oil-producing countries.
Azour’s cautioning is subsequent to a recent IMF warning that the Arabian Gulf countries face a budget reckoning and risk depleting their $2 trillion in financial wealth within 15 years as oil demand nears peak levels.
In a report, the Washingtonbased fund has said that global oil demand may start falling sooner than expected, putting a strain on the finances of the six-member bloc, which accounts for a fifth of
Dr Jihad Azour,
Director of the IMF Middle East and Central Asia Department
the world’s crude production. “Countries in the region need to think long-term and strategically because the oil market is changing structurally both from the demand and the supply side,” Azour said in a previous statement.
“Starting with long-term structural problems, Arab countries will have difficulties addressing the direct impact of the ongoing slowdown. One thing that helps in the recovery in Arab countries is that they have young populations,” Azour said.
Two-thirds of the Arab population in the region is less than 30 years old, and this human capital advantage would play a key role in speeding up the regional economic recovery, he said.
“What is needed are dedicated efforts to implement what Arab governments and international organisations know are essential reforms to the structure and emphasis of Arab economies,” the IMF official said while answering questions in a webinar hosted by the executive director of Arab Center Washington DC.
He said that the current economic crisis is not like that of 2008-09 since it has precipitated a deeper and wider shock to the economies of individual countries as well as to the international economy at large.