The World Bank forecasts a fragile economic recovery for the Middle East and North Africa in 2021, Coronavirus challenges are not excluded.
The World Bank said in a report published on Tuesday that the Middle East and North Africa contracted by 5% during the year 2020.
The report linked the recovery of the Arab region during the year 2021 to two conditions, namely containing the Coronavirus pandemic and oil prices recovery.
The report said poverty rates increased among citizens as many jobs were lost due to local lockdowns.
Expectations of recovery
“Among oil exporters, growth is expected to recover to 1.8% this year, supported by normalizing oil demand, the scheduled easing of the OPEC+ oil production cuts, policy support, and the gradual phasing out of domestic pandemic-related restrictions,” the report said.
Saudi Arabia, the largest economy in the Arab world, will benefit from the resumption of public projects, which had been postponed at the beginning of the crisis, and the recovery of demand after a sharp rise in VAT, it said, tipping a 2.0% expansion.
Growth should also accelerate to 1.5% in Iran thanks to the recovery of domestic consumption and tourism and the mitigation of the effects of Covid-19, they added
Growth in other countries in the region is expected to reach 3.2% in 2021 due to the easing of travel restrictions and a slow recovery of domestic demand.
However, it is expected to reach only 2.7% in Egypt, the most populous country in the region, following the “collapse” of various sectors, notably tourism and gas extraction.
The World Bank warned that regional economies faced a variety of hurdles as they try to get back on their feet.
“The recovery is contingent on containment of the pandemic, stabilizing oil prices, no further escalation of geopolitical tensions, and the assumption of a vaccine rollout in the second half of the year,” it said.
After a sharp contraction this year, most of the region’s economies are expected to return to growth as oil prices recover and stimulus spending declines to counter the Coronavirus pandemic.
Fitch said last month it is unlikely that major economies’ classification will rise in 2021.
The agency said countries in Latin America, the Middle East and Africa are showing the highest levels of exposure to further negative action in 2021.