“The region is likely to Witness a significant decline in growth rates this year,” Jihad Azour, the Regional Director for the Middle East and Central Asia at the International Monetary Fund, announced yesterday. He added that: “12 countries from the region have already contacted the IMF seeking financial support.” As the executive board is set to process those requests in the coming days.
The IMF, yesterday, predicted that the Middle East and North Africa region will experience a “significant decline” in economic growth this year in light of the protective measures taken to protect against the spread of the new Corona virus as well as declining oil prices.
In the report, the Fund urged the governments of the Middle East and North Africa to continue providing financial and economic support packages to prevent the crisis from developing into a long-term recession that would lead to high unemployment rates.
The IMF has already reduced its growth forecasts for the MENA region dramatically due to lower oil prices, rising disputes, and continued sanctions on Iran. The overall growth rate in the region had been floating around 1 percent in recent years, Azour said. “The region, which contains nearly two thirds of the world’s crude oil resources, has been severely affected by the emerging Corona virus and falling oil prices,” he explained. “The epidemic has become the biggest challenge for the region in the short term.”
He continued: “The epidemic is sparking massive economic turmoil in the region through simultaneous instances of domestic and external reduction in demand, trade decline, production disruption, declining consumer confidence, and financial restrictions.” Azour pointed out the measures to combat Corona virus disrupt Job rich sectors such as the tourism, hospitality, and retail sectors which may lead to increased unemployment and lower wages.
The Managing Director of the IMF, Kristalina Georgieva, said: “Global economic growth will be negative this year and may be worse than the global financial crisis of 2008.”
Several countries in the region have taken tough decisions to limit the spread of the virus including stopping flights, suspending education, shutting down major shopping centers, and imposing curfews.
The virus has caused hundreds of deaths in Iran and dozens in other countries in the region. According to Moody’s, the financial consulting firm, the contribution of oil revenues to the GDP of crude exporting countries will decline this year by 4 to 10 percent.
The report added that this reduction is estimated to surpass 10% in countries such as Iraq and Kuwait, hover between 4 and 8 percent in Saudi Arabia, Oman, Qatar and Bahrain. Those estimates however, were based on the price of a barrel of oil ranging between 40 and 45 dollars which indicates that they are going to end up much higher if prices remain between $20-30.