Source: Dubai – Sherif Al Yamani
Data issued by international institutions and private research centers indicate that the Arab countries will compensate for all their economic losses next year, if the new Corona virus is contained during that period.
The most recent of these data confirms this, a report issued by the research firm Capital Economics, but its outlook for the current year was more pessimistic than the rest of the expectations.
The British research institute said that the economies of the Middle East and North Africa region will suffer the worst recession since 1980, noting that social divergence and travel restrictions will severely affect Egypt, Tunisia, Morocco and Dubai.
She pointed out that oil-exporting countries will also be affected this year by falling demand and lower prices, which will lead to the entry of most of these countries into a recession.
On the level of Egypt, the research institution, which always adopts the worst pessimistic outlook, said that Egypt will witness a recession this year, which is the most severe since 1954, and the year that Gamal Abdel Nasser, Egypt’s second president, took power.
The report believes that the Central Bank of Egypt will have to raise its grip on the Egyptian pound, “but this will not necessarily lead to a significant increase in the level of inflation,” expecting the bank to complete the chain of monetary easing.
The report also indicated that Morocco and Tunisia will be affected severely due to the large tourism sector in them.
As for Lebanon, the report indicates that the repercussions of the Corona virus have made the situation worse in the country that has not paid its debts, and which is currently restructuring the debt, and the country has taken steps to float the local currency. The report expected that the Lebanese GDP will shrink by 12% this year, with the inflation rate rising to 20%.
Capital Economics data indicate that the countries of the region will exceed the losses that we hope for this year, during the years 2021 and 2022, and that countries, for example, the UAE, will erase all their economic losses by next year.
During the next two years, the report expected that Saudi Arabia would achieve growth of 2.8% and 1.3%, respectively, economic growth in Egypt would reach 6.3% and 4.8%, the UAE by 10% and 5.8%, and Algeria by 2% and 2.3%.
The International Monetary Fund is adopting a more optimistic scenario, as it believes that most countries in the region will be able to compensate for all their losses by next year, after warning of the stagnation of the effects of the Corona virus this year.
For the oil-exporting countries in the Middle East, with the exception of the Gulf states, the report predicts that their economy will contract by 6.1% this year, and then achieve 6.5% growth in 2021.
With regard to oil importing countries, the report expects to witness a recession of 3.3% this year, and then achieve growth of 4.2% next year.
For the Gulf countries, the fund expects its economy to shrink 0.7% this year, then growth of 3.3% in 2021.
Egypt without recession
On the level of countries, the International Monetary Fund expected that the economies of all Arab countries, with the exception of Egypt, will shrink this year, which is expected to achieve growth of 2%, then 2.8% next year.
However, the fund data indicates that the Arab economies will compensate for their losses by next year, as growth rates in 2021 will exceed the rates of deflation in 2020.
The worst expectation of the fund for the current year was the Libyan economy, which it believes will shrink by 58.7% this year, but at the same time it expected the economy to achieve growth of 80.7% next year.
The report forecasts that Iraq will achieve a growth of 7.2% next year after a contraction of 4.7%, while the UAE will achieve a growth of 6.1% after a contraction of 3% this year.
The only exception was the economy of Lebanon, which the Fund expected to achieve a contraction of 12% this year, but it was unable to predict its economic performance next year due to the great unrest in the country.