The Middle East and North Africa (MENA) region should experience a “sharp drop” in its growth this year, weighed down by the double trouble of the new coronavirus and low oil prices, said on March 24 the Monetary Fund international (IMF).
The Covid-19 pandemic caused a slowdown in global economic activity but also a drop in demand for oil, on which many economies in the region depend heavily.
“The region is likely to experience a sharp decline in growth this year,” IMF regional director for the Middle East and Central Asia, Jihad Azour, said in a report.
The organization urged governments in the region to quickly put in place bailouts to avoid a prolonged recession, rising unemployment and bankruptcies.
Azour said that a dozen countries in the region, without specifying which, had already approached the IMF for financial support, adding that the institution would decide on these requests “in the coming days”.
Before the coronavirus crisis, the Fund had already considerably reduced its growth projections for the MENA region due to low oil prices, political unrest in certain countries or even US sanctions against Iran.
In recent years, annual growth has hovered around 1% on average.
But “the (new) coronavirus pandemic has become the region’s biggest short-term challenge,” he said, with the added shock of the 50% drop in oil prices since the start of the crisis, also fueled by a price war between Saudi Arabia and Russia.
It harms key sectors like tourism, hospitality and commerce, which could lead to higher unemployment and lower wages, added Azour.
On Monday, IMF Managing Director Kristalina Georgieva warned that the world will experience a recession in 2020 that could be worse than that of 2008, the year of the international financial crisis.