Arab Monetary Fund unveils promising Economic Outlook for the region

By Shilpa Annie Joseph, Official Reporter
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The Arab Monetary Fund (AMF) has released the Fifteenth Edition of the Arab Economic Outlook Report, which includes updated predictions for growth and inflation in Arab economies for 2021 and 2022, as part of its ongoing efforts to support decision-making in Arab countries.

According to the report, Arab economies are expected to grow by 2.7 percent in 2021, driven by progress in national vaccination programs and the continuation of fiscal stimulus packages, which totaled $341.5 billion till September 2021.

Further, the AMF has raised its prediction for Arab countries’ economic growth in 2022 to 5.2 percent, citing the expected increase in oil production in several of the region’s major oil exporters as well as the favorable impact of adopted economic reforms.

According to the report, “Inflation rates are expected to record relatively high levels in some Arab countries in 2021, as a reflection of the local and global inflationary pressures, while those pressures are expected to recede in 2022.”

The Arab governments intensified their efforts during 2021 to accelerate the implementation of national vaccination campaigns to ensure health preparedness to confront the COVID-19 pandemic. As a result, the percentage of people who have been vaccinated has climbed in various Arab countries, ranging from 40 to 86 percent, indicating that these countries are on the verge of achieving herd immunity.

This progress encouraged Arab governments to gradually ease restrictions and precautionary measures starting from the second quarter of 2021, which supported the recovery of several economic sectors, especially those with substantial direct and indirect linkages with other economic sectors. The most important are exports, tourism, building and construction, internal trade, manufacturing, pharmaceuticals, communications, and information technologies.

The rate of economic recovery for Arab countries is predicted to expand in 2022, reaching 5.2 percent, due to a number of variables, the most important of which is the expected increase in oil production of key Arab oil-exporting countries under the “OPEC+” agreement starting in May 2022.

Moreover, the report indicated that “the global economy faced significant challenges in 2021 as the world economies intensified their efforts to support post-COVID-19 economic recovery and mitigate its effects on individuals and companies, especially in light of the continued spread of the virus and its variants in many parts of the world.”

In this context, estimates from international institutions suggest that the global economy will grow by around 5 percent to 6 percent in 2021, amid divergent paths of economic recovery between developed and developing countries based on vaccination campaign progress and available fiscal space to support recovery.

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