The International Monetary Fund (IMF) has urged energy-rich Middle East and North African (MENA) countries to expedite reforms and diversification efforts as they continue to suffer from the unprecedented hurdles COVID-19 and low oil prices have created.
The international organization has shared a better outlook than its earlier estimates in July sharing that it expects the MENA Region to shrink by 5 percent compared to its earlier projection of 5.7 percent.
World Bank data reveals that the region which includes all Arab countries and Iran was expected to go through its economic performance since 1978 as it battled economic unrest and shrank by 4.7 percent.
In his statement to media, IMF’s Middle East and Central Asia Director, Jihad Azour stated that “We should look at what is happening today as a call for action, and also as an opportunity to stimulate the transformation of the economy and create more opportunities, especially for the youth.”
“We expect that both growth and unemployment to be affected this year, and overall this crisis could bring growth down by 5% as well as also unemployment could go up by 5%.”
Several countries in the region like Syria, Yemen, Iraq and Libya are already struggling with damaged economies and widespread poverty caused by years of devastating conflicts.
As per the World Bank data, unemployment among youths in the energy-rich region currently sits at 26.6 percent.
Most of the energy-rich economies in the region have implemented comprehensive lockdowns and curfews to prevent COVID-19 and thus lessen the disruption of regional economies.
The IMF expects the average price of oil to be $41.69 a barrel in 2020 and $46.70 a barrel in 2021, considerably lower than the $57-$64 average in 2019.
While COVID-19 and resulting in lower economic activities are anticipated to cause a 6.6 percent contraction to oil exporters economy, the consumer economies which import oil are expected to shrink by 1 percent as the pandemic continues to hit tourism and trade.
“We are at an important moment where there are hopes that (a) vaccine could accelerate the recovery, but also there are challenges with the risk of a second wave of the coronavirus,” Mr. Azour remarked.
IMF’s Middle East and Central Asia Director observed that “Lebanon needs a comprehensive reform program that tackles deep-rooted issues” as IMF considered the country’s economy to decline by 25 percent from an earlier estimated reduction of 12 percent in April
Saudi Arabia’s economy was expected to shrink by 5.4% this year, according to the IMF.