According to the World Bank, the Middle East and North Africa’s (MENA) gross domestic product (GDP) would expand by 2.4 percent in 2021, owing to higher crude prices and the rollout of vaccinations in oil-exporting countries.
The recent forecast is 0.3 percentage points higher than the January estimate, the Washington-based lender stated in its latest Global Economic Prospects report.
The report added that “the region should benefit from the recent rebound in oil prices, stronger external demand, and less economic disruptions from COVID-19 outbreaks.”
Growth in MENA economies is expected to increase to 3.5 percent in 2022 on the back of vaccinations, easing travel restrictions, and rising oil production that will drive more revenue for the oil-exporting countries.
The World Bank also upgraded the global economic growth estimate to 5.6 percent in 2021, the fastest post-recession pace in 80 years, up from 4 percent earlier this year as the world emerges from the pandemic-induced slowdown.
It follows similar revisions from the International Monetary Fund, which upped its global economic projection for this year to 6 percent in April from an earlier 5.5 percent forecast.
Despite the bounce back, global output will be approximately 2 percent below pre-pandemic predictions by the end of the year, according to the World Bank.
World Bank Group President Mr. David Malpass stated that “as the health crisis eases, policymakers will need to address the pandemic’s lasting effects and take steps to spur green, resilient and inclusive growth while safeguarding macroeconomic stability.”
Oil-exporting countries in the MENA region are expected to fare better this year as increased crude prices boost their finances.
The World Bank said that “in oil exporters, a stronger-than-expected rebound in GDP in the second half of 2020 has created the foundation for growth to accelerate to a projected 2.3 percent in 2021.”
Oil prices are likely to average $62 per barrel in 2021 and 2022, according to the bank, which is much higher than its January predictions.
Crude prices have risen by about 40 percent year to date and are at their highest level since October 2018. The oil market has benefitted from the OPEC+ group’s decision to taper production cuts in line with rising market demand.
Saudi Arabia, the world’s largest oil exporter, is expected to grow by 2.4 percent this year and 3.3 percent in 2022.
The pandemic is continuing to weigh on oil-importing economies, though. These are expected to grow at a rate of 2.8 percent this year, which is 0.2 percentage points lower than projected in January.