While we are very much still in the middle, or even at the outset, of the economic impact of the coronavirus pandemic and lower oil prices across the Middle East, there are some troubling signs that recovery will be more difficult than in other emerging market regions. The early evidence suggests that we will see significant variation in economic growth, with Asian economies already showing stronger resilience than Latin America or the Middle East.

On July 13, the International Monetary Fund released its updated economic outlook for the Middle East and North Africa, with a downward revision in (already negative) growth for oil exporters in 2020 to -7.3% decline in real gross domestic product (GDP), before returning to positive growth of about 3% in 2021. This amounts to a loss in oil export revenue to the region of about $270 billion in 2020. For oil importers in the region, the decline in expected growth is more moderate, at -1.1% for 2020 before returning to feeble positive growth of under 2% in 2021.

But in a cross-regional perspective, it is emerging markets that will lead in economic recovery in 2021 as a percentage of GDP, according to projections by Fitch Solutions that sees developed economies taking the hardest hit to growth in 2020. The current sharp recession we see globally will not last forever. The question is how unevenly growth returns and what governments can do to shield citizens from the worst of the downturn and amplify what sluggish growth returns.

Interestingly, as emerging economies are expected to fare better in their pace of recovery starting in 2021, the divergence within emerging markets is striking. It is economies in Asia that are expected to rebound more quickly and with higher annual growth rates than in the Middle East or Latin America. And the drag on growth rates in the Middle East as it recovers in 2021 will be due to the sluggish recovery of oil exporters, mostly in the Gulf Cooperation Council (GCC) states.