The economy of the Middle East and North Africa region will witness its biggest slump in four decades amid the global coronavirus pandemic and historic declines in oil prices, according to a new report from the International Monetary Fund.
The Washington-based lender forecasts the economic impact of the coronavirus will be substantial and long-lasting, with the economy of the Middle East, North Africa and Central Asia expected to contract by an average of 3.1% in 2020. In a region that has so far recorded more than 172,000 cases of the virus, the IMF called on governments to spend what’s necessary, regardless of fiscal space, to save lives.
"While there is considerable uncertainty around the depth and duration of the crisis, this pandemic will compound the region's unemployment problem and worsen the already high public and external debt," the IMF said in its latest Regional Economic Outlook.
“At the same time, restrictive containment measures introduced by governments in the region and fear of contagion are weakening the region’s consumer demand, particularly in tourism, hospitality, and retail sectors.”
If governments in the region don’t respond adequately to their coronavirus outbreaks, the war-torn region could see even more instability, the report said. Fragile and conflict-affected states, such as Syria, Libya, Yemen and Afghanistan, would be among the hardest hit.
In Libya, where two rival forces are battling to take control of the oil-rich country, the economy is expected to contract by more than 50% in 2020.
Lebanon, which was already experiencing its worst economic downturn in decades amid nationwide anti-government protests and dwindling dollar reserves, will see its economy contract by 12%.
Oil-producing countries are also under significant strain, with annual revenue expected to decline by more than $230 billion this year. Real gross domestic product among exporters is projected to contract by 4.2%.
“A plunge in global oil prices is compounding strains on these economies, increasing challenges to combating the virus and preventing lasting economic damage,” the report read.
Already reeling from tough US sanctions and a steep recession in 2019, Iran’s economy is expected to contract by 6% this year, the third year in a row of contraction. Tehran has asked the IMF for a $5 billion emergency loan to help prop up its economy — its first such request in nearly 60 years.
Egypt is the only Middle East economy without a contraction projected for 2020.
This story contains reporting from Agence France-Presse.