IMF Forecasts for the Middle East & Central Asia
IMF recently briefed the world about the economic outlook of the Middle East and Central Asia. The fund has forecasted a reduction of 4.7%. A two percentage further increase in decline than April forecasts.
Moreover, the spike in oil market volatility and the pandemic has exposed the region to risk and uncertainty. This has resulted in a slump in domestic economic activity. The decrease in oil prices by 70% and production cuts further fueled the situation.
An Overview
To recover from the setback Saudi Arabia and Russia, the biggest oil producer among the OPEC group of oil exporters, initiated cuts in oil production. However, the prices remained lower in comparison to earlier records.
Middle East, North Africa, Afghanistan, and Pakistan have all undergone a contraction by two percentage points. The pullback is more to the earlier predictions of IMF in April. Similarly, Saudi Arabia and UAE have injected funds of worth $11 trillion into the economy to cushion it against the slump in growth, more than the $8 trillion worth fiscal stimulus back in April.
MENAP region details
MENAP region’s growth will shrink by 5.1 percent this year. While GDP growth in the Caucasus and Central Asia region is forecasted to reduce by half a percentage point. This is in reaction to strong policy implications and lower production cuts, the IMF said.
Furthermore, the lower GDP revisions for the countries attribute to the mobility constraints and lockdown repercussions. IMF is of the opinion that despite supportive policies, growth revisions appear to be linked to lockdowns and mobility.
Oil Markets in the Pandemic
Additionally, the downturn reflects the double whammy of the oil price volatility and mobility constraints amid the pandemic. The oil sector has suffered a blow at the hands of price volatility and production cuts. While the non-oil-producing sector has suffered at the hands of disruption in tourism, transportation, and the retail sector.
Details Related to Particular Economies
The IMP said that economies like Afghanistan, Djibouti, Jordan, Morocco, and Sudan have receded in growth. The IMF also mentioned Lebanon quoting that its currency has dangerously deteriorated. By losing two-thirds of its value against the US dollar. As well as a double-digit contraction underway this year. The inflation stands at 56% while the country still struggles to find a way out.
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