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Data released by international institutions and private research centers indicate that Arab countries will make up for all their economic losses next year, if the novel Corona virus is contained during this time.
The most recent of that data confirms it, a report released by research institution Capital Economics, but its outlook for the current year was more pessimistic than the rest of expectations.
Recession
The British research institution said the economies of the Middle East and North Africa region will experience the worst recession since 1980, noting that social distancing and travel restrictions will severely affect Egypt, Tunisia , Morocco and Dubai.
She said oil-exporting countries will also be affected this year by lower demand with lower prices, which will push most of these countries into recession.
Regarding Egypt, the research institution, which still takes the worst pessimistic view, said Egypt would experience a recession this year, the most severe since 1954, when Gamal Abdel Nasser, second Egyptian president.
The report believes that the Central Bank of Egypt will have to lift its grip on the Egyptian pound, “but this will not necessarily lead to a significant rise in the level of inflation.” The bank is expected to complete the round of monetary easing.
The report also states that Morocco and Tunisia will be severely affected due to the large tourism sector in them.
As for Lebanon, the report says the repercussions of the Coronavirus have worsened the situation in the country which has not paid its debts and is currently restructuring its debts, and the state has also taken steps to float the local currency. The report predicted that Lebanon’s GDP would contract by 12% this year, with the inflation rate reaching 20%.
Exceeding losses
Data from Capital Economics indicates that countries in the region will surpass their expected losses this year, through the years 2021 and 2022, and even countries like the UAE will erase all their economic losses by next year.
Capital Economics forecasts for the next two years
Over the next two years, the report expects Saudi Arabia to achieve growth of 2.8% and 1.3%, respectively, and economic growth in Egypt will reach 6.3% and 4.8. %, the United Arab Emirates by 10% and 5.8% and Algeria by 2%. and 2.3%.
Monetary Fund
The International Monetary Fund adopts a more optimistic scenario, as it estimates that most countries in the region will be able to make up for all their losses by next year, after warning of stagnant repercussions from the Corona virus this year.
As for the oil-exporting countries in the Middle East, excluding the Gulf countries, the report expects their economy to contract 6.1% this year, then grow to 6.5% in 2021.
As for oil importing countries, the report expects a recession of 3.3% this year, then growth of 4.2% next year.
As for the Gulf states, the Fund expects their economy to contract 0.7% this year, then grow 3.3% in 2021.
Egypt without recession
At the country level, the International Monetary Fund expects the economies of all Arab countries to contract, with the exception of Egypt, during the current year, which is expected to grow by 2 %, then 2.8% next year.
Still, IMF data shows that Arab economies will make up for their losses by next year, as growth rates in 2021 exceed contraction rates in 2020.
The fund’s worst forecast for the current year is for the Libyan economy, which it says will shrink by 58.7% this year, but at the same time it expects the economy to hit a 80.7% growth next year.
Expectations of the report indicate that Iraq will reach 7.2% growth next year after contracting 4.7%, while UAE will reach 6.1% growth after contracting 3% this year.
Post-Corona Perspectives
The only exception was the Lebanese economy, which the IMF predicted to shrink by 12% this year, but could not predict its economic performance next year due to the great turmoil the country is going through.
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