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IMF raises Center East development forecast, restoration will likely be ‘divergent’

IMF raises Middle East growth forecast, recovery will be 'divergent'

The International Monetary Fund has revised its growth forecast for the Middle East and North Africa region upwards as the countries recover from the coronavirus crisis that began in 2020.

Real GDP in the MENA region is now projected to grow 4% in 2021, compared to the fund’s October forecast of 3.2%.

However, the outlook will vary significantly from country to country depending on factors such as vaccine adoption, exposure to tourism, and policies in place, the IMF said in its latest regional economic report released on Sunday.

Vaccine is an important variable this year, and speeding up vaccination could add almost an additional percent of GDP in 2022.

Jihad Azour

Director of the IMF for the Middle East and Central Asia

Jihad Azour, director of the IMF’s Middle East and Central Asia division, said the recovery was “different between countries and uneven between different segments of the population”.

He told CNBC’s Hadley Gamble that growth will be mainly driven by oil exporting countries, which will benefit from the acceleration in vaccination programs and the relative strength of oil prices.

Vaccines an “important variable”

Azour said each country’s ability to recover in 2021 will be “very different”.

“Vaccine is an important variable this year, and accelerating vaccination could add almost an additional percent of GDP in 2022,” he said.

Some countries in the region – such as the Gulf Cooperation Council states, Kazakhstan and Morocco – started their vaccinations early and should be able to vaccinate a significant portion of their population by the end of 2021, the IMF said.

Other nations, including Afghanistan, Egypt, Iran, Iraq, and Lebanon, have been classified as “slow vaccines” that are likely to vaccinate a large proportion of their residents by mid-2022.

Shoppers in protective masks walk near the Dubai Mall and the Burj Khalifa skyscraper in Dubai, United Arab Emirates on Wednesday, January 27, 2021.

Christopher Pike | Bloomberg | Getty Images

The last group – the “late vaccinators” – are not expected to “achieve full vaccination until 2023 at the earliest,” the report said.

It added that early vaccines are expected to hit 2019 GDP levels in 2022, but countries in the two slower categories will recover to pre-pandemic levels between 2022 and 2023.

looking ahead

Azour said innovative guidelines have helped speed the recovery, but it is “very important to do better”.

This could include measures to improve the economy, attract investment, strengthen regional cooperation and tackle the scars of the Covid crisis.

“All of these elements are silver linings that can help accelerate the recovery and bring the region’s economy to levels of growth that existed before the Covid-19 shock,” he said.

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Business

The I.M.F. sees a sooner financial restoration as vaccines are deployed.

The I.M.F. sees a faster economic recovery as vaccines are deployed.

The global economy is recovering from the coronavirus pandemic faster than previously expected, largely thanks to the strength of the United States. However, the International Monetary Fund warned Tuesday that major challenges remain as uneven vaccine adoption threatens to leave developing countries behind.

The IMF said it improved its global growth forecast for the year thanks to vaccinations for hundreds of millions of people. These efforts should contribute to a strong recovery in economic activity. The international panel now expects the global economy to grow 6 percent this year, compared to its previous forecast of 5.5 percent after a 3.3 percent decline in 2020.

“Even with great uncertainty about the course of the pandemic, a way out of this health and economic crisis is becoming increasingly visible,” said Gita Gopinath, chief economist at the IMF, in a statement on the Fund’s World Economic Outlook report.

Emerging from the crisis is being led by the richest countries, particularly the United States, where the economy is expected to grow 6.4 percent this year. The euro area is expected to grow 4.4 percent, and Japan is expected to grow 3.3 percent, according to the IMF

Of the emerging and developing countries, China and India are expected to lead. China’s economy is expected to grow 8.4 percent and India’s 12.5 percent.

Ms. Gopinath recognized the robust fiscal support that major economies have provided to the improved outlook and noted the relief efforts being made by the United States. The IMF estimates that the economic impact of the pandemic would have been three times worse had it not been for $ 16 trillion in global financial assistance.

Despite the brighter outlook, Ms. Gopinath said the global economy was still facing “huge” challenges.

Low-income countries face greater losses in economic output than advanced economies, reversing the gains in poverty reduction. In advanced economies, the low skilled are hardest hit and those who have lost their jobs may have difficulty replacing them.

“As the crisis has accelerated the transformative forces of digitization and automation, many of the jobs lost are unlikely to return, requiring cross-sectoral redistribution of workers – often with significant income penalties,” said Gopinath.

The IMF warned that its forecasts depend on the use of vaccines and the spread of variants of the virus that could pose a threat to both public health and the economy. The fund is also closely monitoring US interest rates, which remain at their lowest levels but could pose financial risk if the Federal Reserve unexpectedly increases them.

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World News

U.S. working with IMF to supply $650 billion in forex help to nations hit by pandemic

U.S. working with IMF to provide $650 billion in currency aid to countries hit by pandemic

The U.S. Treasury Department in Washington, DC on Friday, March 19, 2021.

Samuel Corum | Bloomberg | Getty Images

The Treasury Department is working with the International Monetary Fund to provide monetary aid of up to $ 650 billion to countries hardest hit by the Covid-19 pandemic.

An announcement by the Treasury Department on Friday showed it was helping the IMF allocate $ 650 billion in Special Drawing Rights, which “would help build reserve buffers, smooth adjustments and mitigate the risks of economic stagnation in global growth.” “.

SDRs are currency reserves that countries can use to supplement their foreign exchange assets such as gold and US dollars.

The Treasury Department’s announcement indicated that the allocation of SDRs is within the level the department is allowed to allocate without the approval of Congress. Treasury Secretary Janet Yellen and Senator John Kennedy, R-La., Had a heated discussion on the SDR issue during a public hearing recently.

In essence, the deal would allow countries to exchange their SDRs for US dollars. Global demand for American currency has been a recurring problem throughout the pandemic and has resulted in the Federal Reserve running a robust dollar swap program around the world as well.

The Treasury Department would exchange SDRs for dollars it holds in the Exchange Stabilization Fund. This, in turn, would require the government to borrow more money and create some coastline, namely the difference between the interest on the SDR and the interest on government bonds.

“These potential implied costs are much less than the benefits of a strong global recovery,” the department said in the press release.

“Addressing long-term global reserves would help support the global recovery from the COVID-19 crisis. A strong global recovery would also increase demand for US exports of goods and services – creating US jobs and US -Companies support “statement added.