You may not find names of any Arab country amongst the ones who have been heavily impacted by the pandemic, in terms of COVID-related deaths. However, the efforts to curb the spread of the disease in countries with underdeveloped health systems through full and partial lockdowns have undoubtedly burdened the region's economies.
When the COVID-19 crisis hit in March, the Middle East and Central Asia region saw a sudden reversal of capital flows—which have since stabilized—losing an estimated $6 billion to $8 billion in portfolio outflows: https://t.co/Z4sqh1pt9N #IMFCountryFocus pic.twitter.com/RjB9fflhL8— IMF (@IMFNews) July 17, 2020
Due to the nature of this pandemic as a long-term global health crisis, many economies and sectors have been suffering painful losses resulting from severe volatility in the markets.
A July 2020 report published by the UN has highlighted the different aspects of how the novel Coronavirus has impacted the MENA economies. According to the IMF World Economic Outlook October report for the Middle East, the region's projected GDP is expected to hit -4.1% .
The UN report noted that Arab stock markets have lost at least 23% of its value by July 2020, which means that millions of money that could have been dedicated to economic recovery post the crisis has been slashed due to the pandemic.
Source: Policy Brief: The Impact of COVID-19 on the Arab Region An Opportunity to Build Back Better - July 2020
Even the strongest Arab economies that are based on oil revenues in the GCC have felt the economic heavy impact following the pandemic, as oil prices loom over low territories since March. AP has reported; IMF estimated that Mideast oil exporters are expected to see their economies contract by 6.6% in 2020, especially as the region's oil and gas revenues are set to experience about a 40% decline, falling from about $329 billion in 2019 to $197 billion in 2020.
Using ESCWA estimates based on Forbes and Credit Swiss data, the report points at the fact the Coronavirus economic impact is likely to also widen the wealth gap in the region, where already "31 billionaires own as much wealth as the bottom half of the adult population in 2020."
The report also adds that non-oil based trade revenues are also bracing for a major hit, especially the agriculture and food production sector that might lose about 6% of its value. In the third place comes the textiles and clothing sector shrinking by 5%.
Moreover, the report goes on to expect the region's major foreign direct investment share to drop by 45%, depriving the region of a whopping $17.8 billion, mostly affecting the electrical and transport industries.
Finally, the UN report cites ILO numbers on employment during the second quarter of 2020, the period which was hit the hardest by the coronavirus in the region, stating that more than 10% of working hours were lost in comparison with the same period of 2019, which equals 17 million full-time jobs.
Despite this gloomy outlook into the pandemic's economic damage in the MENA region, policymakers are upon a great chance to reconsider economic policies that, once revised, help reveal weak points so the recovery process can build an optimized more resilient economies.
Did you expect the figures revealed by the UN report about the economic constraints created by the pandemic? Are you more optimistic or pessimistic regarding the future of Arab economies post-COVID?
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