Economic recovery in the Middle East in 2021 will be modest, says World Bank

Economic recovery in the Middle East in 2021 will be modest, says World Bank
An atrium is seen at the World Bank headquarters building during the IMF/World Bank annual meetings in Washington, U.S., October 14, 2017. (Reuters)
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Updated 06 January 2021

Economic recovery in the Middle East in 2021 will be modest, says World Bank

Economic recovery in the Middle East in 2021 will be modest, says World Bank
  • Saudi Arabia will see a boost from the restarting of public capital investment projects put on hold
  • IHS Markit economist David Owen: The Saudi Arabian non-oil economy is well on the path to recovery

RIYADH: The World Bank has forecast that economic activity in the Middle East and North Africa will recover modestly to 2.1 percent this year, but it predicted that any recovery is dependent on the containment of the pandemic, no further escalation in geopolitical tensions and stabilization of oil prices.

By next year, the bank estimates that output will still be 8 percent below what was projected before the pandemic. In Saudi Arabia, activity is expected to get a boost from the restarting of paused public capital investment projects.

The signs for the Kingdom do look positive, as this week it was reported that in December a surge in new orders saw business conditions in the non-oil sector rise to the highest levels in more than a year.

According to the latest monthly IHS Markit Saudi Arabia Purchasing Managers’ Index, the rating for December was 57, up from 54.7 in November, and the highest level since November 2019. Any figure greater than 50 indicates overall improvement in the sector. “The Saudi Arabian non-oil economy is well on the path to recovery,” said David Owen, an economist at IHS Markit and author of the survey.

With regards to the World Bank estimates, some economic experts told Arab News that the extent of recovery this year will differ between countries and depends on the negative impact of the virus and the role of the private sector in facing the pandemic.

Walid bin Ghaith, a member of the Saudi Economic Association, MENA, said the regional GDP is expected to recover in 2021 and expand by 2.1 percent. Monetary and fiscal policy adjustments by governments, he noted, have helped to mitigate some of the economic impact.

Maitham Al-Shakhs, an independent Kuwaiti economic researcher, said the figures of the World Bank report are acceptable in the light of the vaccines and the stimulating programs introduced by each government.

But he warned that there are fears of unstable geopolitical situations from the US, before the current President Donald Trump steps over and Joe Biden takes over. There will be speculation in the stock market during this period, he added.


IMF: Iraq has requested emergency assistance

IMF: Iraq has requested emergency assistance
Updated 8 min 15 sec ago

IMF: Iraq has requested emergency assistance

IMF: Iraq has requested emergency assistance
  • The OPEC member’s economy has only a small manufacturing base and almost all goods are dollar-priced imports

Iraq has requested emergency assistance from the International Monetary Fund and talks are ongoing between the parties, the IMF said late on Sunday.
Iraqi Finance Minister Ali Allawi told Bloomberg News earlier that Iraq was in talks with the IMF for a $6 billion loan package.
“The Iraqi authorities have requested emergency assistance from the IMF under the Rapid Financing Instrument, and indicated their intention to also request a longer-term arrangement with the Fund in support of planned economic reforms,” an IMF representative said in an emailed statement.
“Discussions of the authorities’ request for emergency assistance are ongoing.”
The IMF’s Rapid Financing Instrument provides quick financial assistance, which is available to all member countries facing an urgent balance-of-payments need.
Financial assistance under the RFI is provided without the need for a full-fledged program or review, according to the IMF website https://bit.ly/3c6YubX.
Iraq may ask for an additional $4 billion in low-cost loans through another program linked to government reforms, Allawi said on Sunday.
Iraq devalued the dinar last month after a collapse in global oil prices, a major source of Iraq’s financial resources.
Allawi told Bloomberg that Iraq also planned other types of funding to help plug the budget gap. Once the spending plan was approved, the government would move to issue $5 billion in domestic bonds to expand its financial base.
The OPEC member’s economy has only a small manufacturing base and almost all goods are dollar-priced imports.