The economies of the Mena region will bounce back strongly in 2021, according to the International Monetary Fund (IMF), following the biggest slump in four decades due to the double effect of the coronavirus and low oil prices.
The IMF’s World Economic Outlook report forecasts a 3.3% contraction in all Mena economies in 2020 but, as the cases of coronavirus reduce, it expects them to rebound by an average of 4.2%.
Iran is predicted to see the greatest economic decline this year, contracting by 6%. Meanwhile, the UAE will contract by 3.3%, Saudi Arabia by 3.9%, Qatar by 4.3%, Oman by 2.8% and Kuwait by 1.1%.
But all economies are forecast to enjoy a much stronger economic performance in 2021 based on the presumption that the pandemic disruption dissipates, global economic activity returns, oil prices rise and non-oil sectors grow.
Despite the positive forecast for 2021, the IMF report suggested that Mena’s countries could avoid the worst effects of this year’s recession by providing temporary and targeted tax relief and adjusting monetary policy to ensure there is enough liquidity in the system.
“Governments could consider reorienting spending priorities, for example by reducing or delaying non-essential expenditures, or seeking external financing support or aid,” it stated.
© 2020 funds global mena