IMF raises growth forecasts in Middle East, recovery will be “divergent”

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

Real GDP in the MENA region is now expected to grow by 4% in 2021, up from the fund’s projection in October of 3.2%.

However, the outlook will vary significantly between countries, depending on factors such as vaccine launches, tourism exposure and policies introduced, the IMF said in its latest regional economic report released on Sunday.

The vaccine () is an important variable this year, and the acceleration of vaccination could contribute to almost an additional percentage of GDP in 2022.

Jihad Azour

IMF Director Middle East and Central Asia

Jihad Azour, director of the IMF department in the Middle East and Central Asia, said the recovery would be “divergent between countries and unequal between different parts of the population.”

He told CNBC’s Hadley Gamble that the increase will be driven mainly by oil-exporting countries that will benefit from accelerated vaccination programs and the relative strength of oil prices.

Vaccines are an “important variable”

Azour said each country’s ability to recover in 2021 varies widely.

“The vaccine () is an important variable this year, and accelerating vaccination could contribute to almost an additional percentage of GDP in 2022,” he said.

Some countries in the region – such as the Gulf Cooperation Council, Kazakhstan and Morocco – have started vaccinations early and should be able to inoculate 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 inoculators”, which are likely to vaccinate a large part of their population by mid-2022.

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

Christopher Pike | Bloomberg | Getty Images

The latest group – “late inoculators” – is not expected to achieve “full vaccination by 2023 at the earliest,” the report said.

He added that early inoculators are expected to reach GDP levels from 2019 to 2022, but countries in the two slower categories will recover to pre-pandemic levels between 2022 and 2023.

Looking ahead

Azour said innovative policies have helped accelerate the recovery, but it is “very important to move forward better.”

This could include measures to improve the economy, attract investment, increase regional cooperation and address 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) the level of growth that existed before the Covid-19 shock,” he said.