DUBAI, United Arab Emirates – The International Monetary Fund raised its economic outlook for the growth of the Middle East and North Africa region by 2020 by 1.2 percentage points to a global contraction of 3.8%, showing that, despite some progress since the beginning of the coronavirus pandemic, has been another brutal year for any account.
The recovery will be varied and will be largely based on countries’ investments and strategies for vaccine distribution. But there was a bright spot especially for the Gulf states – lifting the political and economic blockade of Qatar by other GCC countries, Middle East and Central Asia IMF Director Jihad Azour told CNBC on Wednesday.
While the full details of the reconciliation agreement between the blocking states – Saudi Arabia, the United Arab Emirates, Bahrain and Egypt – and Qatar are not publicly known, Azour told CNBC’s Hadley Gamble that “any improvement in border opening , improving the economic relationship will provide additional growth potential. ”
“Of course, this will improve trade, especially in tariffs for goods and services,” he added. “It will reduce the cost of procurement, for example, for Qatar, it will also help airlines by reducing costs. Therefore, there are always benefits from improving economic relations, especially now that we are entering a new phase in terms of globalization.”
A security guard checks the temperature of the man who arrives at a shopping center in Riyadh, the Saudi capital, on May 4, 2020, as the malls reopen after the authorities started a partial lifting of the blockade.
Fayez Nureldine | AFP | Getty Images
The news, which saw a dramatic three-and-a-half-year dispute, ended, is a likely investment advantage as well, Azour said. “I think this is good for business in the short term, but also in the long term, in terms of providing more space for investors. And this is something that will be appreciated.”
Qatar’s financial center alone aims to attract $ 25 billion in foreign direct investment flows by 2022 as a result of the rapprochement, CNBC reported in January. Airlines, food production and production are among the other areas that are likely to see major increases.
The vaccine strategy will be crucial
In the region as a whole, the improvement in the outlook was based on “stronger-than-expected performance among oil exporters, as the absence of a second wave in some countries boosted non-oil activity and the impact of the first wave was lower.” than expected, “the IMF wrote in its regional outlook report.
However, the prospects for recovery are uneven and will largely depend on government vaccination plans. It ranges “from countries with highly diversified vaccination contracts and production capacity to fragile and conflict-affected states that are heavily dependent on COVAX,” Azour wrote in its report. COVAX is a global system run by an international vaccine alliance and the WHO, established to ensure equitable access to vaccines for every country in the world.
The disparities are obvious: rich Middle Eastern countries, such as the UAE and Israel, are about to vaccinate half their populations by March and boast the fastest vaccination campaigns in the world, while poorer countries and territories, like Palestine, are largely dependent on COVAX and have not yet received vaccines for their general population.
“Our analysis shows that countries that have invested heavily in accelerating, accelerating vaccination will see a faster recovery,” Azour said.
Countries that have applied stronger fiscal responses to the Covid-19 crisis “also expect to have a stronger recovery in 2021, helped by a lower depression in 2020,” the IMF report wrote.
He added that although several vaccines are now on the market, the battle is far from over.
“While vaccines shine a glimmer of hope, the road will be long and winding,” the report said. In the short term, the main priority remains to ensure that health care systems are adequate resources, including financing the purchase and distribution of vaccines.