The Middle East and North Africa (MENA) region is likely to experience a “sharp decline” in growth this year, due to both the new coronavirus (Covid-19) and weak oil prices, the International Monetary Fund (IMF) stated on Tuesday.
The coronavirus pandemic is not only slowing down economic activity across the world but also a drop in the demand for oil, on which many of the region’s economies are strongly dependant. On 18 March, for example, decreased demand for petrol in Belgium made gas prices hit an 11 year low.
The IMF urged governments in the region to put rescue plans in place rapidly in order to avoid prolonged recession, a rise in unemployment and business insolvencies. Jihad Azour, regional director of the IMF for the Middle East and Central Asia, said that about a dozen countries in the region had already approached the IMF for financial assistance and added that decisions concerning these requests would be made “in the next few days.”
The IMF had already reduced its growth projections for the MENA region considerably because of the weak oil market, political unrest in certain countries and American sanctions against Iran. Now, the coronavirus forms an added threat.
“Beyond the devastating toll on human health, the pandemic is causing significant economic turmoil in the region through simultaneous shocks — a drop in domestic and external demand, a reduction in trade, disruption of production, a fall in consumer confidence, and tightening of financial conditions,” Azour wrote on Monday.
Angel Gurría, Secretary-General of the Organisation for Economic Co-operation and Development (OECD) warned that “the economic shock was already bigger than the financial crisis,” as the BBC reported on Monday. In that same article, they reported that he “said a recent warning that a serious outbreak could halve global growth to 1.5% already looked too optimistic.”