Egypt will be the only country that will achieve positive economic growth during the current fiscal year in the Middle East and North Africa (MENA) region the International Monetary Fund (IMF) said over its World Economic Outlook (WEO) on Tuesday.
The IMF forecast that MENA’s GDP would contract by 3.3%.
WEO indicated that global economy is expected to contract sharply by 3% in 2020 due to the coronavirus (Covid-19) pandemic that has a worse impact on economic activity than the 2008 financial crisis.
In a baseline scenario, which assumes that the pandemic fades in the second half of 2020 and containment efforts can be gradually unwound, the global economy is projected to grow by 5.8% in 2021 as economic activity normalises, helped by policy support, the report added.
The world suffers extreme uncertainty for the global growth forecast, said the report, noting that many countries face a multi-layered crisis comprising a health shock, domestic economic disruptions, plummeting external demand, capital flow reversals, and a collapse in commodity prices.
Economic fallout depends on factors that interact in ways that are hard to predict. They include the pathway of the pandemic, the intensity and efficacy of containment efforts, the extent of supply disruptions, the repercussions of the dramatic tightening in global financial market conditions, the shifts in spending patterns, behavioral changes such as people avoiding shopping malls and public transportation, and volatile commodity prices, said the report.
The global economy now encounters a grim reality, where exponential growth of contagion means 100 infected individuals become 10,000 in a matter of a few days, mentioned the report, adding that many lost their lives tragically and the virus continues to spread rapidly across the globe.
The current COVID-19 crisis is like no other as the shock is large and the output loss dwarfs the losses the global financial crisis triggered.
This situation is like a war or a political crisis, when there is continued severe uncertainty about the duration and intensity of the shock, the report said, noting that under current circumstances there is a very different role for economic policy.
In normal crises, policymakers try to encourage economic activity by stimulating aggregate demand as quickly as possible, yet this time, the crisis is so large which makes stimulating activity more challenging and, at least for the most affected sectors, undesirable, the report said.