Most countries across the Middle East, North Africa and Pakistan region (MENAP), including Egypt, have taken proactive measures against the coronavirus (COVID-19) outbreak. The statement was made in the Middle East and Central Asia Regional Economic Outlook (REO) report, released by the International Monetary Fund (IMF) on Wednesday.
The reported added that the Egyptian authorities have reduced their monetary policy rates to 300 basis points, while facilitating credit to small- and medium-size enterprises (SMEs), and intervening in capital markets.
Countries such as Egypt, Morocco, Pakistan and Tunisia, among other countries, have increased transfers and subsidies for targeted sections of society via existing social protection programmes, the report added.
Egypt have also used cash transfers to unemployed and self-employed workers, the report said, adding that the country has provided assistance to affected firms in the tourism and export sectors. This has come in addition to offering tax exemptions to ease the financial pressures on society during this time.
The IMF has projected regional growth to shrink from 1.2% in 2019 to –2.8 % in 2020, due to the coronavirus (COVID-19) pandemic. The figure is lower than growth rates reported during the 2008 global financial crisis and the 2015 oil price shock.
The region’s growth will, however, rise to 4.0 % in 2021, as threats from the coronavirus recede and global policy efforts spur recovery, the REO said.
Oil prices have fallen by about 50% to their lowest point in over 20 years since the start of the outbreak. This comes after adjustments for inflation, with travel restrictions introduced by governments around the world also reducing demand for oil. Prices have also been affected by the absence of a new production agreement among Organization of Petroleum Exporting Countries and other major oil producers (OPEC+).
The subsequent production cut agreement by OPEC+ at the start of April, complemented by further production cuts by oil exporting G20 economies, could provide some support to oil prices, particularly if global demand increases. Other commodity prices have fallen sharply too following slowing global growth, the report added.
Additional demand and supply shocks through trade, tourism, remittances, tighter global financial conditions, and spill-overs on domestic credit conditions, along with lockdown measures would greatly curtail trade in countries like Egypt, Djibouti, Mauritania, Pakistan and Tunisia, said the report.