The International Monetary fund (IMF) said that with uneven vaccination rollouts, the recovery in the Middle East and Central Asia is expected to be multispeed and fragile and countries need to maintain focus on managing the pandemic. This came in the IMF’s October Regional Economic Outlook.
After contracting by 3.2% in 2020, real GDP in the MENA region is projected to expand by 4.1% in both 2021 and 2022, upward revisions of 0.1 and 0.4 percentage points since April, respectively, the fund projected.
The fund expected the inflation in the MENA region, to increase to 12.9% this year up from 10.4% last year, while in Central Asia it is projected at 8.5% this year compared to 7.5% last year.
The IMF explained that the region has made good progress since the beginning of this year. In addition to countries in the Gulf Cooperation Council, several oil-exporting and emerging market economies (such as Azerbaijan, Jordan, Kazakhstan, and Morocco) have advanced in their vaccination rollouts.
In addition, data available for the first half of 2021 shows that recovery is ongoing despite the new outbreaks. Prospects for oil-exporting economies improved with higher oil prices and gradually declining production curbs.
Nevertheless, the IMF mentioned the recovery is uneven and incomplete, and new challenges are emerging including rising inflation and declining macro policy space. It added that divergent recoveries persist with concerns about economic scarring, inequities are increasing as the low-skilled, the young, women, and migrant workers have been affected the most by the pandemic, as have smaller firms, particularly those in contact-sensitive sectors.
In addition to that, a new pandemic wave is hitting countries with weak vaccination progress. Low-income countries as well as fragile and conflict-affected states are relying on multilateral initiatives for vaccine access and are lagging behind.
“Risks and vulnerabilities are accumulating with the increased uncertainty about the rapidity to surmount the pandemic. Risks include delays in vaccinations; tighter global financial conditions; a premature withdrawal of policy support; persistent inflation; social unrest, geopolitical, and security risks; and climate shocks,” the IMF stated.