All Arab countries economies are expected to shrink, except for Egypt’s economic growth that is set to increase two percent within 2020, the Arab Monetary Fund (AMF) said in its latest report on the Arab economic outlook.
The GDP of Arab countries is likely to shrink by about four percent, economies of Arab oil exporters are expected to contract by 4.7 percent, while the more diversified Arab economies are expected to decline by two percent in 2020 driven by coronavirus.
The AMF also expected inflation in Arab countries to surge to 8.8 percent in 2020 and to decline to 6.3 percent in 2021.
Coronavirus stimulus packages that Arab countries have launched to contain the pandemic and its impacts reached $231.6 billion, according to AMF estimations.
Recovery in these countries faces challenges, most notably the narrow policy space available to support medium-term recovery, in addition to urgent needs to ensure the efficient allocation of resources between economic sectors to keep pace with the dynamic structural transformation imposed by the crisis.
“The global economy is witnessing its worst economic crisis since the Great Depression of the 1930s, due to the outbreak of the Covid-19 pandemic which causes sharp and unprecedented decline in economic activities in advanced, developing, and emerging-market economies alike,” the report said.
“Above and beyond, the outbreak of the pandemic is negatively affecting consumers’ and producers’ levels of confidence, production and productivity, domestic demand, trade, and international capital flows, bringing them all down to their lowest level ever for a long time….”
“Accordingly, the global economy is expected to shrink by five to eight percent, and a loss of between $8-$12 trillion is expected over 2020 and 2021, based on estimates released by international organisations,” reads the report.
The SMEs sector in Arab countries, which constitutes about 45 percent of GDP and one-third of official employment, has been severely affected by the current crisis.
In addition, Arab oil exporters are more likely to bear nearly half of the burden of oil supply cuts in 2020 and 2021 approved the OPEC+ agreement, which will have a major impact on Arab economies, according to the report.
The report highlighted that despite ongoing efforts towards diversifying oil-exporting economies, the oil sector continues to contribute about 27 percent of these Arab economies GDP, 42 percent of total exports, and 60 percent of public revenues.
