Tunis/Tunisia — Real GDP growth in the MENA region is projected to pick up to 4.0 percent in 2021, an upgrade of 0.9 percentage point relative to October, the International Monetary Fund (IMF) said in a report released Sunday under the title: "Regional Economic Outlook: Middle East and Central Asia."
A year into the coronavirus (COVID-19) pandemic, the race between vaccine and virus entered a new phase in the Middle East and Central Asia region, and the path to recovery in 2021 is expected to be long and divergent.
The outlook will vary significantly across countries, depending on the pandemic's path, vaccine rollouts, underlying fragilities, exposure to tourism and contact-intensive sectors.
2021 will be the year of policies that continue saving lives and livelihoods and promote recovery, while balancing the need for debt sustainability and financial resilience. At the same time, policymakers must not lose sight of the transformational challenges to build forward better and accelerate the creation of more inclusive, resilient, sustainable, and green economies. Regional and international cooperation will be key complements to strong domestic policies.
A year after the start of the pandemic: vulnerabilities are rising
The pandemic's effect on revenue and the response to mitigate its impact led to a generalised widening of deficits in 2020, despite expenditure reprioritisation efforts. Compared with pre-pandemic forecasts, primary deficits widened, on average, by 7 percent of GDP. Although some countries were able to contain debt issuance by using government deposits (Algeria, Azerbaijan, Oman, Qatar, Saudi Arabia, Tunisia, UAE) and/ or sovereign wealth funds (Algeria, Azerbaijan, Bahrain, Kazakhstan, Kuwait, Oman, UAE), the combination of higher deficits and the economic contraction led to an average increase of 9 percentage points in the debt-to-GDP ratio. By the end of 2020, thirteen countries had government debt exceeding 70 percent of GDP (compared with nine by the end of 2019).
Fourteen countries, compared with five in prepandemic times, had public gross financing needs exceeding 15 percent of GDP.