Economic Recovery in Uncertain Times
In the Middle East and North Africa region, last year ended with the prospect of a strong economic recovery although uneven and incomplete. Slow vaccine rollouts, unemployment, inflation, trade decline, and growing public debt all took their toll on the financial and economic stability of the region, but the trajectory of recovery seemed tracked, and there was confidence about the region’s growth prospects. However, the Russian invasion of Ukraine changed the equation, and regional countries are now suffering from its economic fallout. Disruptions in trade flows, supply shortages, and the loss of purchasing power are all affecting the regional economic outlook. The war risks undermining the macroeconomic stability of the region, with potentially harsh repercussions at the political and social levels. Additionally, the price of commodities and market disruptions are threatening the energy and food security of the area. These times of economic uncertainty are not hitting all countries within the region in the same way. On the contrary, the current crisis is exacerbating the asymmetries and divergences that already existed between them, with differentiated impacts amongst commodity importer states and oil and gas exporting countries. Oil producers are benefiting from elevated energy prices, while oil importers are suffering due to the consequences of this global increase. According to some estimates, the region’s economies will grow by 5.2% by the end of the year, although this average masks significant differences among countries: 11 out of 17 MENA economies may not recover to pre-pandemic levels by the end of the year.
How could regional governments, international financial institutions, and development assistance contribute to addressing the economic recovery of the MENA region and mitigating the impact of the current crisis? How can we rethink economic reforms and unlock the potential of economic development? How could international and intra-regional trade help to speed up recovery and foster the prospects for sustainable growth and prosperity?
