MENA’s economic activity to grow by 2.4% in 2021: World Bank

TRMEEconomic activity in the Middle East and North Africa is forecast to advance by 2.4% this year and 3.5% next year, the World Bank says in its June 2021 Global Economic Prospects

The region should benefit from the recent rebound in oil prices, stronger external demand, and less economic disruptions from COVID-19 outbreaks. As vaccinations rise, mobility restrictions ease, oil production cuts taper, and damage to balance sheets reverse, growth should accelerate further to 3.5% in 2022. The outlook is, however, uncertain and depends on the course of the pandemic and vaccination availability and take-up.

In oil exporters, higher oil prices will support growth and government revenue recoveries. Oil prices are expected to average US$62 per barrel in 2021 and 2022. Saudi Arabia is forecast to grow 2.4% this year and 3.3% in the next, reflecting positive pandemic developments, higher oil prices and tapering oil production cuts, and the start of a new government investment programme. Iran is expected to recover to 2.1% in 2021 and 2.2% in 2022 as a rise in industrial production outweighs continued suppressed demand for services amid high cases of COVID-19.

The pandemic is expected to continue to be a drag on economic growth among oil importing economies. In Egypt, growth is forecast to slow to 2.3% in FY2020/21, reflecting damage to tourism, manufacturing, and oil and gas extractives from the pandemic, before strengthening again in FY 2021/22. In Morocco, output is expected to rebound to 4.6% in 2021 as drought conditions fade, policy remains accommodative, and domestic mobility restrictions ease.

Economies beset by fragility, conflict, and violence face mixed prospects. In Libya, the creation of an interim unity government and the lifting of the oil blockade is expected to restore economic activity to close to 2019 levels. In Iraq, output is forecast to expand as oil production rebounds but won’t be enough to reverse a substantial rise in poverty rates. In Lebanon, further contraction is expected in 2021. 

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