The Arab economies are facing a multi-level shock from COVID-19 despite the prompt responses by many governments in the region, the regional head of the International Monetary Fund has stated.
Low oil prices will not only further distress producers but will also impact non-oil Arab economies, said Dr Jihad Azour, Director of the Middle East and Central Asia Department at the IMF.
“Starting with long-term structural problems, Arab countries will have difficulties addressing the direct impact of the ongoing slowdown,” said Dr. Azour, adding that one thing that helps in the recovery in Arab countries is that they have young populations.
Two-thirds of the Arab population in the region is less than 30 years old, and this human capital advantage would play a key role in speeding up the regional economic recovery in the post-COVID19 market, he said.
Dr Azour expects Arab countries to continue their technology adoption programs as the economic recovery would depend on the efficiency of such initiatives.
What is needed, he noted, are dedicated efforts to implement what Arab governments and international organizations know are essential reforms to the structure and emphasis of Arab economies.
Oil producers in the Arab world should continue their economic diversification drive, he said, adding that ongoing COVID-19 pandemic should prompt countries in the Middle East and North Africa to focus on public health and social security. “The countries must work towards reducing trade barriers, decreasing financial vulnerability and avoiding high costs of armed conflicts.”
Dr Azour was answering questions in a webinar last night hosted by Khalil E. Jahshan, who is the executive director of Arab Center Washington DC.
In Tuesday’s IMF podcast on Arab economies, Dr. Azour said all countries in the region were affected by the COVID19-led economic crisis and most of them have introduced a certain number of measures to protect life and livelihoods and also to protect certain sectors in the economy.
“Most challenging moments”
“If we compare to the last hundred years, this is one of the most challenging moments in economic history for both Central Asia Caucuses as well as also for the Middle East and North African countries,” he said.
The IMF’s Middle East head believes the oil exporting countries in the Arab world will face the impact of the shock on their revenues and fiscal situation.
Countries with ample buffers could use them to mitigate some of the repercussions of the shock, but the economic management is going to be more complicated for the nations with less buffers. Oil importing countries will be impacted due the fluctuations in the levels of remittances, capital flows and investment coming from the oil producers, he said.
During the Arab Center webinar, Dr. Azour also provided some global perspective on the impact of COVID19 pandemic.
The current economic crisis caused by COVID19 is not like that of 2008-2009 since it has precipitated a deeper and wider shock to the economies of individual countries as well as to the international economy at large, he said.
What also specifically differentiates the current economic crisis is the degree and level of uncertainty associated with it. He said the international community and organizations knew what instigated the 2008 financial crisis; however, the severity and impact of the current one remains unknown, thus addressing its effects is still indeterminable.
He stressed that the IMF’s current policy, which includes loans and advisory services, is to give breathing space so that “emerging economies and low-income countries are not left behind” in this period.
He predicted that there will be a new globalization effort that may try to address the deficiencies of the former international economy. The international economy, he argued, will have to determine how to address challenges to growth and to make sure that this growth is equitable between low income and developed countries.
(Reporting by Atique Naqvi; editing by Seban Scaria)
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