- Geopolitical issues, higher food prices and potential supply shortages are impacting the region significantly, while oil and gas exporters, particularly in MENA, benefit from higher energy prices.
- Carefully calibrated policies will need to manage uncertainties, maintain economic stability, and support the recovery while protecting the vulnerable. Structural reforms have become even more urgent to prevent scarring and enhance resilience ahead.
Dubai, UAE: Dubai International Financial Centre (DIFC), the leading global financial centre in the Middle East, Africa and South Asia (MEASA) region, co-hosted the virtual launch of the International Monetary Fund (IMF) April 2022 Regional Economic Outlook (REO) for the Middle East and North Africa (MENA) region.
According to the IMF report titled ‘Divergent Recoveries in Turbulent Times’, the war in Ukraine and sanctions on Russia are exacerbating the divergence in recovery prospects for the MENA region. Countries in the Middle East and Central Asia region surprised with growth on the upside in 2021 and maintained momentum entering 2022 despite surging inflation and a temporary pandemic-induced slowdown in January.
Despite better-than-expected economic performance in 2021, the economic environment in 2022 is defined by extraordinary headwinds and uncertainties, particularly for commodity importers, with higher and more volatile commodity prices, rising inflationary pressures, faster-than-expected monetary policy normalisation in advanced economies, and a lingering pandemic.
Oil-importing countries face the challenge of rising food and energy prices and tightening financial conditions, fuelling inflation and worsening external and fiscal accounts. Some countries are also directly exposed to supply disruptions from the war, given their heavy reliance on wheat and energy imports from Russia and Ukraine. On the other hand, oil exporters will benefit from the rise in energy prices, but they can still be negatively affected by volatility in oil and gas markets and tighter borrowing costs.
Policymaking has become increasingly complex, with dwindling macro policy space to deal with shocks, amid high debt and inflation. Policies will need to be calibrated carefully to country circumstances to manage uncertainties, maintain macroeconomic stability, and support recovery, and ensure food and energy security while protecting the most vulnerable. Structural reforms have become even more urgent to prevent scarring from the pandemic and the war, ensure an inclusive recovery, and enhance resilience ahead.
Arif Amiri, Chief Executive Officer at DIFC Authority, said: “DIFC’s long-standing partnership with the IMF on the Regional Economic Outlook report allows us to collectively shape the thinking of decision-makers within the finance industry and others who are contributing to the economic growth of Dubai and the UAE. The latest report comes with a sense of optimism for Dubai and DIFC’s clients who are best placed to make the most of the opportunities that will support sustainable growth in a post-pandemic world.”
Jihad Azour, Director of the IMF’s Middle East and Central Asia Department, said: “In the current macroeconomic environment, policymakers must prioritise accelerating structural reforms to mitigate the impact of tighter macroeconomic policies on growth, address long-term scarring from the pandemic and the war in Ukraine, and help pave the way toward a more resilient, inclusive, and greener future.”
The IMF Regional Economic Outlook report details trends and developments across the Middle East and Central Asia. The report’s findings and indicators are widely used as a benchmark for future economic projections and set the tone for growth, trade and investment. The full report can be accessed here: https://www.imf.org/en/Publications/REO/MECA/Issues/2020/10/14/regional-economic-outlook-menap-cca
About Dubai International Financial Centre
Dubai International Financial Centre (DIFC) is one of the world’s most advanced financial centres, and the leading financial hub for the Middle East, Africa and South Asia (MEASA), which comprises 72 countries with an approximate population of 3 billion and an estimated GDP of USD 7.7 trillion.
With an 18-year track record of facilitating trade and investment flows across the MEASA region, the Centre connects these fast-growing markets with the economies of Asia, Europe and the Americas through Dubai.
DIFC is home to an internationally recognised, independent regulator and a proven judicial system with an English common law framework, as well as the region’s largest financial ecosystem of almost 30,000 professionals working across over 3,600 active registered companies – making up the largest and most diverse pool of industry talent in the region.
The Centre’s vision is to drive the future of finance through cutting edge technology, innovation, and partnerships. Today, it is the global future of finance and innovation hub offering one of the region’s most comprehensive FinTech and venture capital environments, including cost-effective licensing solutions, fit-for-purpose regulation, innovative accelerator programmes, and funding for growth-stage start-ups.
Comprising a variety of world-renowned retail and dining venues, a dynamic art and culture scene, residential apartments, hotels and public spaces, DIFC continues to be one of Dubai’s most sought-after business and lifestyle destinations.
For further information, please visit our website: difc.ae, or follow us on Twitter @DIFC.
Dubai International Financial Centre Authority
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