Economies in the Middle East and North Africa (MENA) region are expected to grow by 5.2 percent in 2022 on the back of oil-price windfalls benefitting the region’s oil exporters
FREMONT, CA: The Middle East and North Africa (MENA) region's economies are anticipated to develop by 5.2 percent in the upcoming years, the fastest rate since 2016. Windfalls from rising oil prices will help the region's oil exporters. As vulnerable nations lag, oil producers will profit from rising oil prices and immunization rates. However, tighter global monetary policy, the pandemic's unpredictable course, persistent supply chain disruptions, and rising food prices increase the danger of inflation for the entire region. In these unexpected times, a healthy dose of realism regarding the region's growth prospects is essential.
Policymakers face a significant challenge in managing this wave of uncertainty, and the World Bank is committed to assisting countries in the MENA area throughout this period of escalating risks. In certain MENA nations, currency devaluation is already increasing inflationary pressures. The rollover of existing debt or the issuance of new debt in tighter financing conditions will likely provide greater hurdles for economies with fiscal and debt vulnerabilities as global central banks control inflation expectations.
The MENA region's nations are significantly reliant on imported food. Because poor households tend to spend more of their household budget on food and energy than do wealthy households, the rise in food costs and the increased risk of food insecurity are likely to affect them more than other families. Early economic indications show a worsening of the financial problems plaguing MENA economies, particularly those of middle-income nations that import oil.
GDP per capita, a measure of people's living conditions, will only just surpass pre-pandemic levels in 2020–2021 despite the anticipated growth rate of 5.2 percent, according to the research. The Gulf Cooperation Council countries' GDP per capita is expected to improve by 4.5 percent in 2022 because of rising oil prices, but it will not reach pre-pandemic levels until 2023.
In contrast, the region's middle-income oil exporters are expected to see GDP per capita growth of 3.0 percent in 2023, while oil importers are expected to see GDP per capita growth of 2.4 percent, barely raising living standards over levels before the pandemic. Overall, 11 of 17 MENA economies may not recover to pre-pandemic levels by the end of 2022 if these projections come true.
Only a third of the middle-income MENA nations had greater vaccination rates than their income peers, which adds to the uncertainty surrounding pandemics. Gulf nations had an average vaccination rate of 75.7 percent, excluding Oman, which had a rate of 57.8 percent, significantly higher than that of their higher-income counterparts.