It also projected a 7.3% contraction in oil-exporting Middle East, North Africa and Pakistan in 2020 and a 3.9 per cent rebound in 2021.
Oil-exporting countries in the Middle East and North Africa will lose $270 billion (Dh991 billion) in oil export receipts in 2020 compared to last year due to the drop in oil prices and production cuts under the Opec+ agreement, the International Monetary Fund (IMF) said on Monday.
It warned that beyond pandemic risks, continued declines in oil prices or production could further erode oil exporters’ policy space and potentially affect these countries’ banking systems.
“Any tightening of financial conditions could complicate debt rollovers for firms and sovereigns in the region,” the IMF said in an update on the region’s economic outlook.
Sovereigns face about $21 billion in maturing external sovereign debt in the second half of 2020.
The IMF projected that real GDP of GCC economies will contract 7.4 per cent this year but will recover 2.6 per cent next year, while non-oil GDP will shrink 7.1 per cent and grow 3.4 per cent in 2021.
It also projected a 7.3 per cent contraction in oil-exporting Middle East, North Africa and Pakistan (Menap) countries in 2020 and a 3.9 per cent rebound in 2021, revising down its projections by 3.1 per cent and 0.8 per cent, respectively.
This reflects a double-whammy from oil price fluctuations and supply cuts caused by pandemic-induced lockdowns.
“Non-oil GDP in these economies has also been marked down as stay-at-home rules and other Covid-19 containment measures are causing larger-than-expected disruptions to the tourism, hospitality, transportation, and retail sectors,” the IMF said.
Amid the erosion of tourism and remittances receipts and oil supply cuts, current account balances of Menap oil-exporters are projected to deteriorate further in 2020 to 5.4 per cent of GDP in 2020 versus 3.2 per cent in last year.
“Going forward, the economic outlook and balance of risks will be subjected to elevated uncertainty around the evolution and persistence of the pandemic. The downturn could be less severe than forecast if, for example, there is an earlier-than-expected availability of a vaccine or if country authorities find a way to maintain activity (and health systems) without stringent lockdowns in the face of any subsequent waves,” said Jihad Azour, director of the Middle East and Central Asia Department at the IMF.
In addition, the potential decline in expatriate workers – which account for more than 70 per cent of the labour force in some oil-exporting countries – could dampen recovery.
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