The International Monetary Fund (IMF) has released the Regional Economic Outlook: Middle East and Central Asia report. According to the report, the coronavirus disease (COVID-19) pandemic continues to sweep across the region, though countries are cautiously proceeding with reopening. The necessary public health response to the pandemic has greatly decreased mobility and has come at a steep economic cost. As a result, real GDP in the region is projected to fall by 4.1 percent in 2020.
This contraction is 1.3 percentage points larger than projected in April 2020. With global recovery subdued, downside risks continue to dominate the outlook as the pandemic continues to test countries. Ensuring adequate resources for health systems and correctly targeting support programs are still immediate priorities. In the near future, governments and policymakers need to continue to act decisively to secure jobs, provide liquidity to businesses and households, protect the poor, and put in place a carefully designed economic road map to recovery. Further actions will be necessary to address pressing vulnerabilities in countries with limited fiscal space to ensure a smooth recovery while maintaining macroeconomic sustainability.
The report states that amid COVID-19 lockdown measures, social tensions and geopolitical risk appear to have de-escalated during the pandemic. Nonetheless, regional uncertainty remains high given ongoing conflicts in Afghanistan, Libya, Somalia, Syria, and Yemen, limiting policy reactions. The renewed hostilities in the Nagorno-Karabakh conflict zone add further risk. Lebanon, in particular, remains in a difficult situation, with a projected contraction of 25 percent for 2020.
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