IMF: Mideast economy set for worst slump in decades

The Middle East and North Africa economy will contract by 3.3 percent this year, the biggest slump in four decades, hammered by the coronavirus and low oil prices, the International Monetary Fund says.

In its World Economic Outlook, the IMF says the damage would be much worse than the region’s last major shock, the 2008-09 global financial crisis, when it managed to post modest growth.

The region, which includes all Arab countries and Iran, will suffer its worst economic performance since 1978 when it was convulsed with unrest and shrank by 4.7 percent, according to World Bank data.

The IMF says that all the Arab countries apart from Egypt will see their gross domestic product (GDP) fall this year.

Saudi Arabia, the region’s heavyweight which is just emerging from an oil price war with Russia that saw crude prices crash, is headed for a 2.3 percent contraction.

“The fast deterioration of the global economic outlook as the epidemic has spread and the breakdown of the OPEC+ agreement among oil suppliers have weighed heavily on commodity prices,” the global lender says.

Its report was prepared before the OPEC+ grouping — which takes in OPEC producers and allies — reached agreement on Sunday to cut output by nearly 10 million barrels per day, the largest in history.

From mid-January to end-March, oil prices dropped by 65 percent or $40 a barrel and natural gas prices declined by 38 percent, the IMF said.

It also projects prices to remain below $45 a barrel through 2023, around 25 percent below the average last year.

— AFP