MENA to See $227bn COVID-Related Losses in 2021
RIYADH (Middle East Eye) – The Middle East and North Africa (MENA) region is estimated to face a loss of $227bn by the end of the year due to the COVID-19 pandemic, with public debt levels expected to rise at the fastest rate this century, the World Bank says.
In its first economic update of 2021, the World Bank said the regional economy, which was hit hard by the pandemic and the subsequent lockdown orders, is expected to recover by 2.2 percent this year after contracting by 3.8 percent in 2020.
"But that recovery is unlikely to be strong enough to get the MENA region’s output back to pre-pandemic levels,” Ferid Belhaj, vice-president for the region, wrote in the report.
"And the substantial borrowing that MENA governments had to incur to finance essential health and social protection measures boosted government debt dramatically.”
The global financial institution said the average public debt for countries in the region was expected to increase by eight percentage points, from 46 percent of gross domestic product (GDP) in 2019 to 54 percent this year, the fastest increase in the 21st century.
Plummeting oil prices combined with the pandemic to create an even bigger problem for the region’s oil exporters, with Saudi Arabia’s deficit seeing its largest single-year rise in more than three decades.
Oil-importing countries in the region could see debt levels reach 92 percent.
The high debt levels are due to COVID-19 having an acute impact on countries that have already faced economic hardship, such as Lebanon.
Last year, the World Bank warned that Lebanon was in a dire position, and the financial crisis in the country is expected to see GDP decline by 13.2 percent in 2021, after already declining by 19 percent in 2020.
In its first economic update of 2021, the World Bank said the regional economy, which was hit hard by the pandemic and the subsequent lockdown orders, is expected to recover by 2.2 percent this year after contracting by 3.8 percent in 2020.
"But that recovery is unlikely to be strong enough to get the MENA region’s output back to pre-pandemic levels,” Ferid Belhaj, vice-president for the region, wrote in the report.
"And the substantial borrowing that MENA governments had to incur to finance essential health and social protection measures boosted government debt dramatically.”
The global financial institution said the average public debt for countries in the region was expected to increase by eight percentage points, from 46 percent of gross domestic product (GDP) in 2019 to 54 percent this year, the fastest increase in the 21st century.
Plummeting oil prices combined with the pandemic to create an even bigger problem for the region’s oil exporters, with Saudi Arabia’s deficit seeing its largest single-year rise in more than three decades.
Oil-importing countries in the region could see debt levels reach 92 percent.
The high debt levels are due to COVID-19 having an acute impact on countries that have already faced economic hardship, such as Lebanon.
Last year, the World Bank warned that Lebanon was in a dire position, and the financial crisis in the country is expected to see GDP decline by 13.2 percent in 2021, after already declining by 19 percent in 2020.