The oil industry is an integral part of the economy. However, the ongoing coronavirus pandemic had a huge impact on the oil prices and oil industry in general. Recently, the International Monetary Fund (IMF) released its latest regional economic report.
This report highlighted the problems the Middle Eastern and North African economies have to deal with this year. The IMF forecasts a dramatic contraction for the Middle Eastern and North African economies in 2020. Moreover, the organization expects a worse outlook for the region than for the global economy.
Notably, the International Monetary Fund expects the MENA region to contract by 3.3% in 2020, compared to last year’s projected growth of 0.3%. Unfortunately, the situation in the MENA region is more precarious than in other parts of the world. In the case of the global economy, the IMF expects the world economy to contract by 3.0% in 2020.
Moreover, people should take into account that economies of several countries located in the region, struggled even before the coronavirus pandemic. For example, due to high levels of unemployment and low growth.
According to the IMF’s Middle East and Central Asia Director Jihad Azour, economies in the region face issues caused by “dual shocks”. The dual shocks refer to coronavirus and low oil prices. He also mentioned the possibility of civil unrest as a result of “dual shocks”.
Local economies and IMF
The region as a whole is struggling to cope with multiple challenges. For example, the IMF expects the economy of Lebanon to decline by 12% in 2020. Such a result is a serious problem for any country but in the case of Lebanon, the situation is even more complicated. The Mediterranean country has the third-highest debt-to-GDP ratio in the world. This country was facing an economic crisis long before the coronavirus pandemic.
Egypt is the only country in the region the IMF expects to strengthen its economy in 2020 as the local economy is expected to grow by 2%.
Lebanon, as well as Iraq, explored further from the International Monetary Fund. Importantly, the organization has $1 trillion in lending capacity. However, there is an unprecedented demand for assistance.
According to the IMF, oil exports are expected to fall by more than $250 billion across the MENA region.
Last month two largest economies in the region, Saudi Arabia and the United Arab Emirates announced large stimulus packages to mitigate the economic impact of the coronavirus. Largest economies plan to support domestic banking and the private sector.