## April 11, 2021: REO Launch Press Briefing

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**Canonical URL:** [April 11, 2021: REO Launch Press Briefing](https://www.imf.org/-/media/files/publications/reo/mcd-cca/2021/april/english/pressremarks.pdf)

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### Introduction: Amid hope, divergent recovery paths ahead
- A year into the pandemic the region reacted with urgency and resolve, implementing measures aimed at containing the pandemic’s spread and, in many countries, fiscal support and accommodative monetary policy that helped cushion the economic blow.
- COVID-19 vaccine and favorable external environment offer hope that the end of the crisis is within sight, but the path to recovery is long and divergent, with many countries falling behind.
- Reasons for divergence:
  - Progress on the vaccine rollout varies widely across the region, with some countries, like the GCC and Morocco, in advanced stages, while others risk falling behind, as widespread inoculation is not expected until 2022-23.
  - Fragile and conflict-affected states, especially those with low incomes, face a particularly difficult path ahead, given their limited vaccine access and ongoing instability.
  - Countries heavily reliant on contact-intensive sectors, especially tourism, will recover more slowly.
  - Countries that did not implement strong fiscal support in the wake of the pandemic are further behind on the road to recovery.
  - The rise in oil prices is helping the fiscal and external balances of oil exporters and supporting the non-oil recovery, although OPEC+ cuts are limiting their impact on overall growth.

### The regional outlook
- Outlook highly uncertain; key risks include the pandemic’s trajectory, dependence on tourism, and available policy space.
- Regional growth projections:
  - Middle East and North Africa region: real GDP growth is expected to pick up to 4 percent in 2021.
  - Caucasus and Central Asia: output is projected to rise by 3.7 percent in 2021, returning to its precrisis level.
  - Accelerating vaccinations could boost GDP by 1 percent by 2022.
- The pandemic has exacerbated economic challenges and exposed gaps in protecting the most vulnerable, ensuring equal opportunities for women and young people, and reducing poverty.
- Rising government debt and growing financing pressures worsened in the past year and will constrain further policy action.
- Risk highlighted: a rapid rise in US bond yields could lead to tighter financial conditions, renewed capital outflows, and higher sovereign spreads.

### Policies to emerge from the crisis toward a better future
- Immediate priorities:
  - Secure access to vaccines and support health systems; regional and international cooperation critical to ensure low-income states are not left behind.
- Macroeconomic policy guidance:
  - Keep policy support flexible, well-targeted, and in place until the recovery is entrenched.
  - For countries without policy space, further support should be balanced with debt sustainability.
  - Develop medium-term fiscal and debt management strategies to reduce elevated debt burdens while providing maximum support to growth.
- Targeted support and labor market policies:
  - Support should target viable firms, especially small ones.
  - Prepare workers for the post-pandemic world, especially the region’s large youth population.
- Structural priorities for a resilient recovery:
  - Address deep-seated transformational challenges such as persistent poverty and climate change.
  - Capitalize on increasing digitalization to prepare economies for the future and improve the efficiency of social safety nets.
  - Prioritize improving governance and policies that adapt and invest in climate resilient infrastructure.

### IMF support and closing
- In 2020, the IMF supported the region with $17 billion in financing.
- The IMF remains a committed partner as countries move into the recovery phase and work to emerge from the crisis and build a better future.
- Upcoming outreach: analysis of the outlook for the MENA region to be discussed in a webinar Monday with a distinguished panel of experts, followed later in the week with an event focused on the CCA.

*Source: pressremarks (April 11, 2021).*

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_Source: https://www.imf.org/-/media/files/publications/reo/mcd-cca/2021/april/english/pressremarks.pdf_