## October 19, 2021: MCD Press Briefing — Jihad Azour

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**Canonical URL:** [October 19, 2021: MCD Press Briefing — Jihad Azour](https://www.imf.org/-/media/files/publications/reo/mcd-cca/2021/october/reo-october-2021-press-remarks-english.pdf)

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### Uncertain outlook
- Regional GDP projections:
  - Middle East and North Africa (MENA) real GDP to expand by 4.1 percent in both 2021 and 2022, after contracting by 3.2 percent in 2020.
  - Caucasus and Central Asia (CCA) real GDP projected at 4.3 percent in 2021 and 4.1 percent in 2022, following a contraction of 2.2 percent in 2020.
- Recovery characteristics:
  - Recovery is ongoing but uneven and incomplete; success of the vaccine rollout varies widely, with low-income countries and fragile and conflict-affected states showing limited progress.
  - Over the medium term, real GDP is expected to remain below precrisis projections by around 2½ percent in MENA and by around 7 percent in the CCA.
  - Employment recovery remains weak.
  - Rising inflation is reducing the ability to use monetary policy to spur growth.
- Elevated risks:
  - Renewed uncertainty around new pandemic waves and vaccination delays.
  - Tighter global financial conditions.
  - Social unrest and geopolitical risks.
  - Climate shocks.

### New challenges emerge
- Distributional impacts:
  - Inequities are on the rise, with young people, women, and migrant workers, as well as small companies, bearing the brunt of the crisis.
- Labor market findings:
  - Average unemployment rate for the Middle East and Central Asia rose to 10.7 percent in 2020, far exceeding rates seen during other recent crises.
  - Workers in contact-intensive sectors were particularly affected.
  - Policies advised to improve outcomes include higher growth and stronger labor market responses to growth, with attention to women and young people.
- Corporate sector findings:
  - The corporate sector has bounced back to pre-pandemic levels overall, but recovery is unequal.
  - Smaller firms and those in contact-intensive sectors are lagging behind.
  - Digitally enabled firms and those with strong precrisis fundamentals were able to partly mitigate the pandemic’s impact.

### Policy tradeoffs and building a transformational recovery
- Immediate priorities:
  - Accelerating vaccine acquisition and distribution, particularly by low-income countries, requiring strong global and regional cooperation.
  - Policy support should target the most vulnerable; eventual withdrawal should be gradual and well communicated.
- Monetary and fiscal policy guidance:
  - If inflation proves persistent, central banks may need to adjust policy rates to prevent de-anchoring of inflation expectations.
  - Fiscal adjustments should be anchored in a credible, medium-term fiscal plan that clearly illustrates debt sustainability.
  - Improving policy frameworks will help reduce trade-offs and bolster credibility.
- Opportunities for transformation:
  - The situation could be a transformational moment toward a more inclusive, resilient, and greener future.
  - Several countries are planning to reorient the role of the state toward health and education, expand social safety nets, and incentivize digital and climate-resilient technologies.
- IMF engagement and support:
  - The IMF continues to engage closely with the region’s countries to provide policy advice and technical support, as well as US$20 billion in financing since the crisis began.
  - The Fund has also allocated $49.3 billion of Special Drawing Rights to supplement the region’s reserve assets.

*Source: October 19, 2021 MCD Press Briefing — Jihad Azour*

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_Source: https://www.imf.org/-/media/files/publications/reo/mcd-cca/2021/october/reo-october-2021-press-remarks-english.pdf_