Regional Economic Outlook: Trade-Offs Today for Transformation Tomorrow
Middle East and Central Asia, April 11, 2021
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Bibliographic details
- Published: April 11, 2021
- Series: Middle East and Central Asia
Regional developments and near-term outlook
- A year into the coronavirus (COVID-19) pandemic, the race between vaccine and virus entered a new phase in the Middle East and Central Asia, and the path to recovery in 2021 is expected to be long and divergent.
- The outlook will vary significantly across countries, depending on:
- the pandemic’s path,
- vaccine rollouts,
- underlying fragilities,
- exposure to tourism and contact-intensive sectors,
- policy space and actions.
- 2021 will be the year of policies that continue saving lives and livelihoods and promote recovery, while balancing the need for debt sustainability and financial resilience.
- Policymakers must also address transformational challenges to build forward better and accelerate the creation of more inclusive, resilient, sustainable, and green economies.
- Regional and international cooperation will be key complements to strong domestic policies.
Government debt, financing, and legacy risks from the pandemic
- The coronavirus (COVID-19) crisis led to a surge in government debt and financing needs as many countries in the Middle East and Central Asia reacted swiftly to mitigate the pandemic’s impact.
- Several countries successfully accessed international financial markets; domestic banks covered a significant share of emerging markets' financing needs, further expanding their already significant exposure to the public sector.
- By contrast, most low-income countries (LICs) had a small response to the crisis because of financing and policy space constraints.
- Public gross financing needs in most emerging markets in the Middle East and Central Asia are expected to remain elevated in 2021–22, with downside risks in the event of:
- tighter global financial conditions, and/or
- delayed fiscal consolidation due to weaker-than-expected recovery.
- Further reliance on domestic financing will reduce banks’ ability to support the private sector’s emergence from the crisis, thus prolonging the recovery.
Policy recommendations and priorities
- Adopt credible medium-term fiscal and debt management strategies.
- Implement policy actions to develop domestic capital markets and mitigate banks’ overexposure to the sovereign.
- Balance policies that:
- continue saving lives and livelihoods,
- promote recovery,
- ensure debt sustainability,
- entrench financial stability.
- Maintain focus on transformational reforms to create more inclusive, resilient, sustainable, and green economies.
- Strengthen regional and international cooperation as a complement to strong domestic policies.
Data, projections, and technical assumptions
- The following statistical appendix tables contain data for 32 MCD countries and territories. Data revisions reflect changes in methodology and/or revisions provided by country authorities.
- A number of assumptions have been adopted for the projections presented in the April 2021 Regional Economic Outlook Update: Middle East and Central Asia:
- It has been assumed that established policies of national authorities will be maintained.
- The price of oil will average US$52.64 a barrel in 2021 and US$50.07 a barrel in 2022.
- The six-month London interbank offered rate (LIBOR) on U.S.-dollar deposits will average 0.3 percent in 2021 and 0.4 percent in 2022.
- These assumptions are working hypotheses rather than forecasts; the uncertainties surrounding them add to the margin of error in the projections.
- The 2021 and 2022 data in the tables are projections based on statistical information available through late March 2021.
Regional Economic Outlook: Trade-Offs Today for Transformation Tomorrow — April 2021 (IMF web landing page content).
Content in this bundle
- Key Messages: Regional Economic Outlook for the Middle East and Central Asia; April 2021
- MENA, Afghanistan, and Pakistan: Selected Economic Indicators, 2000–22
- Press Briefing Remarks: April 2021 Regional Economic Outlook for the Middle East and Central Asia
- statsapp
- Dataset overview
- Full Report
References
- IMF Data Portal
- [IMF Data Mapper® v3
Plot, compare and import data](https://www.imf.org/external/datamapper/datasets/MCDREO)