The region is at the epicenter of both crises besetting the world economy
The shockwaves set off by the crash in oil prices and the coronavirus pandemic have been so fast-moving that economists can barely keep up.
Changes in forecasts for the Middle East and North Africa, or MENA, put the toll inflicted on the region as of April 1 at approximately $116 billion, or about 3.7 percent of last year’s gross domestic product, relative to the outlook on March 19, according to the World Bank.
In its latest regional economic update, released on Thursday, the lender highlighted the lack of clarity.
“Estimates of the costs of the current crisis are fluid, because it is difficult to predict how the global economy, national policies, and societies will react as the pandemic spreads,” it said.
The region is near the epicenter of both crises besetting the global economy. Home to some of the world’s largest oil producers, the Middle East is also contending with a rising number of coronavirus cases and in Iran has one of the biggest outbreaks of the disease outside China.
“More than any other region, MENA is confronting two distinct but related shocks with the spread of the virus and the collapse in oil prices,” said Ferid Belhaj, vice president of the World Bank’s Middle East and North Africa department.
The World Bank said that besides harming local economies through the deterioration of public health, the pandemic is also depressing global demand for the region’s goods and services.
It’s also contributing to a decline in domestic supply and demand because of the restrictions on movement imposed to contain the outbreak, according to the report.
Meanwhile, as lower crude prices directly punish oil exporters, they are also hurting importers by way of a drop in remittances, investment and flows of capital, the World Bank said. Three of the six Gulf Arab economies will probably contract this year, while growth in Saudi Arabia may be just above zero.
The World Bank also singled out lack of data transparency as a drag on economic prospects. MENA is the only region that has seen a decline in data capacity and transparency since 2005, according to the report.