According to the Associated Press on October 12th, the International Monetary Fund (IMF) said on the 12th that as the external shocks caused by the Ukrainian war and global inflation gradually subside, various economies in the Middle East are gradually recovering. However, the escalating war between Israel and Hamas may harm this prospect.
IMF President Christina Georgieva said the organization is closely monitoring the economic impact of the war, especially on the oil market.
At a press conference held during the annual meeting of the IMF and the World Bank in Marrakech, Morocco, she said, "It is clear that this is a new dark cloud on the horizon where the world economy is not the brightest, a new dark cloud that is not needed on this horizon
The IMF predicts that as countries continue to raise interest rates and respond to rising oil prices and some regional challenges, the economic growth rate of the Middle East and North Africa will slow down to 2% this year from 5.6% last year. It is expected that the growth rate in 2024 will increase to 3.4%.
This is lower than the IMF's forecast of 3% global economic growth this year, but higher than the expected 2.9% next year.
The IMF says wealthy countries in the Gulf and other regions will benefit from rising oil prices, while Egypt and Lebanon are still struggling to cope with soaring inflation.
Climate change poses challenges to the entire region, as demonstrated by the devastating floods that occurred in war-torn Libya last month.
According to the report, it is expected that the average inflation rate in the Middle East and North Africa will peak at 17.5% this year and decline to 15% in 2024. If Egypt and Sudan are excluded, both numbers will decrease by about one-third. In September, Egypt's inflation rate soared to nearly 40%, while various armed factions in Sudan have been fighting since April.
Egypt is the most populous Arab country and the world's largest importer of wheat. Since the Russia-Ukraine conflict disrupted Ukraine's important wheat exports, wheat prices have soared. Food prices increased by 70% year-on-year in August.
Egypt received $3 billion in rescue funds from the IMF last year, but was required to carry out a series of economic reforms, including implementing flexible exchange rates and raising borrowing costs.
The IMF also called on Egypt to create a fair competitive environment between the public and private sectors. Previously, Egypt provided decades of subsidies for basic commodities and allowed the military to play an excessive role in the economy.
The Director of the IMF's Middle East and Central Asia Department, Jihad Azur, said that Egypt has made greater progress in certain areas than other countries. He said, "The Egyptian economy is huge, has great potential, and is full of hope. It is very important to provide space for the private sector to play a leading role. That is why redesigning the role of the state to become more of a driving force rather than a competitor is extremely important
In Lebanon, which has suffered a severe economic collapse since 2019, the IMF is still waiting for the country's leaders to reach a preliminary agreement last year to implement financial and economic reforms that can pave the way for relief.
Azur pointed out some successes achieved by other countries.
He said that the reforms implemented by Morocco have achieved results in promoting economic growth and stability.
He also mentioned Jordan, a close ally of the West and facing severe water shortages. He said that although the COVID-19 epidemic, inflation and regional instability have brought continuous impacts, Jordan has maintained economic stability.