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Economic growth in the Middle East North Africa (MENA) strongly recovered in the second half of 2021 and is poised to step up in 2022, as disruptions caused by the COVID-19 pandemic and oil production cuts wane, the World Bank said.
Output in some economies is now back to pre-pandemic levels and the overall growth in the region will accelerate to 4.4 percent this year, higher than the estimated 3.1 percent in 2021, before moderating to 3.4 percent in 2023, the bank said in its Global Economic Prospects report.
The regional forecast is also in contrast to World Bank’s estimations for global growth, which is expected to decelerate sharply from 5.5 percent in 2021 to 4.1 percent in 2022 amid fresh threats from COVID-19 variants, and as pent-up demand and monetary support dissipate.
However, the World Bank, cautioned that the health outbreak remains a “major risk” for MENA economies, given that only less than two-fifths of the region’s population are fully vaccinated and the rapid spread of Omicron could still impact global demand and lead to lower oil prices.
“Economic disruptions related to the pandemic remain a major risk… Changes to oil prices could undermine activity in the region with gains and losses accruing differently to oil importers and exporters,” the report said.
“The increasing frequency of natural disasters linked to climate change threatens to undermine lives and livelihoods in MENA. Over time, rising temperatures would reduce growing areas for agriculture and yields and exacerbate already-scarce water resources, undermining food security, forcing migration, lowering labour productivity and raising the likelihood of conflict.”
Uneven performance
The World Bank noted that economic performance across the region continues to be uneven due to the differences in the severity and effects of the pandemic.
In Saudi Arabia, the oil output has expanded, while the non-oil sector has recovered on the back of the country’s vaccination campaign.
In Egypt, the economy grew faster than expected due to high consumption, growing remittances and contained inflation, while in Tunisia, the rebound has been hampered by high COVID-19 cases, increased mobility restrictions and political uncertainty.
Overall, consumer inflation in the region is still below its long-run average, except for Lebanon and Iran.
(Reporting by Clefoe Maceda; editing by Seban Scaria)
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