Meeting comes amid uptick in prices towards the end of last year despite markets remaining uncertain.
The Middle East will see an uneven economic recovery from the COVID-19 pandemic, an International Monetary Fund (IMF) official said, as countries move at different speeds to secure vaccines and fiscal policy responses differ across the region.
Oil-rich Gulf Cooperation Council countries have secured bilateral agreements with several vaccine providers, but fragile and conflict-afflicted states with limited healthcare capacities rely on the limited coverage of the COVID-19 Vaccines Global Access Facility (COVAX) initiative by the World Health Organization (WHO), which could delay broad vaccine availability to the second half of 2022.
COVID-19’s second wave, which began last fall, has particularly battered the region’s recovery efforts. Many countries have seen infection and death rates surpass those seen during the first wave.
“What we are seeing today is still a race between the vaccine and the virus, and this will shape the recovery in 2021,” said Jihad Azour, director of the Middle East and Central Asia Department at the IMF.
“We will have recovery across the board, but it will be divergent, uneven and uncertain,” he said, adding that accelerating vaccinations could improve growth outlooks by 0.3 percent to 0.4 percent.
The IMF has revised growth estimates for 2020 in the Middle East and North Africa because of a stronger-than-expected performance from oil exporters and the absence of a second wave in some countries, which has boosted non-oil economic activity.
Countries that were agile and fast in providing stimulus packages last year will experience a better recovery, the IMF said.
The IMF also forecasts that emerging markets in the Middle East and Central Asia will lag behind their peers elsewhere. Most countries will not recoup 2019 gross domestic product (GDP) levels until 2022 and fragile and conflict-affected states will have an especially difficult time.
The United Arab Emirates, where vital economic sectors such as tourism and transportation suffered because of the pandemic, will grow by 3.1 percent this year, according to the IMF’s latest estimates.
That is up from an October forecast of a 1.3 percent growth, due to the management of the second wave, which has allowed the economy to recover.
“There is definitely also the improvement we saw in the oil sector,” said Azour. “Oil prices have now regained the ground lost in 2020 … this also has improved their economic conditions.”
A boost coming from Dubai hosting the Expo world’s fair later this year is also seen as a contributing factor, he said.
The IMF expects Saudi Arabia, the biggest Arab economy, to grow by 2.6 percent this year – down from a previous forecast of 3.1 percent.
“It’s important in the case of Saudi to separate oil and non-oil sectors. The non-oil sector will recover faster and we expect the recovery to reach a growth of 3.5 percent this year,” said Azour.
“For the oil sector, the decision to reduce output by a million barrels a day led to a downward adjustment of the oil economy,” he said, referring to Saudi Arabia’s decision last month to implement voluntary crude output cuts.