The Mena region will face a coronavirus-induced loss of $227 billion this year, exacerbating underlying poverty and developmental challenges, according to the World Bank.
The region’s economy, which is expected to have shrunk by 3.8 per cent last year, is set to recover by only 2.2 per cent this year, the lender said in a report on Friday.
Public debt, which grew as nations borrowed to avert health and economic crises, will hit 54 per cent of the region's gross domestic product this year, up from 46 per cent in 2019.
“Most Mena countries may find themselves in a post-pandemic world, stuck with a debt service bill sucking up resources that otherwise could be devoted to economic development,” said Ferid Belhaj, World Bank vice president for the Mena region.
The debt levels of oil-importing countries in the region could climb to 92 per cent of GDP this year, the Washington lender projected.
A recovery next year could prove challenging and will depend on a number of factors.
However, it will largely be contingent on efforts to contain the health crisis, according to Roberta Gatti, the World Bank’s chief Mena economist.
Economic recovery depends on the pace of Covid-19 vaccination campaigns and whether countries can use data to communicate clearly and assure tourists and foreign investors, said Ms Gatti.
“We know that some actions will make that recovery [pick up pace],” she said.
The Covid-19 economic crisis is having an “unequal impact” across different demographics and industries in the region.
Governments were urged to focus on spending that will lessen the suffering of poor households and vulnerable families.
The $227bn loss was calculated using macroeconomic data compiled since the pandemic sparked lockdowns. However, it does not take into account crucial human capital indicators, said Ms Gatti.
“The health services in some countries, particularly maternal health and child health and nutrition, are affected,” she said.
“And we know that when workers lose their jobs, there is a scarring effect and workers end up having lower earnings later on. So, all of these losses are not included in these $227bn.”
High debt levels will have a debilitating impact on Mena economies, particularly nations such as Lebanon that already faced a fiscal crisis before the pandemic.
The World Bank issued a warning earlier this year that Lebanon's GDP could shrink by 13.2 per cent this year, after contracting by 19.2 per cent last year.
The country faces its worst economic crisis and the Washington lender said half of its population could fall into poverty this year.
Lebanon’s debt-to-GDP ratio surged to 170 per cent last year, according to the International Monetary Fund.
It defaulted on $30bn worth of international debt last year, with political turmoil and an explosion at Beirut port causing the economy to deteriorate. The Lebanese pound has lost more than 90 per cent of its value while the average inflation rate stood at 84.9 per cent last year.
“Actually, crisis can also be a trigger for positive change,” said Ms Gatti, citing the example of Morocco, which adopted universal health cover as a result of the pandemic.
The World Bank called for “transparency and good governance” to help the most indebted countries manage their debt.
“It can help governments select the right public investment, the ones that are complimentary to the private sector,” said Ms Gatti.
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Building boom turning to bust as Turkey's economy slows
Deep in a provincial region of northwestern Turkey, it looks like a mirage - hundreds of luxury houses built in neat rows, their pointed towers somewhere between French chateau and Disney castle.
Meant to provide luxurious accommodations for foreign buyers, the houses are however standing empty in what is anything but a fairytale for their investors.
The ambitious development has been hit by regional turmoil as well as the slump in the Turkish construction industry - a key sector - as the country's economy heads towards what could be a hard landing in an intensifying downturn.
After a long period of solid growth, Turkey's economy contracted 1.1 per cent in the third quarter, and many economists expect it will enter into recession this year.
The country has been hit by high inflation and a currency crisis in August. The lira lost 28 per cent of its value against the dollar in 2018 and markets are still unconvinced by the readiness of the government under President Recep Tayyip Erdogan to tackle underlying economic issues.
The villas close to the town centre of Mudurnu in the Bolu region are intended to resemble European architecture and are part of the Sarot Group's Burj Al Babas project.
But the development of 732 villas and a shopping centre - which began in 2014 - is now in limbo as Sarot Group has sought bankruptcy protection.
It is one of hundreds of Turkish companies that have done so as they seek cover from creditors and to restructure their debts.
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Barcelona: Coutinho (6'), Messi (37', 81', 84')
'Worse than a prison sentence'
Marie Byrne, a counsellor who volunteers at the UAE government's mental health crisis helpline, said the ordeal the crew had been through would take time to overcome.
“It was worse than a prison sentence, where at least someone can deal with a set amount of time incarcerated," she said.
“They were living in perpetual mystery as to how their futures would pan out, and what that would be.
“Because of coronavirus, the world is very different now to the one they left, that will also have an impact.
“It will not fully register until they are on dry land. Some have not seen their young children grow up while others will have to rebuild relationships.
“It will be a challenge mentally, and to find other work to support their families as they have been out of circulation for so long. Hopefully they will get the care they need when they get home.”
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Tax authority targets shisha levy evasion
The Federal Tax Authority will track shisha imports with electronic markers to protect customers and ensure levies have been paid.
Khalid Ali Al Bustani, director of the tax authority, on Sunday said the move is to "prevent tax evasion and support the authority’s tax collection efforts".
The scheme’s first phase, which came into effect on 1st January, 2019, covers all types of imported and domestically produced and distributed cigarettes. As of May 1, importing any type of cigarettes without the digital marks will be prohibited.
He said the latest phase will see imported and locally produced shisha tobacco tracked by the final quarter of this year.
"The FTA also maintains ongoing communication with concerned companies, to help them adapt their systems to meet our requirements and coordinate between all parties involved," he said.
As with cigarettes, shisha was hit with a 100 per cent tax in October 2017, though manufacturers and cafes absorbed some of the costs to prevent prices doubling.
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