The economies of the Middle East are expected to recover by 3.8 per cent this year after shrinking 4.8 per cent in 2020 due to the Covid-19 pandemic, the UN said in a report on Monday.
The World Economic Situation and Prospects study by the UN Department of Economic and Social Affairs said any regional recovery hinged on the energy and tourism sectors that have been battered by the pandemic.
“Economic recovery in the region will depend on global energy demand, international tourism and the extent of the recovery of domestic demand on the back of fiscal support measures,” said the document.
“Both global energy demand and international tourism are projected to recover slowly and to reach pre-crisis levels only after 2022.”
The 198-page report refers to the Western Asia region as covering the Arabian Peninsula, the Levant and Turkey, and includes war-torn countries like Syria and Yemen as well as wealthy hydrocarbon exporters like Saudi Arabia and the UAE.
While some oil-rich states cushioned themselves from the crisis through borrowing and spending reserves, all governments had to tighten their belts and cut budgets as coronavirus lockdowns saw unemployment rates soar, researchers said.
“As there are no prospects for improvement in public revenue over 2021 and 2022, the region’s high-income countries are likely to depend to a greater extent on debt financing,” the report said.
“The current situation would likely compel the region’s middle- and low-income countries to curtail or roll back fiscal support measures that could impede their economic recovery.”
Globally, UN researchers predicted a modest recovery of 4.7 per cent this year after the world economy contracted 4.3 per cent in 2020 — more than double the impact of the 2009 global financial crisis.