This OpEd is written by Dr. Joseph Bahout, IFI's Director, and was published in the BRINK News.
During the last year, an already weakened Middle East has witnessed stark challenges to its economic, environmental and structural foundations, thanks to COVID-19.
Declining oil prices went on declining at a steady pace, aggravated by a long-term global shrinking of demand; there was turbulence in the labor market, amid shortages of skilled imported labor due to the pandemic and the growing weight of public sector expenditures. This, in turn, translated into further public debt, growing deficits, and an opening up of public companies to private foreign capital.
Deep and Long-Lasting
According to the UN, “the consequences of the pandemic are likely to be deep and long-lasting.” The region’s overall economy is expected to contract by an average of 5.7%, with the more fragile economies contracting by as much as 13%. Still young and otherwise promising Arab stock markets have dropped by 23% — an overall loss of $152 billion, depriving the region of capital that otherwise could have been invested in the recovery phase.
Read the full oped, here