COVID-19 may inflict a decade of economic pain to Mideast, Central Asia, IMF says

It might take countries in the Middle East and Central Asia a decade to return to the economic growth seen before the coronavirus crisis, the International Monetary Fund said, as long-standing regional vulnerabilities weigh on their recovery.

Lack of diversification among oil-exporting countries and the reliance of oil importers on sectors like tourism, as well as their dependence on remittances, are likely to curb growth, the IMF said on Monday in its outlook for the region, which spans around 30 countries from Mauritania to Kazakhstan.

Oil-exporting countries have been hit the hardest. Oil prices are around 40% below pre-crisis levels, slashing their main source of revenue and reflecting their limited success in diversifying their economies.

“The COVID-19 crisis represents the fastest-moving economic shock of its depth in recent history,” the IMF said.

Economic “scarring” -- which includes long-term losses to growth, income and employment -- is likely to be deeper and longer-lasting than after the 2008-2009 global financial crisis, it said.

Five years after that crisis, real gross domestic product in Middle East and Central Asia countries was more than 4% below pre-crisis trends.

“This time, given preexisting vulnerabilities, it is estimated that five years from now, countries in the region could be 12 percent below the GDP level implied by pre-crisis trends, and a return to the trend level could take more than a decade,” said the IMF.