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  • The COVID-19 pandemic is having a devastating impact on already-vulnerable economies across the Middle East and North Africa (MENA) region. Growing public health challenges and knock-on effects to economic activity triggered by strict social distancing measures are compounded by a simultaneous oil price shock that is exerting pressure on the finances of oil-exporters and oil-importers alike.

    These concurrent shocks are both exacerbating and being amplified by long-standing structural challenges in MENA economies, including, but not limited to, large and inefficient public sectors, uncompetitive business environments, high youth and female unemployment, and governance challenges.

    The results are high levels of unemployment (especially youth and female unemployment) and widespread economic insecurity. In a region where two-thirds of the population is under 35-years-old, pre-crisis youth unemployment stood at nearly 25% – nearly half of which (40%) were women. Pre-crisis measures of economic insecurity also revealed that nearly half of MENA’s population (42%) lived on incomes below US$5.50 per day at 2011 PPP.

    Moreover, conflicts in the region contributed to a doubling of extreme poverty (measured as individuals living on incomes of less than US$1.90 per day), from 2.4% in 2011 to 4.2% in 2015; in addition, broadening the poverty measure to include a more multidimensional analysis, factors such as uneven educational attainment and access to basic infrastructure contribute to a near doubling of the extreme poverty rate.

    Growth outlook

    Estimates of the costs of the crises are fluid because it is difficult to predict how the global economy, national policies, and societies will react as the pandemic spreads. Consequently, estimates of the economic costs in the region can vary in a matter of days.

    As of April 1, Gross domestic product (GDP) in the Middle East and North Africa was expected to contract by 1.1% in 2020, due to the dual shock of the spread of the novel coronavirus and the associated collapse in global oil prices. Growth in 2019, however, was already low at 0.3%. The region’s real GDP per capita in 2020 was expected to fall by 2.6%, continuing a decline of 1.1% in 2019. Disruptions in global economic activity reduced the demand for the region’s goods and services, notably oil and tourism. 

    The virus spread and social distancing measures in the region also triggered negative domestic supply and demand shocks. Output of the region’s developing-country oil exporters was expected to contract by 3.9%. Output of the Gulf Cooperation Council (GCC) was also expected to fall by 0.4%. Despite the oil price collapse, growth of the region’s oil importers was expected to be modest at 0.6%, sharply lower than the forecast of 4.4% previously published in October 2019. Conflicts in Yemen, Libya and Syria will complicate the health responses of the countries.

    These changes in the growth forecasts for 2020 as of April 1 implied that the expected costs of the crisis for the whole of MENA were approximately 3.7% of the region's 2019 GDP (approximately US$116 billion). 

    With strong reforms on the fiscal and energy fronts, Egypt will post a growth rate of 5.5% in 2019, and there are other positive signs: Iraq’s recovery and reconstruction efforts are moving forward, although slowly, which has resulted in recent social unrest.

    Jordan and Lebanon, still bearing the cost of millions of Syrian refugees, are preparing to embark on domestic economic reforms, though challenges remain.

    In Tunisia, elections may have slowed the reform agenda, but they have also stimulated debate around it. Morocco remains stable, though with slow growth. Djibouti’s 7% growth rate for 2019 is the region’s fastest but has had little impact on the country’s high level of poverty.

    And growth in the Gulf Cooperation Council remains around 2.0%, with reforms in many countries, most notably Saudi Arabia. 

    Last Updated: May 21, 2020

  • Strategy:

    World Bank assistance is guided by a MENA regional strategy that is focused on immediate and longer-term development objectives.  Developed to promote peace and stability through economic and social inclusion in the aftermath of the ‘Arab Spring,’ the strategy’s immediate near-term objectives include:

    • Renewing the social contract;
    • Expanding Regional cooperation;
    • Strengthening Resilience to climate and refugee shocks;
    • Promoting Recovery and Reconstruction in conflict-affected countries.

    In parallel to the focus on immediate needs, the World Bank is helping countries develop new models for sustainable and inclusive growth in a dynamic and increasingly knowledge-based global economy. In 2019, the World Bank expanded the focus of the MENA regional strategy to include improving human capital outcomes, leveraging digital technologies, and opening-up business environments for the private sector to compete in free and fair markets.

    Harnessing the region's human capital – The region is far from using the full potential of its human capital. MENA countries' average Human Capital Index is at 49% which means that young people in the region can expect to be on average only half as productive as they could have been with full health and quality education. MENA countries have lined up to address these disparities: a number of pioneering countries are working with the Bank to develop action plans to improve their investments in building human capital. Reforms of education systems are essential. They should start in pre-primary education and address skills development with a focus on employability in the private sector.

    Leveraging technologies for a new digital economy – Creating an infrastructure for the development of a more sophisticated digital economy will be key to take advantage of the region's tech-savvy youth. This should be coupled with adaptable regulatory reforms to allow digital payments. With access to high speed internet and digital payments, many more people could use their mobile devices for economic growth and productive purposes. To support economic transformation and lay the foundations for a new digital economy, more flexible social security systems will be required.

    Developing the private sector through the Maximizing Finance for Development approach (MFD) – The World Bank Group’s Maximizing Finance for Development approach pairs development challenges with private sector solutions. This approach, pioneered in the MENA region, continues to be implemented through coordination between the Bank, the International Finance Corporation (IFC), and the Multilateral Investment Guarantee Agency (MIGA), as in the case of Egypt's energy sector where Bank-supported policy reforms were able to unlock over $20 billion in private investments in renewable energy and gas. Meanwhile, MENA is expanding the approach to social sectors.

    With an expanded regional strategy, the World Bank will help the MENA region weather the current crises, move from stabilization to transformation, unlock its vast economic potential of youth and women, and ease the constraints that hamper their creative energies.


    Last Updated: May 21, 2020

  • The World Bank approved $1.88 billion in lending to the region for 11 operations in fiscal 2020, including $1.83 billion in IBRD loans and $46.9 million in IDA commitments. (Data as of May 172020, to be updated). The Region had delivered 96 ASA tasks (up to May 172020). Revenue from Reimbursable Advisory Services agreements (as of end March 2020) has reached $27.6 million, including direct cost recovery for the offices in Saudi and Kuwait. The expanded advisory program continues to provide ongoing support to the reform process in the GCC.

    The World Bank is also supporting countries’ pandemic response with emergency health operations focused on securing essential medical supplies to support health systems as part of the World Bank Group’s COVID-19 Fast Track Facility. The immediate response includes financing, policy advice, and technical assistance to help countries cope with the urgent health needs of the pandemic and slow the spread of the disease.

    At the same time, together with development partners, the World Bank is also providing relief to individuals, communities, and businesses across the region to stabilize incomes, protect the poorest and most vulnerable, and spur economic recovery.

    As of May 17, the World Bank has provided US$126.9 Million in funding for new COVID-19 emergency health response operations including West Bank and Gaza, and US$385 Million through restructuring, reallocating funds, and activating Contingent Emergency Response Components (CERCs) and Catastrophe Deferred Drawdown Option (CAT DDO) of existing operations.

    Last Updated: May 21, 2020

  • In recent years, the World Bank has intensified its partnerships in support of the new World Bank Group MENA Strategy. Our partnerships are built on collaborative approaches in areas such as joint analytical work, the co-financing of projects, World Bank-managed financial platforms, and collective action in support of policy reforms in close cooperation with the recipient countries.

    Today, partnerships are stronger with bilateral and multilateral donors, regional development banks, Islamic financial institutions, and emerging donor countries.

    The World Bank has continued its well-established cooperation with the G7 countries, other countries in Europe, and the European Commission. Close partnerships with UN agencies have been instrumental in establishing a World Bank footprint on the ground in conflict-affected countries such as Yemen, allowing the World Bank to fund programs where humanitarian and development assistance intersect.

    Lastly, outreach efforts have been especially strong with non-traditional partners, including the Gulf Cooperation Council countries and the Arab Funds for development, as well as civil society organizations and the private sector actors.

    Last Updated: May 21, 2020



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