The IMF announced a 4% pick up in the Middle East and North Africa region's real GDP forecast and a 3.7% rise in the Caucasus and Central Asia's in 2021 on Sunday (April 11th) in Washington, DC. But despite the optimistic forecast, the outlook remains uncertain.
"Overall, real GDP growth for the Middle East, North Africa region is expected to pick up to 4% in 2021. In the Caucasus and Central Asia, output is projected to rise by 3.7% in 2021, returning to its pre-crisis level. Yet the outlook remains highly uncertain with the past of the pandemic and vaccination and available policy space all having a significant impact on individual country forecasts," said Jihad Azour, Director of the Middle East and Central Asia Department at the International Monetary Fund.
Azour shed a light on what needs to be done to shape the region's future because of the worsening rise in government debt and financing pressures caused by the pandemic.
"One particular concern going forward is rising government debt and growing financing pressures that have worsened in the last year. And this will constraint further policy actions. This is particularly important considering the risk of a rapid rise in U.S. bond yields, which could lead to tighter financial conditions, renewed capital outflow and higher sovereign spreads. Addressing these and other challenges will help shape the region's future," explained Azour.
The speed of the recovery could be faster if vaccine production is expanded and distribution accelerated—supported by global and regional cooperation. In such a scenario, growth in the region would be boosted by roughly ¼ percentage point in 2021, accelerating to an additional ¾ percentage point in 2022.
"To exit the crisis, securing access to vaccine and supporting health system remain the most urgent imperatives. Accelerating vaccinations could boost GDP growth by 1% by 2022. Regional and international cooperation will be critical to ensuring that low-income countries are not left behind," said Azour
Azour concluded his remarks by stressing on the IMF's commitment to help the region. The Fund has supported the region with $17 billion in finance to weather the pandemic and will continue to support as well-targeted support should remain in place until the recovery is entrenched.
"Last year, the IMF supported the region with 17 billion dollars of financing. As countries move into the recovery phase, we remain committed, we are the partner to the region, to support the region emerge from this crisis and build a better future," emphasized Azour.
To watch the full press briefing, click here