The effects of the coronavirus pandemic and weak oil prices are expected to cause a drag of about 7.6 percentage point on the GCC region’s GDP this year, the World Bank has warned.
The World Bank has downgraded GCC countries’ 2020 GDP level by 7.6 percentage point on average from what was implied by its forecasts of December 2019, according to the MENA Crisis Tracker report released by the World Bank. The MENA Crisis Tracker is a weekly newsletter that provides information on public health indicators, expected economy-wide losses, and social consequences of the ongoing COVID-19 crisis in the Middle East and North Africa.
‘These GDP-level downgrades can be interpreted as the expected macroeconomic costs of the COVID-19 pandemic and oil price collapse as a per cent of 2019 GDP. The expected GDP losses for 2020 have grown larger as more information became available,’ the report said. It also revealed that the expected GDP losses during 2020 are not expected to be recovered during 2021 in most of the countries in the region.
The World Bank also warned that the recovery in the GCC, as well as the MENA region’s GDP levels in 2021, will not be a V-shaped one. This trend, it added, reflects private-sector forecasters’ increasingly pessimistic view of the cost of the crisis.
The COVD-19 crisis, as per the World Bank, poses considerable risks to already vulnerable populations in the Middle East and North Africa, and one of these risks come from rising food prices, which have come under stress due to breakdowns in global supply chains.
‘In most countries, price increases have been modest (5 per cent or less) but in Lebanon, Qatar, Iran, Syria and Yemen prices of staples have increased by more than 20 per cent since February 2020,’ the report added.