The Middle East economy is gradually stabilizing and improving (international perspective)
Core reading
The International Monetary Fund has recently raised its economic growth forecast for the Middle East this year and next.
Due to the acceleration of vaccination progress and increased economic stimulus policies, the economic recovery of many countries in the Middle East has accelerated.
The analysis pointed out that due to the different levels of vaccination, there is an imbalance in the economic recovery process of various countries, and the full recovery of the regional economy still faces many challenges.
The International Monetary Fund (IMF) recently released the Middle East economic outlook report. It is estimated that the real gross domestic product (GDP) of the region will grow by 4.1% in 2021 and 2022, which is increased by 0.1 and 0.4 respectively from the forecast in April this year. Percentage points.
At present, countries in the Middle East are working hard to adopt various measures to stabilize the economy and protect people's livelihood, while actively promoting the transformation of the economic structure and achieving certain results.
Economic recovery is better than expected
From the second half of the year, the pace of economic recovery in many countries in the Middle East has accelerated, signs of recovery in some industries are obvious, and economic growth expectations have increased.
Boosted by the second phase of the economic and social reform plan, the Egyptian manufacturing, agriculture, telecommunications and IT industries have continued to recover recently, exports have continued to expand, and tourism revenue has increased.
According to a statistical report released by Deutsche Bank, Egypt’s GDP will grow by 5.5% in fiscal year 2021/22, the overall fiscal deficit will be reduced to 5.5% in fiscal year 2023/24, and the inflation rate will remain within the target range.
Thanks to favorable factors such as the high vaccination rate and the continuous rebound of the technology industry, Israel's economic recovery has accelerated and the government's fiscal deficit has been continuously reduced.
The Israeli Ministry of Finance recently predicted that Israel’s economic growth rate will reach 7.1% this year and 4.7% next year.
With the recovery of oil production, the rebound in tourism, and the pulling effect of the Dubai World Expo, the UAE Central Bank predicts that the economic growth rate will rebound to 2.2% and 4.9% in 2021 and 2022, respectively.
The economic performance of other major economies in the region is equally remarkable.
Driven by the resumption of export growth, Turkey's economy rebounded strongly in the second quarter of 2021, with a growth rate of 21.7%.
The World Bank and the OECD have raised Turkey's economic growth this year from 5% and 5.7% to 8.5% and 8.4%, respectively.
According to Saudi media reports, Saudi Arabia's economy in the third quarter grew by 6.8% compared with the same period last year, the fastest growth rate since 2012.
In addition, Reuters quoted relevant agencies to predict that the Saudi economy is expected to achieve a moderate growth of 2.3% this year and 5.1% next year. This figure will be the fastest economic growth rate of Saudi Arabia since 2013.
According to data released by Oman’s National Information and Statistics Center, Oman’s GDP grew by 10.1% year-on-year in the first half of this year.
Among them, the petroleum industry's gross production value increased by 8.7% year-on-year, and the non-oil industry's gross production value increased by 11.1% year-on-year.
The economics professor of Cairo University in Egypt, Veil, told this reporter that the economic situation in the Middle East is better than expected and will maintain a relatively high growth rate this year and next.
Take multiple measures to promote recovery
The IMF report pointed out that the main reason for the gradual stabilization of the Middle East economy is the continuous increase in the regional vaccination rate and the government's introduction of relevant assistance policies.
At the same time, the recent overall high international oil prices have also provided strong support for the economic recovery of economies dominated by oil exports.
In countries with high vaccination rates, economic and social recovery is obvious.
For example, the number of vaccinations per 100 people in Israel is as high as 160, economic and trade activities have accelerated, and economic vitality has been stimulated.
Countries in the region have continuously introduced a series of policies and measures to stabilize the economy and protect the people's livelihood.
In order to solve the problem of cash flow shortage caused by the epidemic caused by enterprises, especially small and medium-sized enterprises, central banks in Egypt, Saudi Arabia, Qatar, Jordan, Morocco and other regions have introduced interest rate cuts, and the banking system has also relaxed credit policies.
Saudi Arabia has introduced an economic stimulus package of more than 50 billion U.S. dollars to increase support for domestic private enterprises and allow business owners to postpone payment of value-added tax, consumption tax and income tax for up to three months.
The Saudi Monetary Authority stipulates that banks should restructure and finance customers without charging additional fees, and provide loans for workers who have lost their jobs due to the epidemic. At the same time, banks are recommended to adjust credit card interest rates.
In order to effectively attract foreign investment and stimulate economic growth, Morocco launched the national investment and export brand "Morocco Now" this year.
At present, Morocco has signed dozens of free trade agreements with other countries, while vigorously attracting foreign investment in strategic and high-tech fields.
The Egyptian government has also continued to introduce targeted policies, from expanding financial support, providing free training, to enhancing the construction of digital information technology, and expanding digital payment applications to help small and medium-sized enterprises get rid of the impact of the epidemic as soon as possible.
Statistics show that 73% of SMEs in Egypt this year have a positive attitude towards future development, and 85% of them have basically maintained steady growth in their income during this period.
Efforts to deal with risks and challenges
The World Bank analyzed in a recent report that the overall economy in the Middle East will continue to recover next year, but due to factors such as different levels of vaccination among countries, the economic recovery process will accelerate divergence, and there will be imbalances in the economic recovery of different countries.
Middle Eastern media commented that the economic recovery of Middle Eastern countries is still affected by multiple factors such as regional geopolitical environment, unbalanced development, irrational economic structure, and vaccination rates.
Factors such as rising inflation and oil price fluctuations also pose risks to regional countries.
Some analysts pointed out that the current global financing situation is beginning to tighten, which brings some pressure on investment inflows into the Middle East. The huge external financing demand and high public debt ratio in some countries in the region threaten the overall economic recovery process.
At the same time, many countries in the Middle East are facing the challenge of industrial transformation.
Veiler said that for a long time, there have been restrictive factors such as single industry, low degree of industrialization, and weak manufacturing development in Middle Eastern countries. They mainly rely on foreign exchange earned from energy exports to drive national economic growth.
Therefore, it is very necessary to optimize the industrial structure and accelerate the adjustment of economic policies.
Veil further analyzed that China and the Middle East have strengthened economic cooperation and trade exchanges have become increasingly close. The development dividends released by the joint construction of the "Belt and Road" have benefited countries in the region.
Egypt has actively participated in the joint construction of the "Belt and Road", the Suez Economic Zone, Egypt's new administrative capital, and Alamein New City and other large-scale projects, which have effectively promoted the improvement of Egyptian people's livelihood and economic development.
(Report from Cairo, November 30)
Our reporter Huang Peizhao