Economies Severely Affected By Mideast Conflict Face Threat Of Contraction -- IMF

(MENAFN- Kuwait News Agency (KUNA)) WASHINGTON, Oct 24 (KUNA) -- The International Monetary Fund cautioned of a large drop in the economic activity in the countries severely affected by ongoing conflict in the Middle East, with contraction looming large in their economies.
Launching the October 2024 Regional Economic Outlook for the Middle East and Central Asia at a press conference on Thursday, Director of IMF Middle East and Central Asia Dept. Jihad Azour said the report provides comprehensive insights into recent economic developments and future prospects specifically for countries in the region.
"It analyzes the impact of economic policy changes on performance, highlighting key challenges faced by policymakers in navigating complex economic landscapes," he said.
"-- growth is set to strengthen in the near term in both Mena and the CCA regions. However, exposure to broader geoeconomic developments is adding to uncertainty," the IFM regional director noted.
"This year has been challenging, with conflicts causing devastating human suffering and economic damage. All production cuts are contributing to sluggish growth in many economies too.
"The recent escalation in Lebanon has increased uncertainty in the MENA region. -- 2024-2025 growth is projected at 2.1 percent a downgrade revision of 0.6 percent from the April EU forecast, and this is largely due to the impact of the conflict and the prolonged OPEC+ production cuts to the extent that this gradually Abate, we anticipate stronger growth of four percent in 2025 however, uncertainty about when these factors will ease is still very high.
"Many oil exporters are expected to see growth rise from 2.3 percent this year to four percent in 2025 contingent on the expiration of the voluntary oil production cuts, growth in all importers is projected to recover from 1.5 percent in 2024 to 3.9 percent in 2025 assuming conflicts," Azour pointed out.
"The conflict is inflicting heavy human toll, and our hearts goes to all the victims and those who were in their life and livelihoods were affected by the escalation of the conflict.
"Of course, the impact of the conflict is to be differentiated between countries who are at the epicenter the group of countries who are severely affected by the conflict, Gaza West Bank, the whole Palestinian economy has been severely affected.
"Lebanon also, and the Lebanese economy was severely affected, with more than 1.2 million people displaced, which represent almost 25 percent of the population, destruction of livelihoods in a broad region that is mainly agriculture and the impact on some key sectors like tourism and trade.
"Therefore, the severely affected countries are seeing a large drop in their economic activity, and they will face contraction in their economies in the context of high inflation.
"The second group I would call the group of partially affected countries.
"And here we have countries like Jordan, Syria and Egypt. And you have mentioned Egypt, the main channel of impact on Egypt is trade.
"The reduction in trade volume going through this way, scanner has affected revenues by more than 60 to 70 percent on average for this away scanner, which would represent between four and a half to four USD five billion of loss in revenues for Jordan, the impact is mainly on tourism, which is not the case for Egypt, those are the two main countries affected.
"Syria, of course, is affected, but we have very little information on that.
"This second group of partially affected countries, authorities have already started to take actions to protect their economies against that, and we have the indirectly affected countries, and here we have to look at the channels of transmission.
"Trade is one, the other one is the impact on tourism, the impact on oil and gas has been relatively muted so far, except high volatility in the short term, we did not see a major impact on the oil and gas sector.
"Yet, I think one has to recognize that it's a highly uncertain moment, and therefore things are changing constantly, and we are ourselves updating regularly our assessment of the situation, our numbers, for example, for the outlook, do not report the last, the latest development in the last months or so, and therefore we will be updating our numbers.
"This high level of uncertainty is affecting countries with vulnerabilities.
"And this is where the fund is, in fact, acting in providing support to countries in order to help them go through these serious shocks," the IMF senior official added. (end)
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