AE - advanced economies; EAP - East Asia and Pacific, ECA - Europe
and Central Asia, LAC - Latin America and the Caribbean, MNA - Middle East
Mena growth to accelerate to 4.4% in 2022: World Bank
WASHINGTON, January 11, 2022
Economic growth is forecast to accelerate to 4.4% in the Middle East and North Africa region in 2022 before slowing to 3.4% in 2023, according to the World Bank’s latest Global Economic Prospects report.
Higher oil and natural gas prices and increased production are expected to benefit energy exporters. Saudi Arabia's oil sector is expected to rebound strongly, boosting exports, while non-oil activity should benefit from high vaccination rates and accelerating investment. In Iraq, output is expected to expand by 7.3 percent in 2022 led by the oil sector, the report said.
However, the global economy is entering a pronounced slowdown amid fresh threats from Covid-19 variants and a rise in inflation, debt, and income inequality that could endanger the recovery in emerging and developing economies, the report said.
Following a strong rebound in 2021, global growth is expected to decelerate markedly from 5.5 percent in 2021 to 4.1 percent in 2022 and 3.2 percent in 2023 as pent-up demand dissipates and as fiscal and monetary support is unwound across the world, the report said.
The rapid spread of the Omicron variant indicates that the pandemic will likely continue to disrupt economic activity in the near term.
In addition, a notable deceleration in major economies —including the United States and China — will weigh on external demand in emerging and developing economies. At a time when governments in many developing economies lack the policy space to support activity if needed, new Covid-19 outbreaks, persistent supply-chain bottlenecks and inflationary pressures, and elevated financial vulnerabilities in large swaths of the world could increase the risk of a hard landing, the report said.
“The world economy is simultaneously facing Covid-19, inflation, and policy uncertainty, with government spending and monetary policies in uncharted territory. Rising inequality and security challenges are particularly harmful for developing countries,” said World Bank Group President David Malpass. “Putting more countries on a favorable growth path requires concerted international action and a comprehensive set of national policy responses.”
The slowdown will coincide with a widening divergence in growth rates between advanced economies and emerging and developing economies. Growth in advanced economies is expected to decline from 5 per cent in 2021 to 3.8 percent in 2022 and 2.3 per cent in 2023 — a pace that, while moderating, will be sufficient to restore output and investment to their pre-pandemic trend in these economies.
In emerging and developing economies, however, growth is expected to drop from 6.3 percent in 2021 to 4.6 percent in 2022 and 4.4 percent in 2023. By 2023, all advanced economies will have achieved a full output recovery; yet output in emerging and developing economies will remain 4 percent below its pre-pandemic trend. For many vulnerable economies, the setback is even larger: output of fragile and conflict-affected economies will be 7.5 percent below its pre-pandemic trend, and output of small island states will be 8.5 percent below, the report said.
Meanwhile, rising inflation — which hits low-income workers particularly hard — is constraining monetary policy. Globally and in advanced economies, inflation is running at the highest rates since 2008. In emerging market and developing economies, it has reached its highest rate since 2011. Many emerging and developing economies are withdrawing policy support to contain inflationary pressures—well before the recovery is complete. - TradeArabia News Service
