Middle Eastern countries are expected to face severe economic impact from the coronavirus pandemic, which is worse than the fallout of the global financial crisis in 2008-2009 and the oil price crash in 2015, the International Monetary Fund on Wednesday.
According to the IMF, real GDP of middle eastern oil exporters could shrink by 4.2% in 2002, compared to its previous projection of a 2.1% growth. Oil exports from those countries are forecast to fall by more than $250 billion. The region’s economy grew by 1.2% in 2019, and the fund expects it would rebound by 4% in 2021, assuming the threats from the pandemic recede.
The GDP of Saudi Arabia, the world’s biggest oil exporter, is expected to contract by 2.3% in 2020, from a 0.3% growth in 2019, the IMF noted. The fund’s previous forecast for the kingdom’s economy stood at 2.2% in real GDP growth in 2020 before the disease changed all growth projections.
Meanwhile, neighbouring Iran is requesting for $5 billion in emergency assistance from the IMF to prop up a faltering economy caused by the coronavirus pandemic and US sanctions. The Islamic Republic is expected to see a 6% economic contraction this year, the IMF said.
Combined with the sharp drop in oil prices, the pandemic is expected to put the Gulf petrochemical sector under intense pressure. Virus containment measures have destroyed demand, disrupted supply chain, and brought vital economic activities to a near halt. The IMF reported nearly $5 billion capital outflows from the Middle East in March.
According to the Arab Petroleum Investments Corporation (APRICORP), the virus has caused global travel restrictions, flight cancellations, automotive industry closures, and fall in car production which have already impacted demand for fuels, tires (rubber), plastics, and other petrochemical products.
