A protester holds a flag during clashes with armed forces in Lebanon, whose economy is in a tailspin

Social unrest threatens Mideast economic recovery, IMF warns

Countries like Algeria, Iraq, Lebanon, Sudan have been witnessing recent protests by thousands of angry citizens demanding better jobs and services — with all experiencing rapidly rising inflation, unemployment and poverty

AFP |
Published: 10.19.21, 16:33
The Middle East and North Africa are on track for a recovery, but rising social unrest is threatening the "fragile" progress of low-income economies, the International Monetary Fund said Tuesday.
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  • The MENA region, which includes Arab countries and Iran, saw real GDP growth shrink by 3.2 percent in 2020 due to weak oil prices and sweeping lockdowns to halt the spread of the coronavirus.
    4 צפייה בגלריה
    A protester holds a flag during clashes with armed forces in Lebanon, whose economy is in a tailspin
    A protester holds a flag during clashes with armed forces in Lebanon, whose economy is in a tailspin
    A protester holds a flag during clashes with armed forces in Lebanon, whose economy is in a tailspin
    (Photo: AFP)
    But with rapid vaccination campaigns, especially in oil-rich Gulf nations, the IMF predicted GDP growth would rise to 4.1 percent this year, up 0.1 of a percentage point from its last projection in April.
    "The region is going through recovery in 2021. Since the beginning of the year, we see progress in the economic performance," said Jihad Azour, director for the Middle East and Central Asia at the IMF.
    But "this recovery is not the same in all countries. It is uncertain and uneven because of the divergence in vaccination... and geopolitical developments", he told AFP.
    The IMF said in a report that while the prospects for oil-exporting economies improved with higher oil prices, low-income and crisis-hit countries were witnessing "fragile" recoveries.
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    עיראק הפגנה הפגנות בעיר בצרה
    עיראק הפגנה הפגנות בעיר בצרה
    Anti-government protestors in Basra demonstrating over the economic state of Iraq
    (Photo: AP)
    It warned of "a rise in social unrest" in 2021 that "could pick up further due to repeated infection waves, dire economic conditions, high unemployment and food prices".
    Algeria, Iraq, Lebanon, Sudan and other countries have been witnessing protests in recent months by thousands of angry citizens demanding better jobs and services.

    Increasing inequities

    Unemployment increased in MENA last year by 1.4 percent to reach 11.6 percent, a rise exceeding that seen during the global financial crisis and the 2014-15 oil price shock, the IMF said.
    The IMF warned of the longer-term risk of an uneven recovery, which could lead to a "permanent widening of existing wealth, income, and social gaps and, ultimately, weaker growth and less inclusive societies".
    About seven million more people in the region are estimated to have entered extreme poverty during 2020-21 compared with pre-crisis projections, according to the IMF.
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    מחאה הפגנות הפגנה ב חרטום סודן נגד השלטון הצבאי צבא
    מחאה הפגנות הפגנה ב חרטום סודן נגד השלטון הצבאי צבא
    Protestors in Khartoum calling for an end of Sudan's transitional military government
    (Photo: Reuters)
    Meanwhile, inflation in the region is projected to increase to 12.9 percent in 2021 from 10.4 last year, with higher food and energy prices in some countries, before subsiding to 8.8 percent in 2022.
    "Inequities are increasing. The low-skilled, the young, women, and migrant workers have been affected the most by the pandemic, as have smaller firms, particularly those in contact-sensitive sectors," said the report.
    According to the international lender, the corporate sector has recovered to pre-pandemic levels, but smaller firms and those in "contact-sensitive sectors" are lagging behind.
    "Fifteen to 25 percent of firms may need to be restructured or liquidated," it added.
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    לוחמים שיעים של חיזבאללה ותנועת אמל במהלך חילופי אש ביירות לבנון
    לוחמים שיעים של חיזבאללה ותנועת אמל במהלך חילופי אש ביירות לבנון
    Supporters of the Shi'ite Amal group allied with Hezbollah fire weapons during armed clashes that erupted during a protest in the southern Beirut suburb of Dahiyeh, Lebanon last week
    (Photo: AFP)
    In Lebanon, the continuing drop in the value of the currency has dashed hopes that the government formed last month can stem an economic crisis that the World Bank brands as one of the worst since the mid-19th century.
    Nearly 80 percent of Lebanon's population lives below the poverty line.
    "The Fund has already started technical discussions with the authorities... to develop what would be in fact that the framework within which the fund can help Lebanon," said Azour, a former Lebanese finance minister.
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