Dubai International Financial Centre (DIFC), the financial centre of the Middle East, Africa and South Asia (MEASA) region, co-hosted the virtual launch of the International Monetary Fund (IMF) April 2022 Regional Economic Outlook (REO) for the Middle East and North Africa (MENA) region.
According to the IMF report titled ‘Divergent Recoveries in Turbulent Times’, the war in Ukraine and sanctions on Russia are exacerbating the divergence in recovery prospects for the MENA region.
The IMF Regional Economic Outlook report details trends and developments across the Middle East and Central Asia. The report’s findings and indicators are widely used as a benchmark for future economic projections and set the tone for growth, trade and investment.
Countries in the region were surprised by the positive growth they experienced in the latter half of 2021, something that maintained its momentum into 2022 despite surging inflation and a temporary pandemic-induced slowdown in January.
Despite the better-than-expected economic performance, the economic environment in 2022 is defined by uncertainties, particularly for commodity importers, with higher and more volatile commodity prices, rising inflationary pressures, and faster-than-expected monetary policy normalisation in advanced economies; all wrapped together in a lingering pandemic.
Oil-importing countries face the challenge of rising food and energy prices and tightening financial conditions, fuelling inflation and worsening external and fiscal accounts.
Some countries have also been directly exposed to supply disruptions from the war, given their heavy reliance on wheat and energy imports from Russia and Ukraine.
On the other hand, oil exporters will benefit from the rise in energy prices, but they can still be negatively affected by volatility in oil and gas markets and tighter borrowing costs.
Policymaking in this department has become increasingly complex, with dwindling macro policy space to deal with shocks, amid high debt and inflation.
Policies will need to be calibrated carefully to country circumstances to manage uncertainties, maintain macroeconomic stability, and support recovery, and ensure food and energy security while protecting the most vulnerable.
Structural reforms have become even more urgent to prevent scarring from the pandemic and the war, ensure an inclusive recovery, and enhance resilience ahead.
“DIFC’s long-standing partnership with the IMF on the Regional Economic Outlook report allows us to collectively shape the thinking of decision-makers within the finance industry and others who are contributing to the economic growth of Dubai and the UAE,” said Arif Amiri, chief executive officer at DIFC Authority.
“The latest report comes with a sense of optimism for Dubai and DIFC’s clients who are best placed to make the most of the opportunities that will support sustainable growth in a post-pandemic world.”
Jihad Azour, director of the IMF’s Middle East and Central Asia department, added: “In the current macroeconomic environment, policymakers must prioritise accelerating structural reforms to mitigate the impact of tighter macroeconomic policies on growth, address long-term scarring from the pandemic and the war in Ukraine, and help pave the way toward a more resilient, inclusive, and greener future.”