IMF downgrades projections for MCD region’s economies, growth to drop to -4.7% in 2020

IMF downgrades projections for MCD region’s economies, growth to drop to -4.7% in 2020

The International Monetary Fund (IMF) has downgraded its projections for the Middle East and Central Asia (MCD) region's growth to -4.7 percent in 2020, 2 percent lower than its projections in April 2020.

This drop is driven by the unusually high level of uncertainty regarding the length of the pandemic and its impact on firm closures and potential renewed volatility in global oil markets that dominate the outlook, according to the Regional Economic Outlook for MENA and Central Asia Update Report issued on Monday.

Countries that are fragile and witness conflicts are expected to see a significant decline in GDP per capita, from $2,900 in 2018/2019 to around $2,000 in 2020, which is a dramatic downturn that will aggravate existing economic and humanitarian challenges and raise already-high poverty levels in the region, according to the report.

Furthermore, output in such countries is projected to shrink by 13 percent, on average, for 2020, up from an average growth of 2.6 percent in 2019.

The MCD region has also been hit hard by the oil shock.

The Organization of Petroleum Exporting Countries and other major oil producers (OPEC+) agreements from March and April (and subsequent expansion), together with a reduction in US