IMF Warns Mideast Economies Could Collapse
The International Monetary Fund (IMF) has warned of a “big drop” in the growth of Middle East economies, especially those of oil-producing nations, due to the coronavirus crisis. More than 33,000 cases of COVID-19 have been reported in the region, with Iran being hardest hit. Most Mideast countries have imposed regulations that have ground business activity to a near halt. In response, the IMF urged their governments to draw up rescue plans to prevent economic collapse. The bank also revealed that a dozen Middle Eastern and North African countries had inquired about financial relief. The pandemic has exacerbated an oil “price war” spearheaded by Saudi Arabia. Overall, the cost of a barrel of Brent Crude, the international benchmark, has plummeted by more than 50%; as a corollary, state revenues have dramatically fallen. “The coronavirus pandemic has become the largest near-term challenge to the region,” the IMF’s director for the Middle East and Central Asia wrote in a report. Moody’s Investors Service estimates that oil revenues in Iraq and Kuwait will nosedive by more than 10% of the GDP, with declines in Saudi Arabia, Oman, Qatar and Bahrain ranging from 4 to 8%. The company’s projections are based on the expectation that Brent prices will average between $40 and $45 per barrel in 2020. The commodity is currently trading at under $30, with global demand having plunged due to the widespread shuttering not only of businesses, but entire industries, such as tourism and aviation.