The International Monetary Fund's "Regional Economic Prospects" report confirmed that the oil-exporting countries, especially the Gulf Cooperation Council countries, will benefit from the recovery in global demand and the rise in oil prices after the Corona pandemic, especially with the high vaccination rates among the GCC countries.
BuykbxixpksD9L5PkJ7jWssG8Mi5U1eMBrXaQ02_0KPg=s320" width="320" />Vaccination rates in all GCC countries have already reached 40 percent of the population and are expected to reach 60 percent by the end of 2021. Despite this, many countries continue to impose economic and social restrictions, which will have a negative impact on economic prospects until the pandemic is contained, according to the report. .
The report included economic forecasts for the oil-exporting countries, which are the Gulf Cooperation Council countries, in addition to Algeria, Iran, Iraq, Libya and Yemen. Among these expectations, the real GDP of these countries will increase by 4.5 percent in 2021, and 4 percent in 2022, if Libya data is excluded, as a result of the recovery of oil and non-oil GDP rates.
It is expected that oil activity will improve by 5.3 percent and 4.4 percent in 2021 and 2022, respectively, which reflects the rise in oil production in Libya and the gradual expansion of supply in the OPEC + countries after August 2021.
The deployment of vaccines and the rise in oil prices will also contribute to supporting confidence and activity in the non-oil sector, which is expected to witness an improvement of 3.9 percent and 3.4 percent in 2021 and 2022, respectively.
In the medium term, real GDP losses are expected to be more contained in oil-exporting countries than in other countries, and inflation in GCC countries is expected to peak at 2.8 percent in 2021.
The report stressed that the rise in oil prices and exports will contribute to strengthening the external position of the oil-exporting countries, as their current account balances are expected to record a surplus of 3.6 percent of GDP in 2021, which exceeds pre-pandemic levels against a deficit of 1.9 percent of GDP. The year 2020. It is also expected that this surplus will gradually decline in the medium term in light of the expected stability in oil prices.
The report also expects total official reserves to increase by $95 billion to reach nearly $1 trillion in 2021, adjusting expectations for an increase of more than $100 billion since the April forecast.
According to the report, the fiscal deficit is expected to decline from 2021 as a result of the current recovery, high oil prices and the expiration of related measures and fiscal consolidation efforts. However, government debt as a percentage of GDP is likely to remain above its level before the pandemic in the medium term, despite its retreat from the peak levels reached during the crisis.
As a result, total public financing needs are expected to remain high, amounting to $473 billion as a whole during the period 2021-2022, compared to $310 billion during the period 2018-2019.
The recovery of companies in the oil countries
According to the report, unemployment in the Gulf Cooperation Council countries rose at an unprecedented rate of 3 percentage points to reach 5.4 percent in 2020 - the highest overall unemployment rate in the history of these countries, according to estimates by the International Labor Organization.
The report emphasized that the recovery of companies in the oil-exporting countries lags behind the recovery in the oil-importing countries. Although revenues in oil-exporting countries contracted by about half the size of their decline in oil-importing countries during the first half of 2020, revenues and profitability in oil-importing countries recovered at a faster pace by the end of 2020, and their performance remained ahead during the first quarter of 2021, reflecting trends common in other emerging markets.
The report stated that there are two main reasons for this disparity. The first reason is the great role played by the sectors that are heavily dependent on direct contact in the oil-exporting countries, meaning industries that depend on the presence of a large number of people on their own to engage in activities, such as tourism, cinema, shopping in malls, and others. These industries play a role in the economy of oil-exporting countries, 20 percent higher than that of oil-importing countries.
Companies in this sector were the most exposed and prone to loan defaults in the Gulf Cooperation Council.
The second reason is that the blow to these industries led to the loss of huge numbers of expatriate jobs in the Gulf Cooperation Council countries, which represented 70 percent of the workforce in them before the pandemic.
The countries of the Gulf Cooperation Council have the highest rates of migrant labor among their working-age population in the world, and when the pandemic led to a sharp decline in the employment of migrant workers, this appeared in the form of negative effects on the domestic consumption of that labor and its external transfers.
The report recommended that the public sector's role in employment should be reduced and noted that allowing migrant workers in the Gulf Cooperation Council (GCC) more flexibility to move between jobs (as Qatar, Saudi Arabia and the United Arab Emirates did) in employment would benefit them by obtaining higher wages.
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