IMF: Middle East set for huge economic hit from coronavirus lockdown

Domestic political issues, lockdowns and decreasing oil prices - also a result of the pandemic - are worsening an already poor economic outlook for the region.

According to a report released by the IMF, almost every economy in the Middle East and North Africa (MENA) region is predicted to shrink in the coming months, though some countries may weather the storm better than others.

Kuwait is expected to experience a 1.1 percent contraction; Oman's economy is projected to fall 2.8 percent, while Algeria's oil-reliant economy is predicted to be severely hit by 5.2 percent.

Later this year Iran will fall 6 percent and both Sudan and Israel are also expecting a downturn at 7.2 percent and 6.3 percent respectively.

Lebanon's numbers are far higher at a 12 percent expected decline for Beirut.

Egypt is the only country expected to post any growth this year at 2 percent, although that number is still far lower than the 5.6 percent expansion seen last year.

The figures by the IMF are based on the assumption that lockdown conditions that governments have imposed across the Middle East will peak in the second quarter of this year, only to be reversed in the second half.

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The "Great Lockdown", as it is called, will represent "the worst recession since the Great Depression, and far worse than the Global Financial Crisis", according to Gita Gopinath, economic counsellor and director of the IMF's Research Department.

Ahmed Esam, assistant economist at Oxford Economics, said "GCC countries, with the exception of Bahrain due to its affected manufacturing sector, are the most resilient in the MENA region to structural shocks owing to their stronger economic positions. North African countries, as well as Jordan and Lebanon, are the most vulnerable".

Billions of dollars in losses

Tunisia's tourism sector will be hard-hit by the coronavirus pandemic, losing $1.4 billion in potential revenues, a report said.

It comes as the North African country scrambles to secure a loan for bonds it plans to issue this year.

Reuters has reviewed a letter forwarded from Tunisian officials to the IMF which warns the country's economy will shrink by up to 4.3 percent, due to the impact of the coronavirus.

The drop would be the steepest in Tunisia's history since it gained independence in 1956, according to the agency.

The report said 400,000 people employed in the sector could lose their job due to the virus outbreak – which has prompted a lockdown in Tunisia.

The measures, enacted last month, has seen the closure of restaurants and hotels and a ban on international flights.

"We are working with partner governments on a potential guarantee for future sovereign bond issuances in the current difficult international context," Reuters quoted the central bank governor and finance minister as saying in the letter.