While Covid has caused uncertainty across the globe, its impact in the Middle East has been felt differently. The human cost has been significant, particularly in certain countries, but the economic costs have been the real focus for 2020.
Hardest hit has been Iran with a reported 48,246 deaths and more than 960,000 cases. Reports of a health system on the brink of total collapse and ongoing and emerging geo-political crises have sent shockwaves through the region too. Other countries have seen lower rates and have been able to contain the spread of the virus. Saudi Arabia has had more than 5,000 deaths. The UAE has seen just 572 deaths in total, Qatar 237, Israel more than 2,000. There are concerns about under-reporting and lack of testing in countries like Lebanon and Syria where official figures place the number of deaths at 1,018 and 409 respectively.
Economic fall-out
But it is the economic impact that is sending the most shockwaves through the region. Already facing the need to move away from a reliance on oil and gas as the bedrock of the economy, the Middle East has faced significant threats to its economic stability over the last year.
As demand for oil fell due to travel restrictions as a result of the pandemic, so did oil prices. A price war between Saudi Arabia and Russia in March saw oil prices tumble to the lowest price since 2002, reaching $23.03 a barrel. Following the truce reached in April, oil production was cut by both countries. This combined with intervention by the OPEC saw stabilisation of prices, but the IMF notes that they are still well below pre-COVID-19 levels. “As a result, a large part of the region’s growth revision is driven by weakened activity among oil exporters in the Middle East, North Africa, Afghanistan, and Pakistan (MENAP) region,” an IMF report said.
This also raises concerns about debt sustainability, with the report going on to say that “debt-to-GDP levels are now projected to reach an average of 95 percent of GDP by the end of 2020 in MENAP oil-importing countries.”
