Covid-19’s consequences and scenarios in the MENA area

No one yet comprehends the full impact of the unfolding Covid-19 pandemic. Let us consider its effects on the MENA region. What is certain is that it will have lasting health, social, economic, and political consequences. The stakes are two-fold: minimizing the blow of the crisis in the short term while setting the stage for lessons learned and better governance policies in the future. Since February 14, the day the first confirmed case of Covid-19 was announced in a MENA country, Egypt, the total contagions in the region are just over 7 million, with approximately 141,000 associated deaths. Without prejudice to the apparent difficulties in detecting active cases and deaths in various areas, the regional situation about the spread of the virus appears less worrying than the initial fears and even less fraught with unknowns than in Europe.

However, limiting ourselves to data relating to the epidemiological situation prevents us from grasping the actual extent of the consequences of a year of the pandemic on the social and economic systems of the MENA area. Although the feared health catastrophe has not yet occurred, the current Covid-19 crisis has led to a sharp increase in uncertainty, concerns, and instability in a region previously marked by social tensions, economic hardship, and extreme political fragility. Therefore, the socio-economic impact of the pandemic appears of enormous proportions, especially in a medium-long term perspective.  However, it will be necessary to wait until 2023 to return to pre-crisis levels). Especially in the North African and Middle Eastern context, the pandemic has generated a domino effect mechanism whose consequences will be much more prolonged and fuller of unknowns than the health or economic crisis alone.

Although the pandemic and the restrictive measures introduced to contain the spread of the Sars-CoV-2 virus harmed economic growth in all countries across the globe, they had more worrying effects on those Nations already previously most vulnerable to shocks. The same applies to those economies focused on specific livelihood factors, such as the production and export of raw materials, tourism, and Foreign Direct Investment (FDI).

Most of the MENA countries base their economies on revenues from the hydrocarbon sector and those from tourism. The strong dependence on the production and export of raw materials has exposed, in the context of the pandemic, many of the countries of the region to a double economic pressure: that deriving from the lockdowns introduced at the national level (therefore, closure of commercial activities, contraction of productivity, the collapse of internal consumption and increase in unemployment) and that caused by the failure in the price of raw materials resulting in turn from the fall of production and consumption on a global level. 

According to the International Monetary Fund (IMF), the simultaneous impact of Covid-19 and the reduction in oil prices led to a loss of more than 12% of the total value for the MENA economies in 2020, thus representing the most economic shock for the region detected by the Yom Kippur war and the subsequent oil crisis of 1973. Moreover, due to the double shock, the area is experiencing a sharp deterioration in payments and trade, given the significant increase in public spending to face emergency healthcare in the face of a sharp reduction in revenues from the sale of hydrocarbons. The area and the social, economic, and political contradictions that characterize the MENA countries were indeed not created by the Sars-CoV-2 virus. Nevertheless, this pandemic will undoubtedly aggravate them.