The Washington-based IMF has projected a GDP growth rate for the Middle East and North Africa (Mena) region of -3.3 per cent in 2020, 5.9 percentage points below the institution’s January forecast of 2.6 per cent growth for the year.

In 2021, GDP growth in the region is expected to recover to 4.2 per cent, 1.2 percentage points higher than the January forecast, but notably from a lower base.

Worldwide, GDP growth is projected at -3 per cent in 2020, followed by a recovery of 5.8 per cent in 2021 – leaving the global economy $9tn poorer and smaller by the end of 2021 than was originally anticipated by the end of 2020.

The Mena region is expected to be impacted more severely than the global average due to both the higher number of oil-exporting nations that will be weakened fiscally by low oil prices, and the outsized impact on travel and tourism – also a key segment in many regional markets.

Saudi Arabia, the region’s largest economy, is expected to see its GDP decline by 2.3 per cent in 2020, followed by a recovery of 2.9 per cent in 2021, representing a softer fall in 2020, but also a weaker recovery in 2021 than both the Mena and global averages.

In its assumptions, the IMF is projecting an average oil price of $35 a barrel for both 2020 and 2021. Sustained low oil prices will confound expectations for higher capital spending on infrastructure in Saudi Arabia over the next two years, while stress on the global financial system is likely to weaken foreign investment.

The UAE is expected to see its GDP fall by 3.5 per cent in 2020 followed by a recovery of 3.3 per cent in 2021, experiencing a worse decline and a worse recovery than both the Mena and global averages.

In addition to the vulnerability of Abu Dhabi’s local economy to low oil prices, Dubai is a market that is particularly focused on trade, travel and tourism and therefore likely to be one of the worst affected markets in the region in terms of non-oil growth, and will also be hit by the postponement of Expo 2020.

The Mena economies that are projected to experience the most severe falls in GDP in 2020 are Lebanon (-12 per cent), Iran (-6 per cent), Algeria (-5.2 per cent) and Iraq (-4.7 per cent) – all of which save Lebanon are oil-exporting economies with particularly high ratios of oil revenues to GDP.

The IMF’s baseline scenario assumes a peak in the coronavirus case curve in the second quarter. Should the Covid-19 pandemic not recede in the second quarter, global growth is expected to fall by a further 3 per cent, while a continuation into 2021 could reduce global growth by up to 8 per cent.