The year 2023 is expected to be one of the slowest years in the US. The recession is also expected to spread across the ocean to the UK and then to the European Union, as the old continent faces an inflationary and energy crisis and war on its eastern side.
This week, the International Monetary Fund said that at least a third of the world’s countries will suffer from recession this year, indicating it will be a difficult year for the global economy.
Faced with all these concerns, Arab countries are anticipating the consequences of this recession on their economies, most of which have not recovered from the consequences of the Corona pandemic in 2020 and 2021, the Russo-Ukrainian war and the pressures inflationary.
In fact, most of the Arab countries have suffered from the monetary tightening implemented by the US Federal Bank, increasing interest rates by 7 times in 2022 on federal funds, and the consequences of this on the high cost of loans and imports in dollars.
oil producing countries
As with the rest of the previous crises, the effects of the threat of recession will not be to the same extent on the Arab economies, divided between oil producers and consumers.
In more than one previous crisis, oil-producing countries have managed to manage the economic challenges they have faced, thanks to the reassuring financial solvency they enjoyed thanks to the proceeds of crude oil and natural gas.
The main Arab countries that have high financial reserves are: Saudi Arabia, Qatar, the United Arab Emirates, Kuwait, Algeria, Iraq and, to a lesser extent, the Sultanate of Oman, Bahrain and Libya.
While the recession could slow demand for traditional energy sources, sanctions on Russian oil could keep oil prices at comfortable levels above $80 a barrel, which is a level corresponding to Arab oil-producing countries.
While growth forecasts have been revised for most countries by the IMF, GDP growth forecasts have been slightly revised for GCC countries.
This is in part due to a combination of continued strong oil revenues for exporting countries, which will provide a buffer for their economies and allow them to run large fiscal surpluses and mitigate inflation.
oil consuming countries
While oil-consuming countries face greater challenges that could set them back years, as they have not yet recovered from the aftermath of the pandemic and the Russo-Ukrainian war.
This year, Egypt has been forced to depreciate its currency against the dollar, and has asked for help from the International Monetary Fund, while countries such as Tunisia, Jordan, Sudan and Lebanon are suffering from various economic crises.
As for Tunisia, which has also requested assistance from the Fund, it still awaits the agreement of all parties inside the country before approving the Fund, while Jordan has recently ended a wave of protests caused by the increase in the price of diesel.
The stagnation hypothesis means that oil-importing Arab countries will enter a third economic down year, by virtue of adopting some of the foreign currency received through migrant workers, whose incomes could be affected by the stagnation.
The recession also imposes a financial burden on households and businesses worldwide, which means more austerity to save on basic spending, and the result is a drop in inbound tourism to many Arab countries, with Egypt leading the way. line, looking for foreign exchange earnings .
Tourism revenues, even before the pandemic, are considered one of the three most important foreign exchange earnings for Egypt, along with remittances from Egyptian workers abroad and export earnings.
While the oil market provides a further boost to exporters of crude oil from Arab countries, the region is not immune to global pressure, due to inflation and high interest rates.
TRT Arab – Agencies
