01/18/2022 | Press release | Distributed by Public on 01/18/2022 06:42
The COVID-19 pandemic brought unprecedented disruptions to the Middle East and North Africa (MENA) region. Our new report "Distributional Impacts of COVID-19 in the Middle East and North Africa Region" demonstrates how the pandemic reduced earnings, increased poverty and inequality, and compounded pre-existing fragilities. The report explores how COVID-19 affected the welfare of individuals and households in the MENA, and what key issues policy makers should focus on to enable a quick and sustained economic recovery.
In addition to a substantial rise in poverty, food insecurity, and inequality, the report notes the emergence of a group of "new poor," and marks changes in the labor market, how hard people work, and how many people work. There is a risk that recoveries will lead to further increases in inequality, given that the informal sector - in which many less well-off people work - tends to recover more slowly.
Looking forward, the report emphasizes that the first priority for recovery remains vaccinations. These are needed to protect people from disease and to avoid new lockdowns. Unfortunately, in many countries in the region, vaccinations levels remain disturbingly low.
In addition to vaccinations, certain economic strategies need to be adopted to ensure a resilient recovery. But how can countries build back better in a setting in which the pandemic has limited already-meager fiscal spaces and contributed to even higher levels of public debt?
Pre-pandemic MENA was the only region in the world with rising levels of poverty. Any economic model that yields such outcomes has run its course. Building back better should therefore not mean an attempt to return to pre-COVID conditions; it should strive for an economic reset instead.
Before COVID-19, economic insiders in the region were protected from the rigors of competition while economic outsiders were relegated to inactivity or the informal economy, and sustained with food and fuel subsidies. This exclusionary economic model is what needs to be changed. The region has to tap the growth potential of all its citizens and needs to build inclusive economic institutions in which many more people can participate.
Doing so does not have to be costly. The changes needed depend less on investments. Rather, the need to be affordable changes in policies and institutions. Countries need to:
To build back better decision makers in MENA should adopt policies to increase growth. Doing so is inclusive, as it contributes to increased economic participation. It is also affordable as policies don't cost much to design and implement.