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Distributional Impacts of COVID-19 in MENA
Introduction The COVID-19 crisis is the fourth crisis to hit the Middle East and North Africa in the past decade, following the Arab uprisings, the 2014–16 decline in oil prices, and the 2019 resurgence of protests in countries that had escaped the first wave of protests in 2010–11 (Muasher and Yahya 2020). This crisis differs from the others because of its overall socioeconomic impact and its distributional consequences. Already, it has exacerbated a series of problems that characterized the region before the crisis—high shares of inactivity, especially among youth; inequality in education; high levels of informality; and large gaps in economic opportunities for women. In 2020, during the pandemic, about 80 percent of informal private sector employees and 68 percent of self-employed reported reduced work in many MENA countries, according to World Bank phone surveys. The incidence and spread of the pandemic have inevitably affected the socioeconomic conditions in the region, derailing progress and intensifying economic woes. Increasingly, the evidence shows that the negative effects of COVID-19 are being disproportionally borne by those who, prepandemic, were already disadvantaged and vulnerable (Hill and Narayan 2020; Oxfam 2021). Using April 2020 growth forecasts from the World Economic Forum, Lakner et al. (2020) estimated that an additional 4 million people are expected to fall into extreme poverty in MENA as a result of the pandemic. The June 2020 Global Economic Prospects (GEP) forecasts raised this estimate to 5 million, and the January 2021 GEP forecasts further raised this estimate to 7–8 million. Especially worrisome is that it will take many years before the region’s economic activity springs back to pre-COVID-19 levels. Per capita GDP in MENA, which was estimated to be about US$14,000 before lockdown, dropped to just a little above US$13,000 during 2020 and is expected to take the next four or five years (by 2025) to bounce back to US$14,000. Meanwhile, the economic cost of COVID-19 in MENA is estimated at about US$227 billion. Further, infection rates have intensified, exerting greater pressure on health care, and fiscal support packages across MENA averaged 2.7 percent of GDP, adding to fiscal pressure. At the global level, mortality from the pandemic stands as high as 2.6 million as of March 2021 (Schellekens and Wadhwa 2021). COVID-19 induced extreme poverty—the difference between poverty rates with the pandemic and without the pandemic—and is estimated to rise by about 88–115 million people compared with prepandemic levels. And lockdowns and mobility restrictions have accelerated economic
