COVID-19-Induced Shocks

from Distributional Impacts of COVID-19 in the Middle East and North Africa Region

Introduction

Republic of Iran and Lebanon) or protests and social unrest (Algeria, Lebanon, and Tunisia). Moreover, some are marked by fragility, conflict, and violence-related vulnerabilities, such as (a) high-intensity conflict in Libya and Syria, (b) medium-intensity conflict in Iraq and the Republic of Yemen, (c) social fragility in Lebanon and the West Bank and Gaza, and (d) spillover effects in Jordan and Lebanon. Furthermore, the region remains prone to climate risks, such as water scarcity, coastal flooding, desertification, and famine.

Against this backdrop, key questions for the region are: How does COVID-19 affect the welfare of individuals and households in MENA, and what are the key issues that policy makers should focus on to enable a quick and sustained economic convalescence? This report attempts to help answer these questions by focusing on the pandemic’s impact on welfare. It furnishes impact estimates for different economic sectors and households across distribution classes, and it throws light on the channels through which they have been affected in different countries. Of the 19 countries and economies in MENA, this report focuses on those with available household-level data: Djibouti, Egypt, the Islamic Republic of Iran, Iraq, Lebanon, Libya, Morocco, Tunisia, and the West Bank and Gaza.1

Since the onset of COVID-19, many statistical agencies have started collecting data to assess the socioeconomic impacts of COVID-19 on households. One of the report’s innovations lies in drawing on this household-level primary data, collected during the peak of the pandemic (as opposed to firm-level data) to facilitate an understanding of selfreported changes in welfare. Findings from many of these surveys can be found on the COVID-19 High Frequency Survey Global Dashboard.2 In addition, the report uses microsimulations to assess not just the overall macroeconomic impact but also distributional implications on welfare and poverty in the selected MENA countries.

A key message of this report is that COVID-19 has created an economic slump and increased poverty and inequality, which will require both immediate short-run measures as well as long-term policy supports with an eye on equity and inclusion.