UN Experts Expect Arab Economy to Rebound in 2023

Rabat – Despite lingering challenges, economic and social developments in the Arab Region are set to register a notable improvement by next year, according to the latest annual survey by the United Nations Economic and Social Commission for Western Asia (UNESCWA).

The report provides a projection of socio-economic developments in the Arab region in 2022 and 2023, suggesting that the region is still struggling with poverty and unemployment to different degrees.

Lead author Ahmed Moummi, who announced the release of the report on January 8, 2022, confirmed that “poverty rates in the Arab region are expected to decrease from 27% in 2021 to some 26% in 2023, with differences among subregions.”

He also noted, “Unemployment rates, however, will remain among the highest worldwide, especially those of women and youth, although they are expected to decrease from 11.8% in 2021 to 10.7% in 2023.”

The report discussed two development scenarios, a baseline scenario and an alternate one. Both of them take into consideration national vaccination rates, development aid flows, remittances inflows, and tourism and oil revenues to set predictions of socio-economic development in the selected countries.

Also putting growth rates in the Arab region at risk are the spread of Omicron and slow vaccination rates, according to the report. Regional gross domestic product (GDP) may rise by 3.7 % and 3.6 % in 2022 and 2023 for the baseline scenario and 3.9 % in the same period for the alternate scenario, it noted.

In both the baseline and alternate scenarios, UNESCWA also expects consumer price inflation in the Arab region to decrease from 16% in 2021 to 6% and 4% in 2022 and 2023, respectively.

Notably, oil prices are predicted to be at $60 per barrel in case of slow vaccination roll-out, baseline scenario, and $80-$100 per barrel in alternate with the progress of vaccination campaigns and economic rebound.

Social disparities continue to be prominent in the region compared to the rest of the world. In the Arab region, only 35.1% of the population has at least one social protection benefit compared to the global average, 46.9%. The region also has the highest gender disparity worldwide, and UNESCWA estimates that it would need 142 years to achieve gender parity.

GCC countries rank as not only the most well-vaccinated population in the Arab region but also in the world, with the United Arab Emirates topping charts with 231.56 of COVID19 vaccination doses administered per 100 people.

Regarding middle-income countries, Morocco ranks first with a 66.14% share of vaccinated-population, followed by Tunisia (58.85%%) and Jordan (42.91%). Coming last, least developed and conflict-torn countries (19% in Sudan and 2.05% in Yemen) with limited access to vaccines due to political instability and lack of finance.

Morocco’s socio-economic situation

In the report, UNESCWA ranked Morocco as a middle-income country.

The North African kingdom is expected to go through a gradual recovery with a 3.4% and 3% GDP growth in 2022 and 2023 and a 1.6% inflation rate for the baseline scenario.

In terms of economic recovery, experts predict that Morocco will receive more tax revenue and improve its fiscal position with an unchanged debt-to-GDP rate (82%) for 2022-2023 and 3.8% and 3.7% fiscal deficits in 2022 and 2023, respectively.

Morocco is also expected to witness a drop in poverty rate from 2.65% in 2021 to 2.42% in 2022 and 2.20% in 2023. Unemployment rates are estimated to remain stable at 11% in 2022 before a 0.7% decrease in 2023.

At the height of the pandemic-induced economic crisis, the Moroccan government supported vulnerable households and businesses through the issue of different aid forms, including loans and repayment plans, to alleviate the shock of the crisis.

The rebound of the Moroccan economy provides a chance for vulnerable populations in the country. Yet, the emergence of Omicron can negatively impact the prospects of Morocco’s economic growth.