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Vaccines, oil help Mideast economies to recover

Middle East economies are recovering from the coronavirus pandemic faster than anticipated, largely due to the acceleration of mass inoculation campaigns and an increase in oil prices.

But the International Monetary Fund warned that uneven vaccine distribution would derail the region's rebound, as the prospects of rich and poor countries diverge.

In its latest report, the IMF again revised upward its 2020 economic outlook for the Mideast and North Africa, now outlining just a 3.4% contraction last year.

This reflects growth for the region's oil exporters buoyed by a boom for commodities and rise in oil prices, which hit $67 a barrel in March.

Even with an expected dip to $57 a barrel by the end of 2021, the surge from last year's all-time low is boosting the oil-rich nations of the Persian Gulf, such as the United Arab Emirates and Saudi Arabia, which also have moved swiftly toward widespread vaccination.

But elsewhere in the region, from Yemen and Sudan to Libya and Lebanon, where inflation soars, instability prevails and wars have left lasting scars, the damaging effects of the pandemic will drag on and cause economic harm, possibly for years to come, the IMF said.

"We are a year into the crisis and recovery is back, but it is a divergent recovery," Jihad Azour, director of the Middle East and Central Asia department at the IMF, told The Associated Press.

"We are at turning point...vaccination policy is economic policy."  

The IMF expects economic growth to reach 4% for the Middle East this year.

But that rosy outlook papers over the region's deep economic divides.

For oil-rich economies, yawning deficits are expected to halve this year as revenues climb, more arms get jabbed and lockdown measures recede, said Azour.

Thanks to strong government management of the virus' successive waves and the jolt in oil prices, Saudi Arabia's economy will expand 2.9% compared to last year's contraction of 4.1%.

The IMF expects the UAE's economy to grow this year by 3.2%, with Dubai's World Expo, now rescheduled for October 2021, key to the nation's recovery.

The UAE has launched one of the world's fastest inoculation campaigns, with over 90 doses administered per 100 residents as of this week.

The outlook is bleaker for fragile and developing economies, many with lagging vaccination campaigns, few resources for fiscal stimulus and revenues drawn heavily from sectors like tourism that have been slowest to recover from the pandemic.

Whereas rich countries plan to vaccinate most of their population in a few months, swaths of the region — from Afghanistan and Gaza to Iraq and Iran — likely won't inoculate a significant portion of their populations until mid-2022, the IMF said.

The region's lowest-income countries could end up waiting until 2023 at the earliest for mass vaccination, according to the report.

Despite the worsening inequality, the pandemic has shown the fortunes of the Mideast's richest and poorest countries to be increasingly intertwined.

Surging infections and floundering inoculation anywhere in the region could spread new variants that threaten overall economic and public health, the IMF reported.

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