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Middle East economic recovery to be gradual in 2021: IMF

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Dubai: GCC’s largest economy Saudi Arabia is expected to record a 2.6 per cent growth in 2021 compared to an estimated 3.9 per cent contraction in its 2020 GDP growth and move to a faster growth of 4 per cent in 2022, according to the International Monetary Fund (IMF).

The latest update of the World Economic Outlook report of the IMF has significantly revised the 2020 growth outlook of Saudi economy upwards from the October projection of 5.4 per cent. However, the IMF has revised its growth outlook for 2021 downwards from the earlier forecast of 3.1 per cent.In its latest WEO update, the IMF has projected the Global economic growth an estimated 3.5 per cent contraction in 2020, the global economy is projected to grow 5.5 per cent in 2021 and 4.2 per cent in 2022. The latest forecasts are clearly shows an improved outlook compared to the October 2020 forecast of 4.4 per cent contraction for 2020 and a 5.2 per cent growth forecast for 2021.

The global growth contraction for 2020 is estimated at -3.5 per cent, 0.9 percentage point higher than projected in the previous forecast reflecting stronger-than-expected momentum in the second half of 2020.

The strength of the recovery is projected to vary significantly across countries, depending on access to medical interventions, effectiveness of policy support, exposure to cross-country spillovers, and structural characteristics entering the crisis.

The IMF expects the recovery path of both advanced and emerging market and developing economies to trace diverging recovery paths.Among the emerging markets, considerable differentiation is expected between China—where effective containment measures, a forceful public investment response, and central bank liquidity support have facilitated a strong recovery—and other economies.Oil exporters and tourism-based economies within the group face particularly difficult prospects considering the expected slow normalization of cross-border travel and the subdued outlook for oil prices. The pandemic is expected to reverse the progress made in poverty reduction across the past two decades. Close to 90 million people are likely to fall below the extreme poverty threshold during 2020–21.