MENA Countries Face Slow Economic Recovery as Pandemic Hinders Tourism and Energy Exports

The six countries in the region (Egypt, Morocco, Qatar, Saudi Arabia, Tunisia and the United Arab Emirates) all depend on energy exports and tourism revenues, explains S&P Ratings, noting that although the contraction is low for these six countries, the growth deficit reached 5.9% compared to 6.7% for the world and 5.3% for the entire MENA region. However, the document indicates, "regional growth has started a rebound in the third quarter of 2021 after a sharp contraction in the first half of 2020. However, what seemed to be a trajectory of rapid recovery has been thwarted by subsequent waves of the virus".

In addition, the rise in oil prices by 10% of the average of the fourth quarter of 2019 contributed to the recovery, unlike the tourism and travel sectors which remained behind. For example, compared to pre-pandemic levels, the hotel and restaurant sector fell by 26% in Egypt, 57% in Morocco, 44% in Tunisia and 19% in Qatar in the first quarter of 2021.

However, vaccination campaigns are not progressing at the same pace in the six countries, the same source notes, specifying that Qatar, Saudi Arabia and the United Arab Emirates have already reached between 70 and 80% vaccination of their population, while Egypt, Morocco and Tunisia are still far behind.

In addition, the majority of banks in the MENA region have withstood the crisis. Thus, credit risk losses will be capped in most of the region in 2021, the agency estimated. Moreover, in terms of exceptional harvest, recovery of commodity prices and others, the result is satisfactory in Morocco, although the pandemic is still present in the region.