Economic and Social Impacts of the Covid-19 Pandemic in the Arab Region
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Economic and Social Impacts of the Covid-19 Pandemic in the Arab Region Prof. Sami Aouadi INTRODUCTION ........................................................................................................................... 05 CHAPTER I The Economic Effects of the Covid-19 Pandemic 1. Repercussions of COVID-19 on the growth rate .................................................. 08 A. Geographical distribution of growth rates .................................................................................. 08 B. Real GDP growth in the Arab region before Covid-19 ............................................................... 08 C. Real GDP growth in the Arab region after Covid-19 .................................................................. 09 2. International Trade during the Covid-19 Crisis in the Arab Region ... 10 A. The volume of international trade of Arab countries in the last five years: food and medical products, as an example, related to COVID-19 ............................................................... 10 B. The impact of the pandemic on trade exchanges and the proposed policies to reduce negative repercussions ............................................................................................................................. 11 3. Pre- and post-Covid-19 inflation ....................................................................................... 11 A. The development of inflation rates in the Arab countries ......................................................... 11 B. Fiscal inflation in the Arab region: towards an economic downturn ...................................... 12 4. Repercussions of COVID-19 on the main economic sectors ................ 12 A. The economic position of the Arab countries according to the key sectors indicators ..... 12 B. The necessity of maintaining the dynamism of life products .................................................. 13 5. An urgent review of financing, debt repayment and government support policies for sectors affected by Covid-19 .................................................. 14 A. Financing and debt repayment policies ......................................................................................... 14 B. Damage to the tourism sector as a result of the borders closures ....................................... 16 6. The repercussions of Covid-19 on corporate economic activity ....... 18 A. The size of small and medium economic enterprises in the economies of each Arab country .......................................................................................................................................................... 18 B. Collapse of small, medium and micro-enterprises and temporary resistance of large enterprises ................................................................................................................................................... 19 C. Governmental decisions to support small, medium and micro enterprises to avoid bankruptcy ................................................................................................................................................... 21 7. Extraordinary measures for central banks ................................................................ 23 A. Monetary policies ................................................................................................................................. 23 B. The trend towards digitalizing banking services ........................................................................ 28 CHAPTER II The Social Effects of Covid-19 in Time of Regional Conflicts 1. The unemployed before and after the outbreak of the virus ..................... 32 A. Unemployment rate of the total workforce ................................................................................... 32 B. The impact of the pandemic on unemployment rates and the proportions of women in Arab labour markets ................................................................................................................................. 33 2. The size of the informal sector according to each Arab country .......... 35 A. Global informal employment ............................................................................................................. 35 B. The size and development of the informal economy ................................................................ 36 C. Share of informal employment out of total employment in the Arab region ...................... 36 D. The effects of Covid-19 on informal workers ............................................................................... 37 3. Covering social protection systems in the Arab countries ......................... 37 A. Access to social coverage ................................................................................................................. 37 B. Social systems and employment sector ........................................................................................ 39 4. Migrant workers in the Arab countries ........................................................................ 40 A. Foreign workers and Gulf labour migration by in public and private sector ...................... 40 B. Foreigners residing in Arab countries ............................................................................................ 40 C. Regular and irregular migration ........................................................................................................ 41 5. Repercussions of COVID-19 on irregular migrants and refugees ......... 43 CHAPTER III The Vulnerability of the Health and Infrastructure Sector 1. Decline in health spending ..................................................................................................... 45 A. The size of the public sector in the economies of Arab countries ....................................... 45 B. Percentage of health spending to GDP ......................................................................................... 45 2. Urgent measures, expenditures and international support to tackle Covid-19 ...................................................................................................................................................... 46 A. Preventive measures and assistance allocated by Arab states and governments to confront Covid-19 .................................................................................................................................... 46 B. Aid received by Arab governments in the framework of international cooperation or the borrowed balances from international funds .................................................................................... 48 Suggested alternative policies and recommendations ........................................ 51 4 Economic and Social Impacts of the Covid-19 Pandemic over the Arab Region Introduction Economic and Social Impacts of the Covid-19 Pandemic over the Arab Region 5 Introduction Arab countries, like the rest of the world, are witnessing a violent shock at the economic and social level as a result of the unprecedented pandemic (Covid-19) which has killed more than one million people, and the number of infections is expected to increase until the global market is provided with an effective vaccine against this virus. The United States, China and Russia are each competing in clinical trials, pouring huge sums into research and development, while developing countries and emerging market economies suffer an economic shock and recession; the consequences of which are likely to continue. Unlike the developed countries, which have been relatively able to control the consequences of the pandemic due to their adequate economic; health resources; infrastructure and crisis control strategies, developing countries witness unparalleled economic and social disruption. The world is witnessing one of the most difficult economic periods, and the Arab region is not in isolation from that. In fact, the exacerbation of regional conflicts and wars has exhausted the economies of the Arab East and the Maghreb countries. The impact of the pandemic has been evident in the first months as the economy shrank and growth retreated in contrast to the emergence of vital sectors such as medical supplies for Covid-19 and food. The pandemic has also cast its shadow over international trade in the region, forcing governments to take exceptional measures such as partial control of the pattern of exports and imports in light of investor mistrust and economic downturn. In the same context, Arab countries have moved towards reviewing the financing policy and debt repayment. They worked to support the affected sectors, which are most vulnerable to this storm, particularly small, medium and ultra-small enterprises with limited resources. This applied to the central banks as well as they have approved urgent measures in terms of debt repayment policy, liquidity control, or monetary policies. On the other hand, the impact of the pandemic has been ferocious on the social and humanitarian levels, particularly at a time of conflicts and wars that have exhausted the region. In addition to the increase in the number of unemployed and laid-offs, whether as a result of corporate bankruptcy; inability to pay wages; or unemployment due to health reasons, an important part of this group complains of not being included in the social coverage that has been and is still selective, excluding irregular groups such as informal workers, irregular migrants, and refugees. Therefore,