Beirut, 18 March 2020-In addition to the rising death toll and extremely heavy burden on health-care systems, the Arab region is suffering from losses of jobs at an alarming rate due to COVID-19, according to a policy brief issued today by ESCWA featuring the first economic assessment of the cost of the pandemic on the region.
Arab States’ gross domestic product (GDP) is expected to decline by at least $42 billion in 2020. The figure could be higher, with the compounding effect of low oil prices and the dramatic slowdown of economies due to the closure of public institutions and private sector enterprises starting mid-March. The longer the lockdown, the higher the cost on the economies of the region.
More than 1.7 million jobs could be lost in 2020, with the unemployment rate increasing by 1.2 percentage points. Unlike in the aftermath of the global 2008 financial crisis, employment is expected to be affected across all sectors. The services sector, the region’s main employment provider, is particularly hit due to ‘social distancing’. Estimates point to a reduction by half of service-sector activities.
“We are under a global health threat which may alter the world as we know it. Its impact on people’s lives and families, on our children’s education, on our health systems and on our planet are yet to be revealed. But we can start to assess our economic losses and find ways to mitigate them,” said ESCWA Executive Secretary Rola Dashti.
The ESCWA assessment also demonstrates that COVID-19 has led to a significant decline in oil prices, which, compounded with the drop in oil prices, has cost the region nearly $11 billion in net oil revenues between January and mid-March 2020. The significant halt in trade and global transport is expected to cause a further increase of that figure in the coming weeks.
Also between January and mid-March, the region’s businesses lost a massive $420 billion of market capital, i.e. about 8% of total market capital in the region.
Policy solutions and swift actions are needed to trigger recovery, based on a comprehensive and integrative approach that leaves no one behind,” added Dashti.
Indeed, ESCWA recommends that Governments adopt coordinated support measures at the macro and micro levels, the first of which should target enhancing social protection, especially for the poor and vulnerable. Government fiscal policy should also be targeted towards supporting businesses, including through extension of tax exemptions, wage subsidies, deferment of debt obligations, and support to small and medium enterprises. Multilateral financial organizations should support least developed and vulnerable countries confronted with fiscal pressures.
According to the World Health Organization (WHO), 17 Arab States have reported laboratory-confirmed cases of COVID-19 to date.