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22:38 GMT
WASHINGTON, Oct 16 (KUNA) -- The World Bank Group said its October 2024 edition of the Middle East and North Africa (MENA) Economic Update came out at a pivotal time for the region where continuing conflict is causing profound suffering.
"The conflict is taking a terrible toll on human lives, societies, and economies, and has repercussions that go well beyond those areas directly affected," according to the report titled Growth in the Middle East and North Africa.
There is little that can be built-and much that can be lost-in the face of conflict, the report said, noting that peace is "an essential prerequisite for development."
"In 2024, real GDP growth in MENA is expected at 2.2 percent, a modest increase from 1.8 percent in 2023.
"This uptick masks important disparities within the region. It is driven by Gulf Cooperation Council (GCC) countries, where growth is forecast to rise from 0.5 percent in 2023 to 1.9 percent in 2024," the report reads.
"Growth is expected to decelerate in the whole of developing MENA.
"In developing oil importers, it will decelerate from 3.2 percent in 2023 to 2.1 percent in 2024, as the repercussions of the ongoing conflict spill over directly onto some countries and exacerbate pre-existing vulnerabilities in others.
"Real GDP growth in developing oil exporters will decline from 3.2 percent in 2023 to 2.7 percent in 2024.
"Over the past year, MENA's 2024 real GDP growth forecasts have been substantially downgraded, with the largest downward revisions among fragile and conflict-affected situations (FCS).
"These downgrades partly reflect the extension of OPEC+ oil production cuts and increased uncertainty due to the conflict centered in Gaza.
"Dispersion among private sector forecasters, a measure of uncertainty, has risen in MENA by 13 percent since October 2023.
"This contrasts sharply with the downward trend observed in other EMDEs and high-income countries.
"As of September 2024, uncertainty in MENA is nearly twice as high as in other EMDEs.
The economic consequences of the conflict centered in Gaza Amidst a deepening humanitarian crisis, Gaza's economy has come to a near-total halt, with a staggering 86 percent contraction in Q2 2024.
"In the West Bank, the economy also contracted by 23 percent in Q2 2024, largely due to tighter restrictions on movement, a drop in consumption, and a severe fiscal crisis.
"As a result of increased deductions by Israel on the clearance revenue transfers and reduced domestic tax receipts, the Palestinian Authority (PA) is facing a projected financing gap of USD 1.86 billion in 2024, according to official PA sources-more than double that of 2023.
"In neighboring economies, the conflict suppressed economic activity, for example through tourism receipts (e.g., a 6.6 percent decrease in tourist arrivals in Jordan through August 2024, in annualized terms) and fiscal revenues (e.g., a 62 percent drop in Suez Canal revenues in the Arab Republic of Egypt in the first half of 2024 relative to the second half of 2023).
"--A Synthetic Control Method (SCM)-based analysis in this report shows that income per capita in conflict-affected countries in MENA could have been, on average, 45 percent higher without conflict, measured seven years after its onset.
"This loss is equivalent to 35 years' worth of progress in the region.--
"Despite the region's current challenges, there is significant untapped potential in MENA.
"Countries can better allocate their talent in the labor market and leverage their strategic location to boost innovation and sustain growth.
"Talent misallocation, both in and out of the labor force and between the public and private sectors, has harmed living standards in the region.
"Over the past 50 years, schooling in MENA has rapidly increased, especially for women, but female labor force participation rates have stagnated.
"Closing gender employment gaps in MENA would result in a 51 percent increase in per capita income in the typical MENA country," the report added. (end)
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