“The war in Ukraine and the associated sanctions have led to rising commodity prices, which will exacerbate the difficulties already facing MENA countries, especially oil importers,” the statement said. IMF, Jihad Azour and senior economists in the same field Jeta Menkulasi and Rodrigo Garcia-Verdu.
After reaching the peak of $ 130 a barrel following the outbreak of war in Ukraine, the Bretton Woods trio’s experts recalled that the average should be $ 107 against $ 38 in 2021. Edition of the World Economic Outlook, published in April.
Similarly, after reaching a historic peak in 2021, food prices are expected to rise further by 14% in 2022.
“This inflation comes at a crucial time for recovery in the region,” the blog authors point out, adding that the IMF has lowered its growth forecast for MENA oil-importing countries, adding that higher commodity prices add to the challenges of rising inflation, and credit, tight global financial conditions, and the need for vaccines. Random progress and, in some countries, the underlying drivers of weakness and conflicts. “
With the exception of the Gulf Cooperation Council countries, the Washington-based financial institution notes that food prices were responsible for 60% of the inflation measured last year in the Middle East and North Africa.
The IMF expects inflation in the region to remain high at 2022, a significant increase of 13.9% compared to its October forecast.
“Many economies in the region are largely dependent on foreign food arrivals (one-fifth of total imports) and this is not surprising given that food consumer baskets (on average one-third) weigh in. This is the case in low-income countries.
The war has heightened fears of food insecurity, as the region is dependent on wheat imports from Russia and Ukraine, and rising prices.
The situation in countries weakened or affected by the conflict is particularly worrying, as their strategic reserves include net domestic consumption of less than 2.5 months, IMF experts warn.
“Rising commodity prices will have a significant negative impact on the external accounts of oil-importing countries,” he warns.
“We predict that these countries’ external balances will fall by an average of 1 point in GDP,” the authors of the blog noted.
IMF experts believe that in order to cope with the double shock of rising oil and food prices, it is necessary to raise key rates in countries where inflation expectations are rising or price pressures are widespread.
“Clear and transparent communication is essential to guide markets”, it underlines.
According to the International Monetary Fund, these difficulties underscore the importance of pursuing structural reforms that will help countries withstand future macroeconomic shocks and accelerate recovery.
“Measures to promote efficiency in public spending and revenue collection, including digital transformation, promoting private sector activities and strengthening social security nets, will all be important priorities,” say IMF economists.
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