Washington's tariffs regime has had a major impact on world economies but the repercussions for Middle East countries struggling with conflicts are even worse, according to the regional director of the International Monetary Fund.
For some countries in the Middle East and North Africa region, the impact of US levies compounded the shocks that have been jolting them for more than a year and a half, said Jihad Azour, who heads the IMF's Middle East and Central Asia Department.
“Especially where those [conflicts] were happening … Lebanon, Syria, the West Bank and Gaza,” said Mr Azour during a Sunday high level panel discussion organised by the IMF's regional office in Riyadh.
The impact of US tariffs that suddenly went from 5 per cent to about 30 per cent for many countries was telling.
Those economies suffered, “with losses of output that could exceed 50 or 60 per cent of GDP”, he said, adding that the impact was even more severe for countries, whose economies were reliant on regional tourism as their supply chains were heavily affected.
“Egypt suffered because of uncertainty on the trade routes, $7 billion [that] they used to collect by the Suez Canal disappeared over less than one year,” he said in his opening address, identifying Jordan as another hard-hit country.
Despite these pressures, Mr Azour said recent developments such as increased regional co-operation, private investment and the push for the development of AI could help these economies in crisis to grow out of their current fragile state.
Financial deepening
In February, the IMF announced the creation of its informal coalition with Arab nations and the World Bank to support the recovery of the region's countries devastated by war – the Arab Co-ordination Group.
Today, the fund and its partners are focusing on areas of trade disruption, infrastructure investment, and using AI to accelerate private sector growth and regional co-operation to aid economies in crisis.
“The hope is that some of the conflicts could turn into a post conflict situation, and reconstruction and recovery will emerge” Mr Azour said.
Gulf countries, of which many have gone through a transformation in the past eight to 10 years, are in a better position to take action to support the struggling economies in the region, he said.
“Doubling down to deepen those reforms and create a regional block that would become larger as a market and more effective as a convening group,” Mr Azour added.
Shared effect
While some of the Middle East countries have faced the pressures of trade war market volatility and geopolitical upheaval, all these factors have affected nations around the world to varying degrees.
The impact of the economic uncertainty on the global financial sector is multifaceted and deep, according to Jamal Al Kishi, chief executive of Deutsche Bank Middle East and North Africa.
“There is a general decline in sentiment in the [global] economy that definitely lowers growth”, said Mr Al Kishi, during a panel titled Global and Regional Economic Developments and outlook.
Investments are typically halted, consumption at times is curtailed in addition to the demand for loans, products and other financial services declining, he said.
“Banks typically witness decline in the quality of their loans when there's lower growth and higher uncertainty. Some households, some corporate clients, run into difficulty that begins to create non-performing loans, that causes banks to incur losses and higher provisions, and those are, of course, quite impactful,” he added.
The culmination of all these issues usually lead to high interest rates from central banks and inflation, which are inimical to growth.
These global factors are increasing the load on economies already under the pressures of geopolitical conflict, and regional co-operation could be a way back to growth, Mr Al Kishi said.
Structural Reforms
Abdulmuhsen AlKhalaf, Vice Minister of Finance of Saudi Arabia, said the path to stability given the global economic headwinds and geopolitical uncertainty is “through structural reforms that regional countries need to take to support their economies during these difficult situations”.
Using the example of the kingdom, he said Saudi Arabia was able achieve 52 per cent of its economic output from non-oil activities to achieve its Vision 2030 goals.
“This give us … enhanced our resilience, and now we are facing this external shock from a position of strength,” he added.
The region's recent push for AI is also having an effect, according to Bandr Al Homaly, chief executive of Jada Fund of Funds, an investment management company backed by Saudi Arabia's sovereign wealth fund.
“Technology overall can accelerate economic development with the democratisation of technology. The potential is huge, interconnected, and inclusive and private markets [that] will increase deal flow,” he said.
This was made possible with low barriers to entry, more accessibility to data, and the decentralisation of innovation hubs, said Mr Al Homaly.
“Innovation now can occur in unexpected places in the world not necessarily in Silicon Valley or other traditions hubs,” he said.
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PULITZER PRIZE 2020 WINNERS
JOURNALISM
Public Service
Anchorage Daily News in collaboration with ProPublica
Breaking News Reporting
Staff of The Courier-Journal, Louisville, Ky.
Investigative Reporting
Brian M. Rosenthal of The New York Times
Explanatory Reporting
Staff of The Washington Post
Local Reporting
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National Reporting
T. Christian Miller, Megan Rose and Robert Faturechi of ProPublica
and
Dominic Gates, Steve Miletich, Mike Baker and Lewis Kamb of The Seattle Times
International Reporting
Staff of The New York Times
Feature Writing
Ben Taub of The New Yorker
Commentary
Nikole Hannah-Jones of The New York Times
Criticism
Christopher Knight of the Los Angeles Times
Editorial Writing
Jeffery Gerritt of the Palestine (Tx.) Herald-Press
Editorial Cartooning
Barry Blitt, contributor, The New Yorker
Breaking News Photography
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Feature Photography
Channi Anand, Mukhtar Khan and Dar Yasin of the Associated Press
Audio Reporting
Staff of This American Life with Molly O’Toole of the Los Angeles Times and Emily Green, freelancer, Vice News for “The Out Crowd”
LETTERS AND DRAMA
Fiction
"The Nickel Boys" by Colson Whitehead (Doubleday)
Drama
"A Strange Loop" by Michael R. Jackson
History
"Sweet Taste of Liberty: A True Story of Slavery and Restitution in America" by W. Caleb McDaniel (Oxford University Press)
Biography
"Sontag: Her Life and Work" by Benjamin Moser (Ecco/HarperCollins)
Poetry
"The Tradition" by Jericho Brown (Copper Canyon Press)
General Nonfiction
"The Undying: Pain, Vulnerability, Mortality, Medicine, Art, Time, Dreams, Data, Exhaustion, Cancer, and Care" by Anne Boyer (Farrar, Straus and Giroux)
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"The End of the Myth: From the Frontier to the Border Wall in the Mind of America" by Greg Grandin (Metropolitan Books)
Music
"The Central Park Five" by Anthony Davis, premiered by Long Beach Opera on June 15, 2019
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The candidates
Dr Ayham Ammora, scientist and business executive
Ali Azeem, business leader
Tony Booth, professor of education
Lord Browne, former BP chief executive
Dr Mohamed El-Erian, economist
Professor Wyn Evans, astrophysicist
Dr Mark Mann, scientist
Gina MIller, anti-Brexit campaigner
Lord Smith, former Cabinet minister
Sandi Toksvig, broadcaster
F1 The Movie
Starring: Brad Pitt, Damson Idris, Kerry Condon, Javier Bardem
Director: Joseph Kosinski
Rating: 4/5
THE BIO
Born: Mukalla, Yemen, 1979
Education: UAE University, Al Ain
Family: Married with two daughters: Asayel, 7, and Sara, 6
Favourite piece of music: Horse Dance by Naseer Shamma
Favourite book: Science and geology
Favourite place to travel to: Washington DC
Best advice you’ve ever been given: If you have a dream, you have to believe it, then you will see it.
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More coverage from the Future Forum
THE CLOWN OF GAZA
Director: Abdulrahman Sabbah
Starring: Alaa Meqdad
Rating: 4/5
UK-EU trade at a glance
EU fishing vessels guaranteed access to UK waters for 12 years
Co-operation on security initiatives and procurement of defence products
Youth experience scheme to work, study or volunteer in UK and EU countries
Smoother border management with use of e-gates
Cutting red tape on import and export of food
Quick pearls of wisdom
Focus on gratitude: And do so deeply, he says. “Think of one to three things a day that you’re grateful for. It needs to be specific, too, don’t just say ‘air.’ Really think about it. If you’re grateful for, say, what your parents have done for you, that will motivate you to do more for the world.”
Know how to fight: Shetty married his wife, Radhi, three years ago (he met her in a meditation class before he went off and became a monk). He says they’ve had to learn to respect each other’s “fighting styles” – he’s a talk it-out-immediately person, while she needs space to think. “When you’re having an argument, remember, it’s not you against each other. It’s both of you against the problem. When you win, they lose. If you’re on a team you have to win together.”
As You Were
Liam Gallagher
(Warner Bros)
Top 5 concerns globally:
1. Unemployment
2. Spread of infectious diseases
3. Fiscal crises
4. Cyber attacks
5. Profound social instability
Top 5 concerns in the Mena region
1. Energy price shock
2. Fiscal crises
3. Spread of infectious diseases
4. Unmanageable inflation
5. Cyber attacks
Source: World Economic Foundation
Killing of Qassem Suleimani
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Keep it fun and engaging
Stuart Ritchie, director of wealth advice at AES International, says children cannot learn something overnight, so it helps to have a fun routine that keeps them engaged and interested.
“I explain to my daughter that the money I draw from an ATM or the money on my bank card doesn’t just magically appear – it’s money I have earned from my job. I show her how this works by giving her little chores around the house so she can earn pocket money,” says Mr Ritchie.
His daughter is allowed to spend half of her pocket money, while the other half goes into a bank account. When this money hits a certain milestone, Mr Ritchie rewards his daughter with a small lump sum.
He also recommends books that teach the importance of money management for children, such as The Squirrel Manifesto by Ric Edelman and Jean Edelman.
