Economic Turmoil Ahead?
Middle East Socioeconomic Overview
Report: September 2023
The IMF warns of an imminent economic recession never seen before in the Middle East. Photo credit: Middle East Monitor
1. Table of Acronyms
2. Introduction
During September, the IMF released an unsettling report using which it warned of an imminent debt crisis that would impact the Middle East. According to the agency, the region will witness a systematic default and economic collapse not seen since the start of the Lebanese financial crisis in 2019. Separate findings by both the IMF and Bloomberg economists have identified Egypt, Tunisia, Jordan and Bahrain as critically vulnerable countries that could default on their sovereign debt obligations, with potentially catastrophic implications for their economies and populations.
3. The Socio-Economic Situation
Egypt
According to the WHO, Corona cases, deaths, and vaccinations are reported as follows:
-Confirmed cases: 516,023
-Deaths: 24,830
-As of 20 May 2023, a total of 112,673,535 vaccine doses have been administered.
Chinese construction workers push carts at a work site at Egypt’s new administrative capital project on Aug. 1. KHALED DESOUKI/AFP VIA GETTY IMAGES
In a recent analytical article, Bloomberg magazine classified Egypt as the second country most at risk of debt crisis, just after Ukraine. According to the Magazine, Egypt has to mind its soaring public debt, interest costs and yield on dollar bonds. To make matters worse, Egypt’s inflation reached a new record of 39.7 per cent in August, up from 38.2 per cent in July, after the Egyptian pound had lost half of its exchange value against the US dollar. Moreover, consumer prices recorded the highest values in more than 40 years in August, as reported by Egypt’s National Statistics organisation. All of this is putting pressure on the country’s leadership and its top military brass. Because of the unflexibility in dealing with the issue, and the over-inflated influence of the military on the country’s public sector, the IMF is still reluctant to dipatch the 3 billion USD to aid Egypt’s ailing economy. In other words, all the micro-reforms the current administration had enacted during President Sisi’s term, have fell short of the expectations of the international organization. For the time being the first review by the IMF of Egypt’s economic reform program, initially scheduled for September, has been postponed for 2024. This way, the IMF would give Egypt time to reconsider its course of action. Unfortunately, Egypt’s economy, together with the regional economy, is in decline.
Despite such gloomy findings, Egypt does have some impressive prospects waiting for it in the future. For instance, it is set in the coming year to join BRICS. The move will allow Egypt to reduce the cost of its imports without relying on the US dollar and to bypass Western conditions. Because of the ease of access to currencies from China, Russia, and India, Egypt will be able to upgrade its trade. Moreover, joining Brics would attract foreign investment from such countries and would therefore improve the status of its own currency and allow it to reduce its own debt deficit. On the shorter long term, the country is also expected to record a 4.4% in 2024, due to increase in Gulf investments from the Gulf Cooperation Council countries. Also, Egypt’s bilateral agreement with other countries have added to this prediction. For now, these two factors will play a significant role in Egypt’s development and can be considered successes of the current administration. Nevertheless, the regional economy is not in a good situation and might therefore cast unproportional effects on Egypt’s successes.
Jordan
According to the WHO, Corona cases, deaths, and vaccinations are reported as follows:
-Confirmed cases: 1,746,997
-Deaths: 14,122
-As of 20 August 2022, a total of 10,057,975 vaccine doses have been administered.
Minister of Industry, Trade and Supply and Labour Yousef Shamali speaks during the inauguration of the 23rd Jordan Economic Conference in Amman on Tuesday (Petra photo)
Following the approval of the 2023-2026 general investment policy earlier in May, Jordan took it upon itself to entise foreign partners to move forward in deepening bilateral ties with the Kingdom. Since Jordan has been keen on implementing reforms in line with interantional requirements, countries are gaining interest in Jordan. Also, the recent decleration of Prime Minister Bisher Khasawneh about the country’s aim to expand the private sector and increase its cooperation with local and foreign companies, and the positive results, including growth rates, increased exports and higher tourism revenues, have added validity to Jordan’s policies. The positive developments do not end here, as the country is continously holding events that will boost its portfolio. For instance, The 23rd Jordan Economic Conference, titled "Innovation in e-commerce", kicked off with wide international participation to enhance economic and investment cooperation in the Kingdom. Moreover, the country will be holding in March 2024, a Jordanian Economic Forum with several member states of the Association of Southeast Asian Nations. This forum will aim to improve trade relations and boost investment opportunities between the two sides. In terms of investment, Jordan has unveiled five key projects to investors worth around 438 million Jordanian dinars ($617 million), including a tourism city. The five projects comprise a tourism and entertainment city, ready houses complexes, a gas distribution network in the capital Amman and the Northeastern Zarqa city, a slaughterhouse in Amman and a fibre mechanical recycling plant. To encourage Jordan in continuing in upgrading its economy the Japanese government has granted a soft loan of $100 million to Jordan. These funds are earmarked to assist the Kingdom in implementing economic reforms.
Iraq
According to the WHO, Corona cases, deaths, and vaccinations are reported as follows:
-Confirmed cases: 2,465,545
-Deaths: 25,375
-As of 1 January 2023, a total of 19,557,364 vaccine doses have been administered.
Iraq is expanding its ties with countries in the region hoping to boost its non-oil economy. Image source: Tehran Times
September started with a US criticism of the banking sector of Iraq; the later has been accused of misuse of dollars at Iraqi commercial banks using fraud, money laundering and Iran sanctions evasion. This development came after the US barred 14 Iraqi banks from conducting dollar transactions as part of a wider crackdown on the illicit use of dollars. From its end, the Iraqi government iterated that it is implementing tighter financial regulations and combating the smuggling of dollars. that it is doing its best to contain the smuggeling of dollars. Despite such friction between the two states, and the economic implications that can result from prospective US sanctions, Iraq was able to score some notable advances to its economy. On one hand, Iran and Iraq seem to be deepining ties through the prospective formation of a Preferential Trade Agreement (PTA) through the Iran-Iraq Joint Chamber of Commerce. Also, the two countries are to set up a joint bank and trade zone in the near future to boost economic activity between them. Similarly, Iraq was visited by Turkish Foreign Minister Hakan Fidan in which he discussed with Iraqi officials about the possibility of connecting Iraq to Türkiye with railways, roads, ports and cities under the Development Road Project, which encompasses several nations and which is part of Iraq’s plan for a non-oil sustainable economy. As for its traditional oil sector, Chinese companies are rushing to Iraq to further develop its rich oil resources. For instance, the company PetroChina is considering promote its subsidiaries so as to provide better services for Iraq and contribute to the development of the Iraqi oil and gas sector.
Lebanon
According to the WHO, Corona cases, deaths, and vaccinations are reported as follows:
-Confirmed cases: 1,239,904
-Deaths: 10,947
-As of 21 December 2022, a total of 5,814,699 vaccine doses have been administered.
Wassim Mansouri, Lebanon's interim central bank governor, was one of the first of Lebanese decision makers, to heed the advice of international organizations about how the banking sector should operate. Photo credit: libnanews.com
In its most recent statement concerning Lebanon, the IMF stated that Lebanon has yet to enact much needed reforms which can put the country back on track. Instead, Lebanese politicians continue to waste critical time as the country continues to witness a shrinking public sector, deteriorating infrastructure, and worsening poverty. Ernesto Ramirez Rigo, the IMF mission's chief, said Lebanon’s inflation remains in “triple digits, further compressing real incomes.” The IMF also pointed out the decline of foreign exchange reserves. All of this is preventing Lebanon from unlocking $3 billion of assistance from the International Monetary Fund, as well as billions in aid from other international donors, due to a lack of consensus among politicians. In other words, the IMF and other interantional organizations do not trust Lebanese politicians and doubt wether they are serious. The IMF, however, did commend the recent decisions taken by the BdL’s new leadership in terms of abolishing the Sayrafa platform which had a detrimental effect on the currency and the economy. The organization also praised the bank’s new goal to establish a reputable and transparent foreign exchange trading platform and its aim to end the drawdown of Foreign Exchange reserves, curb monetary financing, and enhance financial transparency. Despite this, other decision makers within the government have yet to embark on the journey of fixing the country. Some shift the blame on others while asking the international community for more financial assistance. Unfortunately, during an era of donor shortage due to several crises worldwide, foreign governments and organizarions are not giving the Lebanese issue much seriousness.
Palestine
According to the WHO, Corona cases, deaths, and vaccinations are reported as follows:
-Confirmed cases: 703,228
-Deaths: 5,708
-As of 17 October 2022, a total of 3,748,571 vaccine doses have been administered
The Palestinian economy remains at high risk under a multi-layered system of Israeli restrictions on movement and trade in the West Bank and a near-blockade of Gaza, the World Bank said. AFP
September was a month of condemnation, from international organizations regarding Israel’s practices in Palestine. From its end, the World Bank warned that Israel’s combination of fiscal constraints and restrictions imposed to hinder access to health care, adversely affecting the population, especially in Gaza, will cause the Palestinian economy to continue to operate well below its potential. Although growth is projected to hover around 3 per cent, income per capita is also expected to stagnate, damaging living standards as the population continues to grow. The organization recommends Israel changes its policies on the ground as the immense discrepancies between the two entities economies is quite large. For instance, the income per capita in Israel almost 14 to 15 times higher than in the Palestinian territories. Similarly, the IMF also delivered some scathing remarks to Israel; it directly called for the lift its restrictions on the Palestinian economy and occupied territories to give way for improving investment opportunities. “Amid a deteriorating security, political and social situation, the recovery of the Palestinian economy is losing momentum and per capita income is projected to decline over the medium term,” were the exact words of the organization. The IMF also blamed Israel for withholding tax revenues and the restrictions that have suffocated Palestine’s economy, and commended the Palestinian banking sector which has done a remarkable job in keeping the country afloat.
Syria
According to the WHO, Corona cases, deaths, and vaccinations are reported as follows:
-Confirmed cases: 57,423
-Deaths: 3,163
-As of 15 January 2023, a total of 5,090,630 vaccine doses have been administered
People gather to protest against the Bashar Assad regime in Suwayda, Syria, Sept. 1, 2023. Photo credit: cbsnews
President Bashar el Assad made international news during the second half of September, as he travelled to China for the first time since the war began in Syria. The aim of this visit is to foster and improve ties between the two countries and coax China into future reconstruction efforts which is expected to cost tens of billions of dollars. Last year, Syria joined China’s Belt and Road Initiative in which Beijing is aiming to expand its influence in developing regions through infrastructure projects. This is very important for Syria’s government as it needs the backing of a major power to counter the effects of the economic siege imposed by the US. As such, improving ties with China and giving it the leverage it needs to expand Syria thus placing it directly under its wing, will give Syria a major economic, political, and security boost. Moreover, Syria is in close cooperation with Russian companies to import of 1.4 million tons of soft wheat used in making bread, to mitigate the shortage in wheat. Also, the government inaugurated a new gas well in Palmyra that will assist in narrowing the gap between supply and demand. It is the second gas well to start production in recent months. Meanwhile, the government has contracted a company to invest in various oil and gas fields in Palmyra and around Deir-ez-Zor.
President Bashar’s trip to China came out of sheer necessity to save the country from its own crumbling economy which has sparked protests in some areas. The most notable instance is the Suwayda city where the cost of living has notably increased, prompting civilians to go to the streets. Unfortunately, demonstrations evolved quickly into demands for the downfall of the Assad government, after the government reduced fuel subsidies and raised gasoline prices by nearly 250%. Syria’s leadership tried to remedy the situation by doubling public wages and pensions. Instead, the move accelerated inflation and further weakened the Syrian pound. As such, millions of Syrians who were already living in poverty after years of war and economic stagnation, found themselves in a worse position. To make matters worse and despite the recent unrest, the government is reportedly considering eroding subsidies on food commodities and oil products during the coming period. Also, the budget crunch among humanitarian actors is impacting 2.5 million Syrians relying on foreign aid. Hopefully the meeting between Chinese President Xi and Mr. Assad will meet public expectations and will be a start of a new future for Syria and the rest of the region as the country seriously needs it.
Cyprus
According to the WHO, Corona cases, deaths, and vaccinations are reported as follows:
-Confirmed cases: 660,854
-Deaths: 1,364
-As of 10 June 2023, a total of 1,858,908 vaccine doses have been administered
Photo credit: ekathimerini.com
In a recent report issued by the Eurobank, Cyprus’s economy is set to grow even though there are many uncertainties. What will allow the island to sustain this growth is a resurgent tourism sector, strong export of services with an 11.6 per cent increase, and significant household consumption growth of 7.8 per cent. These two factors along with an improving construction sector, will allow the economy to be resilient against global uncertainties and to score notable growth. Moreover, the government’s policy of expanding the IT sector paved the way for smoother business transactions and inward investment into the country. Since Cyprus is constantly working on improving its economy, it was able to secure a 369-million-euro loan from the European Investment Bank on favorable terms, to bolster economic resilience and competitiveness, promote innovation, and expand investment programs. When asked to comment on the loan, Finance Minister Makis Keravnos, stated that it will also help Cyprus to consider promoting infrastructure, secure sustainable growth, contain public sector employment and the wage bill. For the time being and before the government starts to make use of the funds, it plans to counter inflation and reduce fuel prices. The idea of such a directive is to maintain a healthy economic cycle and to protect vulnerable groups of the population and those groups of society who are in real need. As such, this policy will allow the country, in all of its different social classes, to withstand current times and therefore keep the economy afloat.
4. The Humanitarian Situation
Egypt
A High-level workshop, was co-organized in Cairo by the Government of Egypt (GOE) and UNHCR. It marks the formal launch of the planning process for the 2024 Egypt Refugee Response Plan (RRP), representing an opportunity to build on the strong partnership between the Egyptian government and the international community.[1]
Jordan
The UNHCR states that there are currently 655,283 registered refugees in Jordan up until the beginning of September.
The proportion of Syrian displaced people registered within the UNHCR for September, are distributed as follows:
-194,815 in Amman Governorate (29.7 %)
-169,215 in Mafraq Governorate (25.8%)
-127,982 in Irbid Governorate (19.6%)
-97,141 in Zarqa Governorate (14.8%)
-16,892 in Balqa Governorate (2.6%)
-12,924 in Madaba Governorate (2%)
-8,522 in Jarash Governorate (1.3%)
-8,254 in Karak Governorate (1.3%)
-8,122 in Maan Governorate (1.2%)
-5,769 in Ajlun Governorate (0.9%)
-3,746 in Aqaba Governorate (0.6%)
-1,417 in Tafilah Governorate (0.2%)
Jordanian leadership warned on 20 September, while speaking at the UN General Assembly in New York, that their country can no longer sustain the effects of the Syrian refugee crisis, while calling for serious efforts by the international community.[2]
Jordan and Sweden co-hosted a high-level ministerial meeting at the 78th United Nations General Assembly in support of Palestinian refugees and UNRWA as the agency faces financial challenges amid a lack of funds.[3]
Iraq
The UNHCR states that there are currently 295,448 registered Syrian refugees in Iraq.
The proportion of displaced Syrian people registered within the UNHCR up until the beginning of September, are distributed as follows:
-139,533 in Erbil (47.2%)
-74,022 in Dahuk (25.1%)
-38,716 in Sulaymaniyah (13.1%)
-18,244 in Ninewa (6.2%)
-15,150 in Baghdad (5.1%)
-2004 in Kirkuk (0.7%)
-1,557 in Anbar (0.5%)
-6222 in other areas (1.9%)[4]
A total of 154 mt of dates donated by the King Salman Humanitarian Aid and Relief Centre of Saudi Arabia, as well as 56mt of Immediate Response Rations (IRR), were distributed to over 37,000 Syrian refugees in 10 camps in the Kurdistan Region of Iraq (KRI).[5]
According to an official from Iraq’s ministry of migration and displaced, Iraq is cooperating with the United Nations to develop a roadmap with the goal of closing IDP camps in the Kurdistan Region and return the residents to their hometowns.[6]
Lebanon
{The statistics sections was not updated for the month of September by UNHCR admin.}
Since the beginning of July, the number of registered Syrian refugees in Lebanon is 795,322.
Refugees in Lebanon are distributed as follows:
-305,921 in Bekaa (38.5%)
-222,788 in North Lebanon (28.0%)
-177,374 in Beirut (22.3%)
-89,239 in South Lebanon (11.2%)[7]
While speaking at the UN General Assembly in New York, Lebanese representative warned that his country can no longer sustain the effects of the Syrian refugee crisis, while calling for serious efforts by the international community.[8]
Lebanese Bishop Jules Boutros, who took part in the “Mediterranean Meetings 2023” in Marseille, concluded by Pope Francis, spoke to Vatican News on migration in Lebanon. He stated that it should be an opportunity to introduce refugees to Christ.[9]
Lebanese politicians criticized the UN for handing out “Housing Attestation” which is considered a total breach of Lebanon’s sovereignty.[10]
According to the Lebanese armed forces, the military rescued 27 Syrian migrants from drowning after their rubber boat capsized off the country’s northern coast.
Syria
Hostilities including shelling and clashes across Syria during September have resulted in significant displacement of families. Around 5,300 families – estimated over 26,500 individuals - have been newly displaced in north-west Syria.[11]
More than 83,000 people throughout Syria received aid with Medair’s healthcare and WASH services.[12]
UNRWA finished a project of rehabilitating a school in Yarmouk camp. As such, children can resume going to school. [13]
Qatar Charity laid the foundation stone for the ‘Al Karama’ city near the Al-Bab city in northern Aleppo countryside. The city, which will be built with the support from benefactors in Qatar, in cooperation with Turkey’s Gaziantep Province, is expected to provide safe and model housing for approximately 8,500 internally displaced Syrians.
The SRTF announced the delivery of maintenance tools and equipment needed to begin rehabilitation works under its Cash-for-Work (CfW) project: “Rehabilitation of Ten Schools in Rural Areas of Northern Aleppo – Phase I”.[14]
Increased hostilities across north-west Syria have resulted in the death, injury and displacement of civilians including children. as of 5 September, nearly 3,000 families have been displaced across north-west Syria, including some 2,400 families who were displaced from the southern countryside of Jarabulus in Aleppo.[15]
Cyprus
Cyprus called for the European Union (EU) to increase its financial support to Lebanon in a letter arguing that Lebanon was a "barrier" that prevented refugees from entering Europe.[16]
Amnesty international issued a statement condemning the racism and violence against refugees in Cyprus.[17]
According to the Cypriot Interior Ministry, Cyprus has formally called on the European Union to re-evaluate which areas of Syria can be declared safe and free from armed conflict so that Syrian migrants can eventually be repatriated there.[18]
[1] African Business, Ahttps://african.business/2023/09/apo-newsfeed/government-of-egypt-united-nations-high-commissioner-for-refugees-unhcr-organize-a-joint-workshop-with-all-partners-to-kick-off-the-2024-egypt-refugee-response-plan
[2] Cradle, Sept. 21, 2023, https://new.thecradle.co/articles/jordan-lebanon-warn-of-severity-of-syrian-refugee-crisis
[3] News Arab, September 22, 2023, https://www.newarab.com/news/jordan-sweden-raise-funds-palestinian-refugees
[4] https://data2.unhcr.org/en/situations/syria/location/5
[5] OCHA, https://reliefweb.int/report/iraq/wfp-iraq-country-brief-july-2023
[6] Rudaw, September 25, 2023, https://www.rudaw.net/english/middleeast/iraq/25092023
[7] https://data2.unhcr.org/en/situations/syria/location/71
[8] Cradle, Sept. 21, 2023, https://new.thecradle.co/articles/jordan-lebanon-warn-of-severity-of-syrian-refugee-crisis
[9] Vatican News, September 24, 2023, https://www.vaticannews.va/en/church/news/2023-09/mediterranean-meetings-bishop-boutros-lebanon.html
[10] The 961, September 22, 2023, https://www.the961.com/un-is-giving-syrian-refugees-residency-certificates/
[11] OCHA, Sept 13, 2023, https://reliefweb.int/report/syrian-arab-republic/north-west-flash-update-increasing-hostilities-north-west-syria-11-september-2023
[12] OCHA, https://reliefweb.int/report/syrian-arab-republic/medair-gives-aid-83000-people-syria
[13] OCHA, Sept 12, 2023, https://reliefweb.int/report/syrian-arab-republic/unrwa-reopens-school-yarmouk-delivers-hope-devastated-camp-enar
[14] https://reliefweb.int/report/syrian-arab-republic/srtf-delivers-maintenance-tools-and-commences-rehabilitation-works-under-cash-work-project-northern-aleppo
[15] OCHA, Sept 6, 2023, https://reliefweb.int/report/syrian-arab-republic/north-west-flash-update-increasing-hostilities-north-west-syria-06-september-2023
[16] New Arab, September 18, 2023, https://www.newarab.com/news/cyprus-calls-eu-financing-lebanon-stem-refugee-flow
[17] Amnesty, September 6, 2023, https://www.amnesty.org/en/latest/news/2023/09/cyprus-authorities-must-protect-migrants-and-refugees-from-racist-attacks/
[18] Arab News, Sept 22, 2023, https://www.arabnews.com/node/2378561/world