Further Economic Repercussions
Middle East Socioeconomic Overview
Report: January 2024
Palestinians in Gaza move from place to place, only to discover nowhere is safe | AP News
Table of Acronyms
2. Introduction
The War in Gaza continues to claim the lives of many while expanding in scope and intensity. As such, the armed conflict has spread to Syria, Lebanon, Iraq, and the Red Sea inflicting economic repercussions to the whole region. With consistent escalations on both sides occurring the world is wary of a massive showdown that will put the security of the region in jeopardy. Moreover, humanitarian funding has decreased immensely even though the situation is consistently deteriorating. As such, the socioeconomic repercussions will be felt in the months to come.
3. The Socio-Economic Situation
Egypt
At the beginning of this year, Egypt officially joined BRICS. Photo credit: https://economymiddleeast.com/
January began with President Al-Sisi remaining in power after his successful re-election in December. Although he easily secured most of the votes, there are great concerns about the direction the economy is heading to. Although the country has a $3bn bailout package from the IMF in order to preserve macroeconomic stability and for inclusive and private-sector led growth, and had implemented some liberal reforms for the foreign exchange market, further reforms in financial markets are needed to unlock more IMF funds. However, President Al- Sisi was reluctant to oversee another devaluation of the pound prior to the election as reforms for the exchange market had caused such unexpected devaluation. Moreover, the coming of the pandemic, the decline of international trade, and the ongoing war in Gaza have exterted external pressure causing the country to lose billions in revenues. Nevertheless, analysts still emphasize that even if things get back to normal in terms of international trade and the situation in Gaza, the country will still neeed to adopt fundamental reform – both to satisfy the demands of the IMF and its international creditors, and to put Cairo on the path to long-term financial stability. Afterall, the GDP has recorded a slow down from 4.4% in 2022-2023 to 2.65% in the current fiscal years as inflation has impacted food prices; so far they have continued their upward trend while suffering from a shortage. Moreover, the country is still witnessing a scarcity of hard currency needed for imports.
Despite the pessimism expressed by international organizations and the general security situation in the region, investments are continuing to flow into Egypt. This is due to the Egyptian government’s prioritization for the stimulation of investment, production, and exports in order to boost economic growth in the future. It plans to do so by issuing bonds in currencies of the members of the BRICS’s New Development Bank (NDB). According to Egypt’s Minister of Finance Mohamed Maait, this will include green, blue, social, and sustainable bonds. Maait added that there are promising prospects for cooperation with NDB in clean energy projects, transportation, and social and environmental protection. Moreover, Egypt seeks to collaborate with the bank in information infrastructure and water and sanitation, especially in light of its enormous financing capabilities and advanced international expertise. This also falls in line with NDB’s plans to expand its activities in Egypt as the Bank is aiming to explore more promising investment opportunities and provide soft development financing to the private sector.
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According to the WHO, Corona cases, deaths, and vaccinations are reported as follows:
-Confirmed cases: 516,023
-Deaths: 24,613
-Recovered: 442,182
Jordan
The Senate's Finance and Economy Committee discusses the updates to the Economic Modernisation Vision. Photo credit: jordantimes.com
New analysis have indicated that Jordan has demonstrated remarkable stability despite the economic reprecussions of the war in Gaza. In November 2023, the country’s annual inflation rate recorded a modest increase of 1.3% compared to the same time the previous year. Although this uptick is noticeable, it is within acceptable bounds, signaling an element of economic resilience. Moreover, the country recorded a drop in its food inflation rates by 1.4% from October 2023 indicating an improvement in the food security situation in the country. Nevertheless some food items such as cucumbers, and eggs deviated from this trend with a marked increase in prices as they are among the staples for refugees residing within Jordan. Since the Kingdom is doing well economically and has adopted necessary reforms requested by international organizations, the IMF has approved a 1.2 billion USD program to boost Jordan’s economy. The government is not stopping here, but is also holding other talks to push the economy even further. For instance, the Lower House Economic and Investment Committee has been holding meetings to discuss the updates on the Economic Modernisation Vision (EMV) and the impact of the events in Gaza on the national economy. The EMV aims to achieve a 5.5 per cent growth by 2033, and create a million job opportunities. The financial indicators of the EMV executive programme for 2023 were praiseworthy, with a real growth rate of 2.7 per cent. During the meetings, it was also discussed the government’s mechanism in keeping a close watch on food supplies and addressing delays in goods due to global fluctuations in energy and imported goods prices.
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According to the WHO, Corona cases, deaths, and vaccinations are reported as follows:
-Confirmed cases: 1,746,997
-Deaths: 14,122
-Recovered: 1,731,007
Iraq
The Iraqi Prime Minister, Mohammed Shia Al-Sudani, and the French President, Emmanuel Macron. Photo: Iraqinews.com
In a bid to implement economic reforms in Iraq, Baghdad agreed to join the IMF’s non-financing program in the coming months. According to Iraqi Prime Minister Mohammed Shia Al-Sudani, who attended the World Economic Forum in Switzerland, the move aims to inititate a series of systematic reforms that would improve several key sectors. Previously, the IMF had warned that the country cannot rely on oil revenue to fuel its economy as there is going to be further cuts in oil production cuts by OPEC and the interruption of the pipeline with Turkey. That’s why the Iraqi government is heeding IMF’s warnings and is aiming to implement some changes before oil revenue start to dwindle. Nevertheless, the IMF did laud the remarkable improvement in Iraq’s economy which were observed after some IMF-backed suggestions were implemented. Moreover, the Fund expected inflation in Iraq to stabilize in the coming months, attributing this to tighter monetary policies, higher exchange rates, lower food prices, and improved compliance with anti-money laundering and terrorist financing measures. Additionally, the experts at the IMF anticipate a shift from a budget surplus in 2022 to a deficit in 2023. The PM also held a series of private meetings with several heads of states to prepare the country for future economic advancements. One notable instance is his meeting with the French President Emmanuel Macron, in which they discussed plans to develop their partnership in the oil and gas industry, and ways to fortify their various agreements with TotalEnergies and other major French corporations.
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According to the WHO, Corona cases, deaths, and vaccinations are reported as follows:
-Confirmed cases: 2,465,545
-Deaths: 25,375
-Recovered: 2,439,497
Lebanon
The situation in the Red Sea is alarming to Lebanese importers and exporters. Photo Credit: Naharnet.
As the war expands in terms of intensity and scale, Lebanon enters 2024 with very discouraging and disappointing economic results, despite the efforts of the private sector to maintain some growth in certain sectors. The caretaker government of Prime Minister Najib Mikati stated the GDP growth last year at two percent, although some economists negate these projections and even insist that the growth will be negative for 2024. Time and time again, the World Bank and International Monetary Fund have presented economic indicators to remind the Lebanese authorities that the country will never fully recover if financial and economic reforms are not implemented in a systematic manner. To make matters worse, the situation in the Red Sea and the disruption of maritime transportation will be impacting the Lebanese economy due to increased shipping costs. Elie Zakhour, former president of the International Chamber of Navigation, indicated that the cost of shipping a regular container has aleady doubled from approximately $2,000 to $4,000 due to the Red Sea escalation. Additionally, insurance costs have surged by up to 700% due to increased premiums related to “war risks”. He also claimed that about 40% of Lebanon's total exports and 18% of its imports will be affected by the rerouting, impacting commodity prices in Lebanon. This crisis will also force local farmers and industrialists, who already suffer from problems of their own related to infrastructure and absence of loans, to incur additional costs, affecting their global competitiveness.
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According to the WHO, Corona cases, deaths, and vaccinations are reported as follows:
-Confirmed cases: 1,243,838
-Deaths: 10,952
-Recovered: 1,087,587
Palestine
Several Palestinians walk past an Israeli military vehicle in Tulkarem, in the occupied West Bank, MARCO LONGARI (AFP)
During this month, the humanitarian situation in Gaza deteriorated even further over the suspension of some countries its funding to the UNRWA. There are no words in the English language to describe the situation as things have beyond desperate and catastrophic. We are witnessing under our very eyes the ethnic cleansing of a whole population as extremists call for the expansion of illegal settlements within Gaza. As such, suffering and death will only increase in the coming months as not only the city is being bombed to smithereens, it is being suffocated from medicine, food, fuel and necessary items needed to withstand the low temperatures. Naturally, the economy has drastically shrunk as nearly all of its infrastructure has been destroyed. According to the official estimates cited by this analyst, Gaza’s economy has contracted by 85%. As for the West Bank, it became an economic time bomb due to the decision to ban the entry of some 200,000 Palestinian workers hired by companies located in occupied lands. As a result, 434 million USD were lost as many of the businesses inside West Bank rely on workers’ compensation to keep functioning. Moreover, the apartheid regime decided to withhold taxes worth 2.09 billion dollars it collects on behalf of the Palestinian Authority, thus threatening the overall stability of the West Bank. After all, the taxes and VAT collected by Israel account for more than 65% of all Palestinian revenue. To make matters worse, the PA cut public employees’ salaries thus impacting the overall purchasing power of West Bank citizens. As a result, the economy in the West Bank has shrunk by 30% as inflation increased from 1.7% on October 7 to above 5%.
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According to the WHO, Corona cases, deaths, and vaccinations are reported as follows:
-Confirmed cases: 703,228
-Deaths: 5,708
-Recovered: 615,445
Syria
Sanctions are still making thins difficult for Syria. Photo credit: LBC.
The Syrian economy has suffered from a severe recession and disturbances represented by high inflation and low income. This major crisis has led to a deterioration in the standard of living of citizens. The Syrian economy was not immune from the severe negative impacts witnessed by the global economy due to the political crises that led to an increase in energy and food prices, in addition to the continuing repercussions of the Corona pandemic. However, the unilateral coercive measures imposed on the Syrian government by the West have increased the severity of these effects. As such, the year started with the European Council announcing that it added six persons and five entities to the EU sanctions list, imposing "additional restrictive measures" due to "the gravity of the ongoing situation in Syria." According to the council these entities are engaged in the transfer of Syrian mercenaries, arms trade, narcotics trafficking or money laundering. Such measures have led to an increase in inflation, the unavailability of needed goods, the increase in transportation costs, and the rise in cost of reconstruction materials. This in turn has led to an increase in prices of medicines, vegetables, fruits and foodstuffs. The sanctions have also harmed Syria’s ability to attract foreign investment despite its policies to evade such an issue. To make matters worse, the Council also noted that the restrictive measures in place will be further developed in the future.
Although the situation remains grim, some positive developments have been noted. Syria and Iran signed a Memorandum of Understanding that included six cooperation agreements during the 15th meeting of the Syrian-Iranian Joint Higher Committee held in Tehran on December 9. The agreements are sought to foster deeper economic ties between the two. Moreover, the United Nations Industrial Development Organization initiated a USD 2.25 million project to revitalize Syrian agro-food businesses that Russia funds. In addition to that project, UNIDO is funding three other projects to help the Syrian government reduce the use of chemicals harming the ozone layer. Also, Syria's Minister of Electricity, Ghassan Al-Zamel, stated that the Cabinet approved a contract with a Chinese company to construct a large photovoltaic plant near Homs worth EUR 38.2 million. Another good news is the declaration of the government to restructure the public industrial sector, with several mergers under study by the government. On January 6, two entities were merged under a new General Company for the Manufacture and Marketing of Cement and Building Materials.
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According to the WHO, Corona cases, deaths, and vaccinations are reported as follows:
-Confirmed cases: 57,423
-Deaths: 3,165
-Recovered: 54,578
Cyprus
The Central Bank of Cyprus. Photo credit: https://www.ekathimerini.com/
The tiny island begins the year by scoring a notable achievement as the drilling by Italian energy giant ENI in the Cronos-2 field in Block 6 of Cyprus’ exclusive economic zone (EEZ) appears to have discovered another natural gas reservoir. Sources indicate that the quantity discovered is quite significant and will be an impressive addition to Cyprus’s energy sector. Other positive news, although not at the same scale, encompassed the release by the Central Bank of Cyprus statistics regarding the stability of the amount of Non-performing loans, although there was a constant increase in interest rates. When nowadays’ figures are compared with figures from January 2023, there was a drop from 8.3% to 9.5%. However, the European Commission did warn about the economic reprecussions of increasing private debt. In its latest report, the Commission stated that while the macro-economic environment remains stable, the private sector is still under pressure due to an exceptionally high level of debt. Since March 2023, the debt-to-GDP ratio has been 163%. Although it is considered a decrease from 187% at the end of 2021, itis primarily attributed to GDP growth rather than a substantial decrease in debt. Also the Commission stresses that bad loans transferred outside the banking system to loan acquisition companies still weigh on the economy via private sector debt. Nevertheless, authorities seem to be confident in addressing such issues especially when the economy is navigating in the right direction. Hopefully, interest rates will drop thus allowing the country to eradicate more non-performing loans.
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According to the WHO, Corona cases, deaths, and vaccinations are reported as follows:
-Confirmed cases: 681,110
-Deaths: 1,365
-Recovered: 546,203
4. The Humanitarian Situation
Egypt
Amnesty International released a statement claiming that the EU and Egypt have failed to promote human rights as part of their cooperation. It claimed that EU leaders have ignored Egypt’s abysmal human rights record, emboldening the Egyptian government to continue committing human rights violations without fear of consequences.[1]
A recent social media campaign in Egypt called for the immediate expulsion of Syrians and a boycott of their businesses, blaming them for the country's economic woes.[2]
Jordan
The UNHCR states that there are currently 649,091 registered refugees in Jordan up until the beginning of January.
The proportion of Syrian displaced people registered within the UNHCR for the beginning of January, are distributed as follows:
-191,838 in Amman Governorate (29.6 %)
-168,739 in Mafraq Governorate (26.0%)
-126,675 in Irbid Governorate (19.5%)
-96,538 in Zarqa Governorate (14.9%)
-16,552 in Balqa Governorate (2.6%)
-12,648 in Madaba Governorate (1.9%)
-8,379 in Jarash Governorate (1.3%)
-8,265 in Karak Governorate (1.3%)
-8,115 in Maan Governorate (1.3%)
-5,622 in Ajlun Governorate (0.9%)
-3,796 in Aqaba Governorate (0.6%)
-1,400 in Tafilah Governorate (0.2%)
-524 in other (0.1%)
WFP stated that it is undertaking dedicated efforts to improve nutrition, dietary habits, and health for women with anaemia and high-risk pregnancies in addition to children. To this end, WFP launched the third phase of its nutrition campaign, targeting 1,500 children under the age of two and their caregivers.
WFP’s funding shortfall for refugee assistance persisted throughout January. Therefore, WFP continued providing monthly food assistance to around 410,000 vulnerable refugees in camps and host communities with cash transfer values reduced by one-third.[3]
Iraq
The UNHCR states that there are currently 301,606 registered Syrian refugees in Iraq.
The proportion of displaced Syrian people registered within the UNHCR up until the beginning of January, are distributed as follows:
-110,595 in Erbil (52.6%)
-35,824 in Dahuk (17.1%)
-29,653 in Sulaymaniyah (14.1%)
-4,771 in Ninewa (2.3%)
-16,298 in Baghdad (7.8%)
-2,412 in Kirkuk (1.1%)
-1,693 in Anbar (0.8%)
-12,667 in other areas (4.2%)[4]
Committed to boosting economic recovery and sustainable job creation, IOM and the Government of the Federal Republic of Germany, through the KfW Development Bank, launched the sixth phase of their ongoing partnership, aiming to create 1,100 new jobs in small and medium-sized enterprises (SMEs) in Iraq, via its Enterprise Development Fund (EDF) component.[5]
The Iraqi Red Crescent, Baghdad branch, continued their humanitarian work by giving food parcels to low-income families residing in the city’s slums and impoverished neighborhoods.[6]
Lebanon
Since the beginning of January, the number of registered Syrian refugees in Lebanon is 784,884.
Refugees in Lebanon are distributed as follows:
-299,402 in Bekaa (38.1%)
-220,931 in North Lebanon (28.1%)
-176,836 in Beirut (22.5%)
-87,715 in South Lebanon (11.2%)[7]
Irish humanitarian organization Concern Worldwide has partnered with local charity Nusaned using Irish government donations to feed up to 1,000 families which have displaced from the south. [8]
According to The World Food Programme, around 1.4 million people are severely food insecure, while a million children face disrupted schooling. [9]
Syria
The SRTF’s Management Committee (MC) approved a new initiative; “Enhancing Shelter and Livelihood in Deir-ez-Zor Governorate” that focuses on shelter rehabilitation, providing agricultural support and promoting community resilience through Cash-for-Work (CfW) activities, with a specific emphasis on empowering women and assisting returnees and Internally Displaced Persons.[10]
The European Union has contributed EUR 4 million to the United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA) to sustain and enhance the delivery of basic education and technical and vocational education and training (TVET) to Palestine Refugee children and youth in Syria.[11]
Fuel shortages are emerging, posing significant risks to humanitarian response, affecting staff movement, essential goods transport, and the functionality of life-saving health facilities and medical equipment. Over 600,000 IDPs across NES will soon lack cooking and heating fuel, exacerbating their suffering in harsh winter.[12]
The SRTF announced the successful closure of the intervention: "Supporting Health Services in Ar-Raqqa Governorate -- Phase V".[13]
Qatar Red Crescent Society has recently provided vital cancer drugs worth $1 million dollars to meet the needs of patients with cancer among internally displaced people and local communities in northern Syria for five months.[14]
Cyprus
Cypriot authorities rescued 60 "distressed and dehydrated" Syrians, including children, from a boat drifting for a week in the Mediterranean, amid a sharp rise in migrant arrivals.[15]
Cyprus is demanding that parts of Syria be designated safe enough to return prospective Syrian asylum seekers, an assertion that the island-nation has been pressing for months.[16]
[1] Amnesty, January 23, 2024, https://www.amnesty.org/en/latest/news/2024/01/eu-egypt-eu-must-address-egypts-abysmal-human-rights-record/
[2] New Arab, January 10, 2024, https://www.newarab.com/news/egypt-anti-syrian-campaign-calls-refugees-expulsion
[3] OCHA, Relief Web, https://reliefweb.int/report/jordan/wfp-jordan-country-brief-december-2023
[4] https://data2.unhcr.org/en/situations/syria/location/5
[5] OCHA, Jan 23, 2024, https://reliefweb.int/report/iraq/iom-iraq-and-germany-recommit-economic-recovery-creating-1100-new-jobs-enar
[6] OCHA, Jan 23, 2024, https://reliefweb.int/report/iraq/under-title-among-our-families-iraqi-red-crescent-organize-campaign-supporting-needy-families
[7] https://data2.unhcr.org/en/situations/syria/location/71
[8] OCHA, Jan 24, 2024, https://reliefweb.int/report/lebanon/families-fleeing-shelling-lebanon-get-aid-ireland
[9] OCHA, Jan 10, 2024, https://reliefweb.int/report/lebanon/projecting-impact-prolonged-food-insecurity-and-education-interruption-economic-growth-lebanon
[10] OCHA, Jan 25, 2024, https://reliefweb.int/report/syrian-arab-republic/srtf-approves-initiative-foster-womens-empowerment-support-idps-and-ensure-long-term-sustainability-deir-ez-zor
[11] OCHA, 24 Jan 2024, https://reliefweb.int/report/syrian-arab-republic/eu-supports-education-palestine-refugees-syria-enar
[12] OCHA, Jan 22, 2024, https://reliefweb.int/report/syrian-arab-republic/syria-military-escalation-northeast-update-dg-echo-nes-forum-echo-daily-flash-22-january-2024
[13] OCHA, Jan 9, 2024, https://reliefweb.int/report/syrian-arab-republic/empowering-communities-successful-conclusion-srtf-health-intervention-ar-raqqa-northeast-syria
[14] OCHA, Jan 1, 2024, https://reliefweb.int/report/syrian-arab-republic/qrcs-provides-cancer-drugs-equipment-northern-syria-enar
[15] New Arab, January 24, 2024, https://www.newarab.com/news/sixty-syrian-migrants-including-children-rescued-near-cyprus
[16] Euobserver, Jan 9, 2024, https://euobserver.com/migration/157893