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I wrote – Manal Al-Masry:
The European Bank for Reconstruction and Development, in a report, said that Egypt is the only economy in all the regions in which the bank operates that is likely to emerge from recession in calendar 2020, with growth expected to be 2% supported by partly due to large public construction projects and a boom in the telecommunications sector.
This occurs despite the fact that the European Bank, in this report, withdraws from its expectations for the emerging economies in which it invests, after measures to contain the impact of the Corona virus continued for a period longer than expected.
The bank added that the Turkish economy is expected to contract 3.5% in 2020, following the drop in external demand that led to the collapse of exports, as internal shutdown and supply chain restrictions hurt sectors. services and manufacturing, but GDP growth could rise to 5% in one year. 2021.
The bank expected GDP in the southern and eastern Mediterranean region to contract by 1.3% in 2020 as a result of containment measures, a decrease in tourism, a decrease in external demand and a slowdown in investment flows. direct foreign.
He also expected the region’s GDP to grow 4.4% in 2021, provided reforms are implemented and political uncertainty is reduced.
The bank now expects a general contraction in all economies in which it operates of 3.9% this year, with a return to growth next year of 3.6%.
Previous forecasts published in May included a decline in GDP for these countries by 3.5% during 2020, and a recovery or growth of 4.8% in 2021.
“Production in the regions in which the EBRD operates fell dramatically in the second quarter of 2020, by 8.2% year-on-year,” said Piata Jaforsic, chief economist at the European Bank for Reconstruction and Development. Larger than the falls of the global financial crisis. “
He added: “The speed of recovery is expected to be similar to that observed after that crisis, with the GDP returning to levels prior to the spread of the Covid-19 pandemic in late 2021.”
The bank said that the economies of the regions in which it operates have witnessed supply and demand pressures due to domestic measures to contain the epidemic, while external shocks include lower prices of raw materials, contraction of exports , collapse of tourism and decrease in remittances.
The EBRD invests in emerging economies from Central and Eastern Europe to Central Asia, the Middle East and North Africa, primarily promoting the private sector and supporting sustainable and inclusive development.
The bank indicated that, through this report, its latest set of forecasts is subject to a high level of uncertainty and depends to some extent on the accuracy of the first growth estimates in the first half of 2020.
These expectations also depend on governments’ decisions to impose more lockdowns or how people can interact with the ongoing virus, perhaps through self-imposed social distancing.
The new report warns that some sectors, such as tourism, may face permanent long-term damage, but asserts that other sectors, such as online retail, could benefit from further digitization.
The report shows that this year’s contractions are likely to be the largest in economies that depend heavily on external sources of income, such as Albania, Greece, Cyprus, Croatia and Montenegro, which lost most of their tourist season this year.
Exports from the regions in which the European Bank for Reconstruction and Development operates fell by more than 14% in the first half of 2020, compared to the same period in 2019, according to the report.
Domestic and international tourism also dropped dramatically, as the number of international tourists in the regions where the EBRD operates decreased by 65% in the first six months, compared to the same period last year.
Other economies hardest hit include countries that have experienced a significant decline in remittances, such as the Kyrgyz Republic, or those that have aggressively integrated into global value chains, such as the Slovak Republic.
The report indicated that while some remittances may have only been delayed, many migrants have returned to their home countries, indicating that remittances may decline further in the future.
He also indicated that Lebanon’s production is likely to contract drastically, reflecting growing uncertainty after the Beirut explosion last August, which caused severe damage and loss of life and exacerbated existing economic and political challenges in the country.
The new report includes the results of a survey conducted in August 2020 by the European Bank for Reconstruction and Development and the Munich-based ifo Institute for Economic Research, showing that the economic impact of the Covid-19 crisis on the lives of people was more severe in the regions where the bank operates than in developed Europe.
According to the study, job losses, and in particular business closures, appear to be more prevalent than it was during the global financial crisis, with the burden of the crisis falling disproportionately on those with low levels of education and income.
The study reveals that 73% of respondents in regions where the European Bank operates say they have been personally affected by the Covid-19 crisis, compared with just 41% in developed Europe, where stimulus packages generally have been older.
Workers in the region have so far relied on complementary employment more than they did during the global financial crisis, and around a fifth of respondents to study in regions where the European Bank operates said their hours of work had increased. work at your current jobs. A similar percentage said they had started a second job.
According to the statement, a separate European Bank survey of SMEs indicates that SMEs are more optimistic about the recovery in economies where stimulus packages are greatest.
The study shows that the crisis had the greatest impact on small and medium-sized companies in hospitality and entertainment services, non-food retail, light industries and construction, as more than 40% of SMEs in hospitality and entertainment services registered a sales drop of more than half in the quarter. The first of 2020.
Exporting SMEs, in particular, were hit the hardest and were also more pessimistic about the recovery, reflecting widespread travel restrictions and border closures.
