COVID-19 pandemic effect on the economy of the Middle East!

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COVID-19 pandemic

Global COVID-19 pandemic has affected the Middle East severely. The oil prices in Middle-East are profoundly affected and decreased simultaneously in the past few months. The import and export business between countries has dropped to 90%. Today, gulf monarchies are facing two wars starting from economic crises to the battle for oil with Russia.

Health, retail, technology, and other sectors are facing downfall due to coronavirus. In Iran, the GDP projection is around 25-30%, and the situation is becoming more dramatically weak day by day. Collapsing of SME’s that are small and medium enterprises in Egypt, Jordan, and Lebanon is another factor of a decrease in jobs and unemployment.

In the upcoming month, the IDP that is internally migrating people and refugees will increase directly affecting the population and available resources. More the consumption more will be the need for essential supplies.

Economic losses in the Middle East due to COVID-19:

The economic loss in the COVID-19 pandemic has affected the whole world. Even right now, all the countries are fighting to save lives. But, the most affected countries through coronavirus are from the Middle East. They faced massive losses in oil prices; tourism is most famous in the Middle East and countries, and as international fights are shut the tourism earning is 0.

  • Affect on Iran, Iraq & Lebanon: Iran is facing a projection of 5% GDP only because of a decrease in religious tourism from all over the world. Now the employment of the young generation and job seekers is at danger due to severe effects. Iraq’s political situation is not well then facing this COVID-19 pandemic is becoming more unstable and threatening for the country. There is no clear-cut idea that economic conditions and GDP will increase unless the pandemic over or reduces.
  • Affect on small business houses: 40% of the economy depends on small and medium-sized businesses that pay the massive amount to the government as taxes. The sectors attached to the tourism sector indirectly in providing amenities and resources are affected, and no business flow and currency flow are there. Even though Saudi Arabia and the United Arab Emirates are ready to help small traders by giving some relief through money, SME’s sectors in Jordan, Lebanon, or Egypt are majorly dependent on small business houses. After getting help too, it is becoming difficult to survive.
  • Affect due to refugees: Refugees and laborers’ are returning to their homes. The resources and essential amenities are required in more quantity. To accomplish those requirements is a big challenge for governmental bodies. It is not possible to provide essential resources to more people suddenly when the production is least. So, the problem is there for governments to feed people.

COVID-19 pandemic

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Affect of COVID-19 pandemic on oil & petroleum:

Seventy percent of revenue comes from oil & petroleum in places like Africa. Hence, they are dependent on petroleum for their economy and earning. But, due to COVID-19, the cut of 50% has ruined these places earning.

After this, Saudi Arabia was dependent on petroleum of 80% of revenue, and now after facing this significant loss, they have decided to withdraw 32 billion dollars from foreign reserves. President Abdelmadjid Tebboune has announced that country has to face an economic loss of 50%. Earlier, the plan was to build a kingdom to rule by its oil economy, but now there are no signs to cope with it.

23 Nations are cutting their oil production by 10 million barrels to bear the loss. There is no chance of producing more oil without export. Exporting is less hence consumption has reduced. Unless or until exporting would become stable, the production cutting will remain the same.

To make the situation stable in the United Arab Emirates, the authorities have decided that whoever comments on the COVID-19 pandemic situation illegally would be fined for 5 thousand dollars. Strict punishment would be given in case of offensive comments spreading hatred among people.

Note: There is no end to disaster as per the research; the situation will take at least one year to become stable. None of the countries and states in the Middle East could start all the work entirely until cases reduce. The number of cases and the spread rate is increasing, which is a direct danger for any country.

Saudi Arabia has passed the rule of strict cut-offs and curfew in all the affected areas. The entry and exit are strictly prohibited at any cost. The infected have to be quarantined until reports come negative. Now, even after recovering home quarantine of 7-10days is suggested to avoid any doubt. Rules have to be followed strictly by every citizen; the government is trying to tell people that it is for your safety. So, citizens have to cooperate by following all the norms. Required help is being provided by the government when and wherever needed. A special budget was passed to help needy people.

Tourism expectations are 0 due COVID-19 in 2020:

It will be a disaster year in the Middle East. As discussed above, the economy is suffering because of various factors in the Middle East, and tourism is one of them. The tourism sector of the Middle East also earns huge income, mainly from pilgrims. This year, none of them are allowed, and other industries that are earning through tourist flow are affected. Especially local vendors and SME’s near tourist places will not get any tourist customer in 2020. It will be a bad loss for all those market personnel, and there is no chance of recovery.

Morocco, Iran, Oman, Turkey has many heritage sites that people love to explore every year. It is excellent for any tourist to know the history of historical places. Beautiful beaches and marketplaces were full of travelers until 2019. But, this year, the picture of these places is different.

On the other hand, turkey is facing a lot of significant crises and tourism issues since 2015 due to political issues and terrorist attacks, and now, in 2020, tourism is affected severely. It is time for pilgrimage from Saudi Arabia to Mecca and Medina, but unfortunately, the flow is restricted again due to pandemic.

Jordan and Lebanon are countries that earn a small part of their economy from tourism, which is 7% in their GDP. These are the least affected countries due to pandemic, but other sectors are also under pressure due to prolonged lockdown in the country. Also, the cut-off of 7% from GDP affects industries or people serving and earning from tourists.

Affect on these places is less, but still, it is considerable.
  • Expert’s calculation shows that “1.8 million jobs were lost by the tourism sector in the Middle East, and hence the unemployment rate is increasing.”
  • Even though companies don’t want their employees to go, they have to fire or cut-off salaries due to no money in hand. Paying without earning is becoming difficult for all sectors now.
  • The loss of US$21 trillion till May and this digit will increase if the situation continues ahead.
  • Asian Pacific countries and the whole region have faced a loss of $800 from the tourism sector.
  • Even WHO is saying that strict action is needed, and relaxation has to be given to the tourism sector else many families will reach in debt.
  • The recovery rate after this will be more severe and painful. The situation will take at least one year to come track once this pandemic over or decreases.

COVID-19 pandemic

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Alcohol Market:

The alcohol market of the Middle East is famous for its brands and products, but due to the COVID war. The supply is less and even it was zero till March. Now, it will prolong till all the countries become stable to import the quantity they get early.

A considerable amount was earned by the alcohol market, contributing 20% to most Middle East countries. Even the consumption among travelers was more on tour trips. Due to affected tourism, the supply for tourists in hotel chains or restaurants is least.

Exhibition Director ME has stated a line regarding the tourism sector “The tourism activities are an essential part of our economy, but due to COVID-19 pandemic we are suffering a lot. This industry rank 3rd in the highest-earning sector in the Middle East and contribute a huge amount in GDP. But now we never know the situation will come on track and when everything will become stable soon.” Hence, everyone is just hoping for situations to become stable and on track soon.

The situation is worse due to affected airlines in the Middle East:

As per a report, the loss of $24 billion is recorded from last year’s revenue. The airlines were shut till now, and even international flights are closed today. Domestic flights are opened only for essential travel. 1.2 million People have a threat to their jobs.

Some people were running their houses from the airlines’ salaries. But, again, like other sectors, airlines are getting no or least revenue. Due to this, paying a salary is becoming difficult for any industry now. $130 billion loss of GDP due to the least income from airlines. Airlines are also a part of the tourism sector, but now they are getting no revenue.

Earlier the airline ministry thought that we could do some cost-cutting to relieve the COVID-19 pandemic effect on Airlines.  But now, as the situation is becoming dangerous, there is no effect of cost-cutting. It is impossible to recover for the airlines of the Middle East from the impact of the coronavirus on their services. Until the situation becomes normal, and the flow of passenger start at a normal pace, nothing could be done.

Most Travelers from other countries are for travel and tourism activities. The tourism travel from the past few months is zero, and hence the result in front of the authorities.

The tourism ministry passes the relief funds for various regions, but they are not enough to pay the salaries of so many employees. Hence the salary cutting from 20 to 30% as per the designation would be started very soon. It will affect the lives of millions of employees working in different Airlines in the Middle East region. Now, the question is that would the countries will be able to recover at an average pace?

When will the workflow starts with normal strength, how people will get relief. The ministries are working on this. A solution will be in hand once the vaccine for the disease is out. The scientist from all over the world is working and trying to solve the problem. Trials are ahead, and very soon, the result will be in our hands.

Is the digital currency exchange is safe?

Due to worldwide lockdown, most of the companies are assigning work from home in whichever sector it is possible. Now, due to e-working and staying at home, people are using digital currency and exchanging them for goods. Even traders are using digital coins at various platforms.

Using digital currency is not a loss as most of the currencies are safe. Now, to ensure secure payments, one has to choose an authentic and trusted platform to trade. Check the history of the platform that you want to use and then proceed ahead.

The scammers are also working from home, and numbers of digital scams are increasing. Now, it is the responsibility of a business house or an individual to choose the right app or site to trade.

So, we can say that Middle-East countries like Cyprus, Lebanon, Egypt, Sudan, Iraq, Iran, Israel, the West Bank, the Gaza Strip, Jordan, Libya, and Syria are facing dangerous crises.

COVID-19 pandemic

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Bottom Lines:

Middle East countries are facing serious conditions due to the COVID-19 pandemic; it is not possible to suggest when the situation will get normal and on track. Governments have all the responsibilities in their hand. They all are working continuously to provide optimal solutions for a better result to reduce the effect of pandemic and to grow the economy soon.

Hence, we suggest all our dear readers be safe and check out the latest post for updates on recent news of Info Treee.

Reference:

  1. https://www.newyorker.com/news/our-columnists/can-the-middle-east-recover-from-the-coronavirus-and-collapsing-oil-prices
  2. https://www.rand.org/blog/2020/04/economic-consequences-of-covid-19-in-the-middle-east.html
  3. https://thearabweekly.com/pandemic-will-ruin-middle-easts-2020-tourism-economy-0
  4. https://www.hoteliermiddleeast.com/business/116527-Middle-East-could-lose-1.8-millon-travel-and-tourism-job-
  5. https://www.iata.org/en/pressroom/pr/2020-04-23-01/

 

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