How were Egypt and the Middle East countries affected by the war in Ukraine? World Bank Answers

Farid Barhagy, Vice President of the World Bank Group for the Middle East and North Africa, predicted that tourism in Egypt would stop due to the Russian-Ukrainian war.

In a post published by the bank on its website on its blog, it said that the countries most affected by tourism, such as Egypt, Russians and Ukrainians, account for at least a third of tourist arrivals, and the industry is expected to experience a recession. Which negatively affects the employment rate and balance of payments.

Belhaj said that the non-productive countries in the region would suffer negatively because of the war in Ukraine.

He said that the Middle East and North Africa region is at risk because it is Ukraine’s neighbor and is only a thousand kilometers away from it (if we draw an imaginary straight line from Ukraine to the Middle East).

On the economic front, Belhaj said, some countries in the region have trade relations with Ukraine and Russia, and the impact of the crisis on the region’s economy will be real – albeit to a different degree.

These effects are expected to have a dual negative impact on levels of food security and well-being across the region, in addition to the Covid-19 pandemic, supply chain disruptions and the internal issues unique to each country.

Belhaj summarizes the impact of the crisis in 5 effects, namely, food price shocks (particularly wheat), high oil and gas prices, risk aversion and their tendency to invest safely (which may affect private capital flows to emerging markets) in full. market), as well as remittances and tourism from expatriates.

Belhaj expects oil and gas exporters such as Qatar, Saudi Arabia, Kuwait, Libya and Algeria to witness an improvement in public and external financial balances and higher growth rates.

In particular, natural gas exporters could see a structural increase in demand in Europe, where the EU authorities have announced their interest in diversifying their supply sources of energy products.

Oil and gas prices have risen to record levels since the outbreak of the Ukraine war, while the United States has announced a ban on imports of Russian oil, while Europe will strive to reduce its dependence on Russian gas by two-thirds by the end of this year. General, batch for other producers. Provided an opportunity.

As for remittances from workers abroad in the region—particularly from expatriates from the Gulf Cooperation Council—they cover only a fraction of the shock of rising energy prices in countries like Jordan and Jordan, according to Belhaji. Egypt.

The conflict in Ukraine will have a significant negative impact on many economies of the region, such as Lebanon, Syria, Tunisia and Yemen, which mainly depend on Ukraine or Russia for food imports, especially wheat and grain.
The World Bank expects that the crisis will lead to disruptions in the supply chains of cereals and oilseeds, higher food prices and a significant increase in the costs of domestic production in the agricultural sector. And the

In light of this long-awaited crisis, Belhaj said that the World Bank is ready to respond with all available tools appropriate to the nature of weaknesses and shortcomings at the country level.

He added that budget support operations can be effective in countries such as Morocco, Tunisia and Egypt, where the impact of the crisis is expected to be most severe at the level of national macro-financial constraints.

He explained that the Bank is ready to increase its support for domestic production and commercial marketing of agri-food, agricultural risk management and food reserves in countries facing shocks, whether through increased energy or fertilizer costs, or other factors such as crises and drought/climate. Relevant to change (eg Iraq, Yemen). Tunisia, Lebanon and Egypt).

“In the short term, we are ready to act from 2020 in the context of the response to the COVID-19 pandemic to expand each country’s nutrition-focused social protection programme,” he said.

He noted that the Bank is committed to continuing to provide close and targeted technical and analytical assistance in areas such as fiscal sustainability, subsidy reform, food security, trade control and agricultural risk management, especially to the most affected countries.

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