Joint CEF-MCD Webinar on IMF’s Regional Economic Outlook report for MENA:
Inflation Dynamics and Spillovers from US Monetary Policy Normalization.
The IMF-Middle East Center for Economics and Finance (IMF-CEF) and the IMF’s Middle East and Central Asia Department (MCD) hosted a virtual panel discussion on May 31, 2022, to discuss the IMF’s recently published Regional Economic Outlook (REO) for the Middle East and North Africa (MENA) region.
Mr. Paulo Drummond, CEF Director, gave opening and closing remarks, and Mr. Mohamed Belhaj, Senior Economist at the CEF, moderated the event. The panelists were Mr. Mohamed Belkhir and Mr. Filippo Gori—both are Economists in the IMF’s Middle East and Central Asia Department.
The panel highlighted the divergence in economic recovery prospects in the region. Panelists explained that, with higher and more volatile commodity prices, rising inflationary pressures, tighter global financial conditions, China's slowdown, and a lingering pandemic, the region is facing extraordinary headwinds and uncertainties, particularly for commodity importers. Panelists stressed that fiscal and financing vulnerabilities of oil importers have increased, while oil and gas exporters have benefited from the rise in energy prices.
The panel also shed light on spillovers from US monetary policy normalization to countries of the region. The speakers emphasized that monetary policy tightening in advanced economies, especially if accompanied by increased volatility, is projected to harm capital inflows, bond rates, equity prices, and economic activity in the region. They noted that, while increased vulnerabilities and market volatility are likely to intensify spillovers in developing countries given the deterioration in fundamentals of many of the region’s countries, high oil prices are projected to lower the vulnerability of oil exporters.
Panelists then delved into discussing inflation dynamics and drivers. They noted that inflation in the Middle East and North Africa region has risen, as it has elsewhere, due to a variety of factors and country specificities. They highlighted that, overall, global factors have been the primary driver of price dynamics in the region, both historically and currently. They explained that international food price pass-through is estimated to have the greatest impact on domestic inflation dynamics in most countries, while supply-chain constraints appear to have the longest lag.
The speakers underscored the importance of managing policy trade-offs while supporting transformational recovery. They emphasized that policymakers need to carefully calibrate policies to country circumstances to manage uncertainties, maintain macroeconomic stability, and support the recovery while protecting the most vulnerable. They underscored that policymakers also need to prepare for the future by enabling private sector growth and youth employment and by investing in climate resilience.
The floor then opened for discussion with a diverse audience from the region, including participants from the public sector, academia, the business community, and representatives from civil society and international organizations.
For more details about the webinar, please watch the recording here and refer to the power point presentation below.
For more information about the REO, please follow this link.
Webinar Power Point Presentation:
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