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MENA’s economic growth eases amid double-digit food inflation – World Bank

MENA’s economic growth eases amid double-digit food inflation – World Bank
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Mubasher: Economies in the MENA region are expected to grow at a slower pace in 2023, according to the World Bank’s latest economic data.

The slower growth is seen driven by double-digit food inflation, while the MENA’s gross domestic product (GDP) is projected to retreat to 3% in 2023 from 5.8% in 2022, according to the "Altered Destinies: The Long-Term Effects of Rising Prices and Food Insecurity in the Middle East and North Africa" report.

As for the oil exporters who leveraged from a windfall in 2022, they are believed to experience slower growth in 2023.

Meanwhile, the real GDP per capita growth is forecast to level down to 1.6% this year from 4.4% in 2022.

Last year, inflation in the region sharply increased, particularly in countries that experienced currency depreciations. According to the World Bank, eight out of 16 countries suffered from double-digit food price inflation or higher in 2022, which affected poorer households the most since they spend more of their budgets on food than those that are better off.

Ferid Belhaj, Vice President of the World Bank for the MENA region, said: "Food price inflation is having a devastating impact on poor families. The long-term implications of food insecurity will be felt for generations and sadly limit prospects for many, many young people."

"The human and economic cost of inaction is immense and bold policies are needed in a region where young people make up more than half of the population," Belhaj added.

The report underlined that the average yearly food inflation across 16 MENA economies hit 29% during March-December 2022, higher by around 19.4% year-on-year (YoY) than 14.8% in October 2021-February 2022.

Inflation accounts for 24% to 33% of this year’s forecast food insecurity across developing oil importers and exporters, conflict countries, and the GCC.

Roberta Gatti, World Bank Chief Economist for the MENA region, noted: "The report estimates that close to one out of five people living in developing countries in MENA is likely to be food insecure this year.”

Gatti highlighted: “Almost 8 million children under five years of age are among those who will be hungry. Food price inflation, even if it is temporary, can cause long-term and often irreversible damage."

During the period from March to June 2022, the hike in food prices may have increased the risk of childhood stunting by 17%-24% in developing countries in MENA. In this regard, about 200,000 to 285,000 newborns experience a risk of stunting.

"The research offers clear evidence that inadequate nutrition in utero and early childhood has the potential to disrupt the destinies of children, setting them on paths to limited prosperity," the chief economist elaborated.

The report believed that the billions of dollars in financing are not enough to encounter severe food insecurity. Hence, it outlined policy tools to lessen food insecurity before it escalates into a major crisis, including targeted cash and in-kind transfers that could be introduced immediately to stem acute food insecurity.

Mothers can leverage enhanced parental leave, in addition to child and medical care, which are influential for a kid's development.

A recent report by Mubasher Capital predicted that the six GCC economies will grow at 3.9% throughout 2023, which marks twice the pace of the estimated world growth of 1.7%.