The crisis in the Middle East will shave Africa's projected economic growth by at least 0.2% this year, a joint policy paper by continental and global institutions shows.
- •The report, titled “Impacts of the Conflict in the Middle East on African Economies,” warns that African economies, which were slowly recovering from the severe consequences of COVID-19, the Russia–Ukraine war, and rising trade tariffs, could be among the most affected by the ongoing conflicts in the Middle East.
- •The report says the main effects of Middle Eastern conflicts on African economies include surging prices of hydrocarbons, food products, and fertilizers; as well as disruptions to global trade, logistics, and supply chains, and volatility in capital and foreign exchange markets.
- •The report recommends, in particular, strategic inflation management to ensure short-term price stability expectations.
“Eighty percent of the oil imported into Africa comes from this region, as well as 50% of refined petroleum,” said Claver Gatete, Executive Secretary of the ECA. As a result of these conflicts, 31 African countries were already experiencing currency depreciation, Gatete said.
The report cautions oil-exporting countries to adopt strict fiscal discipline by managing windfall revenues prudently, while strengthening debt-monitoring, and using energy reserves strategically. Where fiscal space allows, it advises that temporary and targeted social protection measures be deployed to shield the most vulnerable populations from the crisis.
For the Senior Vice President of AfDB, Marie-Laure Akin-Olugbagde, “there is a need for global coordination, as no country or institution can face these shocks alone. In addition, a rapid response is essential, as was the case during the COVID-19 pandemic and the war in Ukraine, and people must be placed at the center of interventions.”
To address the crisis, AfDB Chief Economist Kevin Urama urged African governments not to panic or take hasty decisions that could harm their fiscal balances. The report urges governments to avoid broad-based subsidies that could worsen long-term fiscal deficits, and to diversify sources of energy, inputs, and food supplies.
It also recommends that African governments strengthen regional and intra-African trade in oil and fertilizer markets to enhance resilience; and ensure smooth inter-institutional coordination to harmonize strategic monetary and fiscal policies.
At the same time, the report calls upon development partners, multilateral banks, and development finance institutions to provide emergency support to African countries through crisis response measures and technical assistance.
The document was presented in Washington, D.C., by the African Union Commission, the African Development Bank Group (AfDB), the United Nations Economic Commission for Africa (ECA), and the United Nations Development Programme (UNDP).
