São Paulo – Despite all preventive measures adopted in many Arab countries such as PCR tests, lockdown and curfew, only mass vaccination offers a prospect of upturn in the Middle East and North Africa (MENA) region. So said EuroMoney Country Risk expert Helmi Hamdi (pictured above), who spoke during a webinar hosted by the Arab Brazilian Chamber of Commerce (ABCC) on Wednesday, May 5.
Hamdi divided the Arab world into two blocs. The bloc 1 comprises the Gulf Cooperation Council (GCC) countries – Oman, United Arab Emirates, Saudi Arabia, Qatar, Bahrain, and Kuwait. The bloc 2 is made up of the other Arab countries in the Levant and North Africa.
The GCC countries, Hamdi says, have faced a double crisis due to the oil price drop and the impacts of the pandemic on several non-oil sectors such as retail, tourism and transport.
“Several Arab countries responded by adopting severe measures to curb the spread of the coronavirus and avoid a devastation on their local healthcare systems,” the economist said.
Other countries such as the UAE have cooperated with vaccine manufacturers such as China’s Sinopharm. “Many countries, especially in bloc, started mass testing for COVID-19 as soon as the pandemic began, and thousands of tests were carried out every day,” he said. Starting on last July or August, all countries in the bloc 2 also started running tests.
Emergency measures were implemented, such as closing schools, movie theaters, pools, and gyms. Restaurants remained open for delivery only, while malls and stores were closed, and bringing together over five people were forbidden. “The Arab countries urged people to work from home if possible, and schools and universities were closed in February 2020,” he said.
Jordan and Morocco implemented a full lockdown, closing the air space and land barriers for every kind of commercial passenger transport. “In Saudi Arabia, the government decided to forbid the entrance of visitors and implemented a 24-hour curfew in the holy cities of Mecca and Medina starting April 2020, halting train and bus services, closing parks and restaurants,” Hamdi said.
Business
The Arab countries carried out a series of actions to help companies impacted by the pandemic, with emergency packages for the private sector and small companies.
The government of Bahrain implemented a stimulus package of USD 11.4 billion. The UAE announced a stimulus plan of USD 27 billion to boost the economy. Qatar contributed with USD 23 billion. Saudi Arabia gave USD 13 billion to support small- and medium-sized companies and the private sector. Egypt announced a USD 6 billion package.
“Moreover, other initiatives were also implemented by the governments such as deferring installments for six months without charging additional fees from small-sized businesses, as well as deferring 50% of the workers’ pay in sectors affected by the pandemic in Bahrain,” Hamdi said.
In mid-Summer, from July through August, everything seemed well, and prevention and contention measures seemed to work. But lockdowns were gradually loosened, and COVID-19 cases grew back exponentially.
“In early November 2020, almost 2.2 million people had been infected in the MENA region. But the mortality rate remains smaller than the global average, particularly because it has a young population – half of the population in the Arab countries is under 25,” he said.
Vaccine is the only solution
Despite all prevention measures such as PCR tests, lockdown and curfew, nothing was enough to control the pandemic. So, Hamdi concludes that mass vaccination is the only solution and the Arab countries are adopting this strategy.
“Vaccination is not compulsory in the Arab countries, but access to public places such as gyms, indoor restaurants and pools will only be allowed with a vaccination certificate,” Hamdi said. He said that, starting this year, some countries such as the UAE, Saudi Arabia and Bahrain have made vaccination compulsory. The UAE are carrying out one of the world’s fastest vaccination campaigns, Hamdi said.
But actions haven’t been equal across all Arab countries for several reasons such as hesitancy to get vaccinated, misinformation, conspiracy theories, and how each government managed the crisis ushered in by the pandemic.
Hamdi said that since the Summer of 2020 several GCC countries have purchased more vaccines than they need to serve their population. These countries started vaccinating in December 2020 or January 2021 and plan on immunizing most of their populations by the end of the year.
Other countries such as Algeria, Djibouti, Egypt, Iraq, Jordan, Lebanon, Palestine and Tunisia started by vaccinating risk groups and expect to immunize a large part of the population by mid-2022. “Many countries in the bloc 2 haven’t even started their vaccination campaign and are yet to receive their first doses, as is the case of Libya,” Hamdi said.
One year later
The implementation of these preventive measures together with vaccination and relief policies have kept the GCC economies resilient,” said the economist. “Many of them are recovering faster than was expected, largely because of the fast rate of the mass vaccination and the rise in oil prices,” said Hamdi.
As a result, the frontiers are reopening and air traffic is slowly coming back, as airlines such as Emirates, Qatar Airways and Gulf Air get back in business. Malls, stores and restaurants are reopening, as well as schools and universities. “This means the economic activity has recovered, and life is gradually going back to normal, specifically in the GCC countries,” he reported. In May, Saudi Arabia is expected to reopen its frontiers, which have been closed since April 2020.
Prospects
Some Arab countries estimate a GDP growth this year. Saudi Arabia, the Gulf’s largest economy, is expected to grow by 2.8% in 2021. The UAE contracted by 5.8% last year. Kuwait estimates a 2.2% growth, while Oman and Bahrain could reach a 2.1% and a2.5% GDP growth, respectively.
A non-oil GDP growth is also expected for the region driven by several factors, including the stabilization of the housing market, the recovery of the trust and the hosting of the Expo 2020 in Dubai.
“This is great news for the Arab world and their trade partners such as Brazil,” said ABCC president Osmar Chohfi.
Survey
In the webinar, ABCC Market Intelligence manager Marcus Vinícius talked about a survey on trends in the Arab consumer habits after the pandemic that was commissioned by the entity and carried out by H2R Pesquisas Arançadas research firm.
The survey showed that during lockdown communities were forced to close, which resulted in a surge in online purchases. “The people went into survival mode, going out only when it was strictly necessary, concerned about the increase in medicine and food prices and dealing with the stress due to social distancing,” said Vinícius.
As restrictions were loosened in the Arab countries, it brings a higher caution regarding health and the mandatory use of facemasks. “The fear of the virus and the earning to go back to past habits are a point of conflict, and retail needed to understand how to be part of a new ecosystem of care, health and well-being to regain the consumer trust,” the manager said.
Most apps and websites grew in the Arab countries during the pandemic, particularly message and social media apps, but also online purchases, healthcare, delivery, videoconference and game apps and websites.
“E-commerce had shown a growth before the pandemic, and from 2018 to 2020 it grew by 100%. It’s estimated to grow even more, to USD 30 billion in 2021, up 36%,” Vinícius said. Saudi Arabia, Egypt and UAE account for 80% of the e-commerce sector in the region.
Approximately 48% of users were already buying online before the pandemic, and social media such as Facebook and Instagram are much more used for buying now.
The webinar “The Impacts of the COVID-19 Vaccination on the Economic Recovery of the Arab Countries” featured Brazil’s food company Bauducco exports manager Alain Wehbe and Brazilian Lebanese businessman Issam Hassan, who owns a trading company in the UAE that sells Brazilian brands.
The online event was moderated by ABCC Marketing & Content director Silvana Scheffel Gomes. ABCC president Osmar Chohfi opened the conference and secretary-general Tamer Mansour closed it. It also featured the head of the ABCC international office in Dubai, Rafael Solimeo.
Translated by Guilherme Miranda
