Beyond the devastating health and social challenges, the Covid-19 pandemic is causing economic turmoil across the globe as containment measures lead to disruption to production, declines in demand, reduced trade, and tightened financial conditions. The first reports of coronavirus infections in the Middle East and North Africa (Mena) came from Iran in February, with other countries following shortly afterwards. As in other regions around the world, government responses to the outbreak in Mena have ranged from strict lockdowns to complete denial. As the rest of the world looks on, there is tremendous concern for conflict-torn states, such as Syria and Yemen, whose weak public health systems are likely to be compounded by reduced imports, resulting in shortages of medical supplies and other essential goods.

In a double whammy to the region’s oil-dependent economies, plummeting crude prices are hurting exporting countries, such as Algeria and Iran, both of which “will have to rely on flexible exchange rates” and “conduct much-needed reforms in private sector development and broader economic transformation” to manage the situation, says the World Bank in an April publication. According to an IMF blog post, published around the same time, lower export receipts will weaken external positions and reduce revenue, putting pressures on government budgets and spilling over to the rest of the economy. Meanwhile, oil importers are also feeling the pain from reduced foreign direct investment, remittances, tourism and grants from exporters, warns the World Bank, adding that for the likes of Egypt, Jordan and Lebanon a recession will “worsen already high levels of public debt”.

In this year’s GTR+ Mena publication, we take a look at how the pandemic is casting a shadow over infrastructure funding in North Africa, where a wait-and-see approach has settled over the sector; the ways in which development banks in the region are making hundreds of millions of dollars available through new trade finance facilities to help mitigate the impact of the virus on supply chains; and – away from the virus – how financial institutions can minimise their risk of exposure to Iran petroleum sanctions as outlawed transactions continue seemingly unabated.

As with all our annual GTR+ regional publications, we have teamed up with trade data company Coriolis Technologies to reveal the trade trends and flows with and within the Mena region and how these might be affected going forward. Although this Trade Briefing report was compiled at the start of the year, before the Covid-19 pandemic took hold and global oil prices collapsed, author Rebecca Harding notes that the overall takeaways in the report remain valid: that the region’s dependency on oil will have an impact on its trade and economic performance, greater in net oil exporting countries than in net oil importers, and that – at this point in time – nobody truly knows what the effects will be.