African Development Bank: Libya’s economy is the most deteriorated in North Africa in 2020

North Africa’s GDP growth is significantly negative in 2020 at -1.1%, with a -5.1 percentage point drop from 2019, according to the African Development Bank’s 2021 Economic Outlook for North Africa.

According to the report, North African economies experienced three shocks in 2020, which are the CCoronavirus andemic, the collapse of oil prices, and the sharp decline in tourism. However, those losses were less severe than expected, due to rapid interventions by governments to mitigate the effects of the pandemic.

The Libyan economy was the most affected in 2020 among the North African economies, declining by -60.3%, while the economy in Tunisia declined by -8.8%, Morocco by -7.1%, Algeria by -4.6% and Mauritania by -3.6%.

On the other hand, Egypt managed to achieve a positive growth of +3.6%, and it is one of the few countries in the world that achieved this in 2020.

The report indicates that the Coronavirus pandemic significantly reduced the resilience of North African countries. The crisis also led to a significant consumption of government financial liquidity, at a time when the oil-exporting countries faced a double impact resulting from the closures and sharp fluctuations in the oil market, especially in Libya.

The report concluded that if the pandemic continues until 2022 and beyond, it is likely that some countries will face liquidity problems in repaying their debts. It is estimated that the financing needs of North African countries during the period 2021-2023 exceed $180 billion to adequately respond to the crisis.

In the short term, the report suggested various measures to manage the damage. The African Development Bank recommended the importance of reducing the Coronavirus pandemic, providing relief to vulnerable populations, overcoming challenges related to vaccines, and developing debt resilience.

Some of the medium-term proposals included supporting small and medium-sized enterprises and enhancing local resources. While economic diversification and export diversification require long-term attention, along with investment in public goods to ease regional disparities and promote inclusive growth. In addition to deepening regional integration in the context of the African Free Trade Area Agreement.

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