Econostrum | Economic News in the Mediterranean

World Bank calls for coordinated integration in the Mena region

Written by Frédéric Dubessy on Monday, October 19th 2020 à 16:14 | Read 574 times

Responsible for the report, Bianca Moreno-Dodson suggests a new framework for coordinated trade integration in the Mena region (photo: F.Dubessy)
Responsible for the report, Bianca Moreno-Dodson suggests a new framework for coordinated trade integration in the Mena region (photo: F.Dubessy)
MENA. In a report released on Monday 19 October 2020, the World Bank says that "trade and integration, within the Middle East and North Africa (MENA) region and with the rest of the world, will be key to reducing poverty, empowering the poor and stimulating economic growth after the Covid".

The 120-page document entitled "Trading Together: Towards a Revival of MENA Integration in the Post-Covid Era" focuses on "the long-term effects of the double economic shock caused by the spread of the coronavirus and the collapse of oil prices. It "recommends policy changes and reforms to build a new integration framework for the region".

According to the World Bank, the economies of the Mena region are expected to contract by 5.2% in 2020, a rate 4.1 points lower than forecast in April 2020 and 7.8 points lower than in October 2019. For Algeria, this difference between the forecasts of October 2019 and those of October 2020 for the year 2020 even reaches -19.5 points for Lebanon (the highest rate in the Mena region), 11.4% for Tunisia, -9.8% for Morocco, -8.6 points for Algeria, -7.8% for Jordan and -6.8% for the West Bank and Gaza.

"The most recent data suggest an increasingly pessimistic view of the situation of the regional economy, which is expected to recover only partially by 2021," says this economic newsletter on the region from the Washington-based institution. "Driven by a combination of declining oil export revenues, falling other budget revenues and the expenditure required to deal with the pandemic, the region's current account and budget balances are projected to be -4.8 per cent and -10.1 per cent of GDP respectively in 2020, significantly lower than projected in October 2019. Public debt is expected to increase significantly in a few years' time, from around 45% of GDP in 2019 to 58% in 2022," the report continues.


"Rethinking economic and social policies and strengthening trade integration"

"The Mena region was already lagging behind economically before the outbreak of the Covid-19 pandemic. Six months later, we see - with appalling clarity - the tragic consequences for human life, livelihoods and well-being across the region," says Ferid Belhaj. The World Bank Vice President for the Middle East and North Africa Region wants to continue "to help the Mena region stop the spread of the disease and protect and care for its people. We will continue to stress the need for countries in the region to give the highest priority to transparency, governance, the rule of law and contestability of markets, to inspire confidence, to promote the private sector and to build a new framework for sustained regional economic integration that will make trade a powerful tool for reducing poverty and expanding access to opportunities for all".

While, according to Ha Nguyen, senior economist at the World Bank and co-author of the report, "the pandemic continues to cause economic losses and disproportionately affects poor and vulnerable people", the paper leaves room for optimism. According to Blanca Moreno-Dodson, director of the Centre for Mediterranean Integration and responsible for the report, "the Covid-19 pandemic offers an excellent opportunity for countries in the region to rethink their economic and social policies and strengthen trade integration, while reducing their dependence on oil.

The report proposes a new framework for coordinated integration in the Mena region that goes beyond reducing tariffs, when it takes an average of $442 and 53 hours to comply with export formalities for cross-border trade in the area. "This is three times more expensive and four times longer than the averages for high-income OECD economies," the text notes.

The World Bank therefore suggests "prioritising regional trade in food security, health systems, renewable energy and the knowledge economy". As well as to "establish a common digital market for the region so that the Mena countries improve both trade and digital connectivity with wider markets in Africa and the Mediterranean countries. This should help to increase productivity, coordinate an effective disaster response and create resilient, sustainable and inclusive jobs in the region.


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