Impact of Public Health Surveillance

Growth in GDP per capita in 2021 for the GCC, the other oil exporters, and the oil importers, is forecast to be only 0.3, 1.6, and 1.2 percent, respectively (see Figure 2.1 Panel D). In terms of GDP per capita, all three MENA country groups are forecast to still be below their pre-pandemic levels.

The risks to the region’s growth outlook are also uneven. While the GCC is among the best in the world at vaccinating its citizens, the slow pace of the vaccine rollout in many developing MENA countries leaves them vulnerable to surges in covid cases as new variants emerge.2 Political uncertainty and fragility in many developing oil exporters—such as Iran, Iraq, Libya, and Yemen—pose additional risks to the growth outlook for those countries.

Expectations of a modest global recovery in demand is fueling a correspondingly tenuous recovery in private-sector business confidence. Monthly Purchasing Managers’ Indices (PMI), which track month-to-month changes in private sector investment decisions in anticipation of expected market conditions, can be interpreted as indicators of business sentiment. PMIs are available for a handful of MENA economies: Egypt, Lebanon, Saudi Arabia, the UAE, and Qatar. Readings above 50 signal improving business conditions for the private sector. In Lebanon, the PMI has been below 50 since at least 2019.

Figure 2.2 shows sharp contractions in March and April of 2020, but by September 2020, Egypt, Saudi Arabia, the UAE, and Qatar were all above 50, a level that signals improving business conditions. Saudi Arabia, the UAE, and Qatar have had PMIs above 50 since the beginning of 2021, which indicates continuous economic expansion in the private sector, consistent with the forecasts in output growth.

The PMI for Egypt, in contrast, fell again and has been below 50 since December 2020, which suggests a continuous deterioration in private sector confidence and investment prospects. Furthermore, beginning in the third quarter of 2020, the year-over-year decline in public investment in Egypt lessened and started to increase year-over-year in the first quarter of 2021. According to data from the Egypt Ministry of Planning and Economic Development, retrieved on August 17, 2021, nominal private investment fell by 43 percent year-on-year in the first quarter of 2021, while public investment increased by 14 percent year-on-year during the same period. Thus, at least for Egypt, there is abundant evidence suggesting uneven contributions of the private and public sectors to growth in 2021.

Impact of Public Health Surveillance

While the Covid-19 pandemic stopped the global economy in its tracks in early 2020, differences across countries in estimates of the economic costs of the Covid-19 pandemic are associated with the ability of each country’s health systems to deal with the pandemic. Testing capacity is a crucial part of the health surveillance that is essential to disease prevention and response (de Walque and others 2020). Figure 2.3 shows the partial correlation between Covid-test positivity rates and the macroeconomic costs of the pandemic, proxied by the difference between pre-pandemic growth forecasts and the current estimates of GDP growth rates for 2020. The econometric estimates suggest that a 1 percent reduction in a country’s test positivity rate is associated with 0.08 percent deterioration in the expected growth rate in 2020, after controlling for GDP per capita in 2019. A similar exercise to gauge the impact of the Covid-test positivity

2 See a discussion on vaccination at Chapter 6.