The war in Gaza and Lebanon is dragging down the Arab economies.

As the conflict in Gaza enters its second year and Israeli attacks on targets in Lebanon intensify, the European Bank for Reconstruction and Development (EBRD) has cut its growth forecasts for Egypt, Jordan, Lebanon, Morocco and Tunisia.

The London-based bank now expects Lebanon to suffer another year of economic recession, after seeing its gross domestic product (GDP) shrink by 40% over the five years from 2018 to 2023.

A Palestinian boy looks on in disbelief as his city is reduced to rubble during the war between Israel and Hamas. Photo: BBC

The EBRD said Lebanon could return to growth next year “provided regional tensions ease”. The bank estimated that Lebanon’s economic collapse has left a third of the country’s workers unemployed, while 80% of the population lives in poverty.

The conflicts in Gaza and Lebanon are also having a direct impact on the economies of Egypt and Jordan, with their tourism industries under severe pressure. If the conflict escalates or widens, the damage could be even more widespread, said Beata Javorcik, chief economist at the EBRD.

The damage caused by the conflict comes at a time when much of North Africa is suffering from severe drought affecting agricultural production, leading to lower growth forecasts for Morocco and Tunisia.

Many countries affected by the conflict are also saddled with high debt levels, with Egypt spending 8% of its annual economic output on interest payments on its public debt, and Jordan spending 5%, Ms Javorcik said.

Conflicts could add to those costs if they follow the same pattern as the war in Ukraine. According to the EBRD, investors and lenders now view countries near Russia as riskier than they were before the conflict broke out and therefore demand higher lending rates.

Quang Anh (according to Wall Street Journal)

Source: https://www.congluan.vn/cuoc-chien-o-gaza-va-lebanon-dang-keo-lui-kinh-te-cac-nuoc-a-rap-post314101.html