In its Regional Economic Prospects report published Wednesday, EBRD explains that the slowdown will be driven by a sharp decline in tourism, measures to contain the spread of the pandemic, a likely poor harvest, a recession in Europe and lower commodity prices.
Growth could be sustained by non-agricultural growth, particularly mining, adds the Bank in its forecasts.
In the southern and eastern Mediterranean region, the negative impact of the coronavirus is expected to be seen in the tourism sector, a decline in domestic demand due to containment measures, a fall in demand from the main trading partners and a slowdown in foreign direct investment.
According to EBRD report, the economies of the region are expected to shrink by 0.8 pc in 2020 before rebounding with growth of 4.8 per cent in 2021.
The Bank’s report predicts a modest impact of the crisis on the long-term trajectory of economic output, with growth resuming towards the end of the third quarter, but warns against potentially significant longer-term economic, political and social effects.
“If social distancing remains in place for much longer than anticipated, the recession may be much deeper, with the 2019 levels of output per capita not attained again for years to come,” underlines the European Bank for Reconstruction and development.
Lockdown measures have affected domestic demand and supply. External shocks include a sharp drop in commodity prices, weighing on commodity exporters, disruption to global value chains, a collapse in tourism and a drop in remittances.