As countries worldwide are still recovering from the repercussions of the COVID-19 pandemic the war in Ukraine is expected to result in severe implications for the global economy. The ongoing conflict is driving up energy and commodity prices and threatening food security in many parts of the world. The magnitude of the impact on individual countries depends on the composition of their economies and their trade and financial links with the two countries in conflict. The gross domestic product of the Arab region is expected to grow by 5.18 per cent in 2022 if the conflict ends by June 2022 (0.02 percentage point lower than the pre-crisis projections) and by 4.78 per cent if the conflict endures longer (0.42 percentage point lower than the pre-crisis projections – an estimated loss of around $11 billion). As heavy oil exporters the Gulf Cooperation Council economies will benefit from the recovery in oil markets that started in 2021 and will grow at their fastest pace since 2014. These countries will also profit from oil price hikes caused by the war in Ukraine. All other Arab countries are expected to grow at a slower pace than pre-crisis projections. In addition to higher energy prices these countries also face increasing food security concerns as a result of the economic sanctions on the Russian Federation and disruptions to supply chains caused by military activities. Some will also face a decline in official development assistance.

This annual flagship publication seeks to both analyze routinely monitored economic and social variables in the Arab region in a global context as well as address debt sustainability and the macroeconomic implications. Given that the COVID-19 pandemic will have significant repercussions in 2021 and beyond it is crucial to understand how Arab countries are dealing with the economic impact of the virus. The report sets out two scenarios: a baseline scenario projecting that the economy will rebound in the first quarter of 2021; and a pessimistic scenario in which the crisis will persist throughout the first quarter of 2021. However given considerable advancements in research on COVID-19 vaccines an economic rebound should be expected no later than the second quarter of 2021.

The economic and political uncertainty which has characterized the Arab region in the wake of the 2011 transitions and upheaval continues to restrain the region’s prospects for growth job creation and stability. Economic expansion remains stalled with persistently low global oil prices adding a further burden to the regional economy and constraining the growth and fiscal balances of those countries that had been top-performers due to energy exports. While some progress on social indicators such as gender representativeness can be noted countries in and affected by political transition and conflict have regressed on a plethora of socioeconomic indicators. These trends can be noted for the past five years and with this in mind the 2015-16 Survey will utilize recent data in order to take stock of the impact of instability and conflict and address the foregone growth and output and destructive effects of this period. It also draws on recent research of ESCWA regarding migration social developments the impact of conflict women’s empowerment and specific country-level analysis.