Source: International Monetary Fund – IMF (video statements)
Rising global trade tensions could have ripple effects for countries in the Middle East and North Africa (MENA) and the Caucasus and Central Asia (CCA), with the impacts varying based on each country’s trade ties and placement in global supply chains. The spillovers from these changes could grow if policy uncertainty and financial market volatility were to weigh on investor confidence and global growth. While the appropriate policy responses will differ across countries—depending on their domestic economic fundamentals, vulnerabilities, and policy space—stronger monetary and fiscal policy frameworks could help boost the ability of economies to withstand these shocks. Forthcoming chapters of the World Economic Outlook and Regional Economic Outlook: Middle East and Central Asia point to the beneficial effect of adopting inflation target monetary policy regimes with greater exchange rate flexibility and credible medium-term fiscal frameworks characterized by fiscal rules and strong and independent institutions.