MENA growth forecast up, but global risks loom

Economic growth in the Middle East and North Africa (MENA) region is forecast to accelerate this year, with the aggregate gross domestic product (GDP) projected to rise by 2.6 per cent, as reported by The National on April 23rd.

However, the World Bank has cautioned that the outlook remains fraught with uncertainty due to the risk of a trade war, global economic slowdown, and volatile crude oil prices. 

The MENA region’s economic performance was muted in 2024, with growth just 1.9 per cent, largely hindered by ongoing conflicts in Gaza and Lebanon.

In 2026, regional GDP is expected to expand at a faster rate of 3.7 per cent, the Washington-based multilateral lender said in its Mena Economic Update on April 23rd but the World Bank’s latest forecasts represent a downward revision of 1.3 per cent from previous projections made last October. 

The World Bank highlighted significant downside risks, including international trade policies, potential global growth deceleration, and fluctuations in oil prices.

“As is the case globally, [it] is shrouded in great uncertainty”, the World Bank said.

“International trade policies and resulting trade volumes, a potential slowdown in global growth, and volatility in oil prices present significant downside risks to the near-term macroeconomic outlook for Mena economies.”

This update follows similar warnings from the International Monetary Fund (IMF), which has also lowered its global growth forecast.

The IMF revised its projection for global growth in 2025 down to 2.8 per cent, citing disruptions from trade tariffs, particularly from US policies under President Donald Trump.

The IMF anticipates that growth in MENA will slow to 3per cent in 2025, with a slight recovery to 3.5 per cent by 2026. 

Despite these challenges, the Gulf Cooperation Council (GCC) countries, which control a third of the world’s proven oil reserves, are forecast to experience a 3.2 per cent growth rate in 2025, a recovery from last year’s stagnation.

This projection is a revision down from earlier estimates.

However, these economies, including Saudi Arabia and the UAE, are expected to benefit from increased oil production as OPEC+ accelerates its rollback of production cuts. 

Saudi Arabia’s economy is expected to grow by 2.8 per cent in 2025, while the UAE’s economy is predicted to expand by 4.6 per cent this year, a revision upwards.

The World Bank noted that diversification efforts in countries like Qatar, Oman, Saudi Arabia, and the UAE will continue to bolster “non-oil sectors”. 

Meanwhile, oil-importing nations including Egypt, Morocco, and Tunisia, are projected to grow by 3.4 per cent in 2025, benefiting from easing inflation and stronger private consumption.

However, lower global oil prices may help cushion the impact of global economic pressures. 

The World Bank also highlighted the ongoing challenges posed by conflict in the region.

Economic losses from the Gaza conflict have been devastating, with GDP in Palestinian territories falling by 27 per cent in 2024.

Lebanon’s economy has contracted by almost 40 per cent since 2019, exacerbated by prolonged political instability. 

As the MENA region faces these challenges, the World Bank stressed that political stability and recovery remain precarious, with peace efforts critical for long-term growth. 

The National. Maghrebi