IMF forecasts suggest that the MENA economies are on track to a remarkable 4% growth by 2025 if oil shocks subside and geopolitical tensions ease. It seems the region’s financial future will depend heavily on the delicate balancing act between numerous conflicts and oil extraction.
This year promises to be less generous, with projected growth of just 2.1%, a rate that the IMF calls “modest.” It is slower than in previous years, primarily due to prolonged clashes between Israel and Hamas, and the continuing uncertainty about how much oil OPEC+ will supply.
Jihad Azour from the IMF struggles to contain his optimism, highlighting favorable news amid gradually falling inflation, which is expected to reach a mere 3% next year. However, in Egypt, Iran, and Sudan, the situation is more complicated.
Oil-exporting countries are likely to be the most resilient, supported by robust growth in non-oil sectors, which offers hope for a brighter economic future.
The situation is quite curious in the Persian Gulf. While oil drilling has slowed, investment programs are growing rapidly, thus driving internal demand and fostering economic optimism.
Meanwhile, oil-importing countries in the region are still facing significant risks due to instability and high financial needs, making their future less certain than it could be.
Unsurprisingly, despite the positive outlook, the IMF cannot hold back its skepticism, pointing to “structural gaps” that may continue impeding productivity growth in many regional economies. Since January 2024, the IMF has approved $13.4 billion in new programs for the region, signaling a serious effort to ensure a brighter future for all.
