Economic growth in the Middle East and North Africa (MENA) is expected to be modest in the coming years, with a projected growth rate of 2.7 per cent in 2024, up from 1.9 per cent in 2023, according to World Bank economists. The report predicts that both oil-importing and exporting countries in the region will experience similar growth rates in 2024. However, there is a significant difference in forecasted growth between the Gulf Cooperation Council (GCC) economies and developing oil importers. While the GCC economies are expected to lead the growth with a rebound of 2.8 per cent in 2024 and 4.7 per cent in 2025, developing oil importers are forecasted to lag behind.
The projected low growth in the MENA region is expected to have limited positive impacts on living standards, with GDP per capita forecasted to grow by a modest 1.3 per cent in 2024. This growth is largely driven by the GCC economies, highlighting the divide between the oil-rich countries and those that rely on oil imports. The report also highlights the impact of the recent Gaza conflict on the region, increasing uncertainty and disrupting maritime transportation, particularly through the Suez Canal, affecting both the MENA region and global trade.
The report acknowledges the challenges faced by most MENA economies in managing their debt levels, with many countries experiencing a surge in their debt-to-GDP ratios over the past decade. Oil importers struggle to grow out of debt as periods of economic growth coincide with faster debt accumulation. This trend is further exacerbated by fluctuations in exchange rates and other unaccounted factors, calling for greater debt transparency and management strategies. On the other hand, for oil exporters in the region, high GDP growth tends to align with smaller increases in nominal debt stocks, contributing to a slower increase or faster decrease in the debt-to-GDP ratio.
Despite these challenges, the World Bank remains hopeful about the region’s economic prospects, particularly in the GCC countries. The rebound in growth is attributed to the anticipated recovery in oil output as OPEC+ gradually relaxes production quotas and the strong momentum of the non-oil economy, which is expected to expand robustly in the medium term. The report emphasizes the GCC’s commitment to diversifying their economies as a strategic approach to fostering resilience and sustainable development amid global economic volatility.
Overall, the MENA region is expected to see a modest improvement in economic growth in the coming years, driven largely by the GCC countries. While challenges related to debt management and external factors persist, the region’s commitment to diversification and resilience bodes well for its long-term economic stability. With a focus on transparency and strategic planning, the MENA region can navigate through uncertain times and emerge stronger in the global economy.
