In an era marked by significant economic fluctuations, the International Monetary Fund (IMF) has issued a cautionary note for countries across the Middle East and North Africa (MENA). As oil prices stabilize at lower levels and geopolitical tensions rise, the region faces layers of economic uncertainty and challenges that could impact its growth trajectory.
According to the IMF’s regional outlook report, Brent crude oil prices, having soared past $120 a barrel last year, are now predicted to settle between $65 and $69 per barrel by 2025 and 2026. This downturn threatens the economic stability of energy-exporting countries, making them vulnerable to market volatility. Jihad Azour, director for the Middle East and Central Asia at the IMF, emphasized that the combination of tariff measures, reduced foreign aid, and ongoing geopolitical tensions presents a formidable challenge.
Azour, speaking exclusively to MEO News in Dubai, urged MENA countries to actively devise and implement policies to shield their economies from global headwinds. “Countries need to react and devise protective policies promptly,” he stressed, highlighting the potential negative impact on regional growth, which could be suppressed by as much as 4.5% due to these factors.
Particularly concerning is the reduction in foreign aid, following the U.S.’s strategic withdrawal under former President Donald Trump’s administration. This drop in international assistance poses new risks, especially for nations already in fragile conditions, Azour noted.
Despite these challenges, the report projects a modest growth in the region, from 1.8% last year to 2.6% this year. Gulf economies continue to benefit from robust foreign direct investment, now comprising nearly 2% of GDP since the pandemic, while other MENA nations grapple with diminished inflows.
Azour also highlighted the IMF’s willingness to collaborate with struggling nations, including Syria, where recovery efforts are expected to be extensive and require regional and international support. “The Syria recovery will be a long process, necessitating comprehensive institution-building, economic reform, and infrastructure development,” he explained.
In light of these developments, experts suggest that MENA countries can still seize the opportunity to drive growth through structural reforms and diversifying economic partnerships. By building resilience through innovative policy-making and strategic alliances, the region can mitigate the effects of global economic uncertainty and forge a more stable economic future.
As the MENA region stands at this economic crossroads, the call for strategic reform and diversification has never been more urgent.
