Middle East and Central Asia
2024
April 18, 2024
Regional Economic Outlook for the Middle East and Central Asia, April 2024: An Uneven Recovery amid High Uncertainty
Description:
An Uneven Recovery amid High Uncertainty The Middle East and North Africa and the Caucasus and Central Asia regions are positively impacted by the resilience of the global economy. Lower global commodity prices and vigilant policy responses have helped ease inflation in most countries. However, uncertainty and risks have risen amid ongoing conflicts, shipping disruptions, and reduced oil production. This is leading to an uneven recovery across the Middle East and Central Asia, with growth rates varying this year. Policymakers need to ensure economic stability and debt sustainability while navigating geopolitical risks and improving medium-term growth prospects. Amid high uncertainty, it is essential that countries implement reforms to enhance their fundamentals, including by strengthening institutions. Additionally, countries can seize potential economic opportunities amid shifting trade patterns by reducing long-standing trade barriers, diversifying products and markets, and improving infrastructure.
January 31, 2024
Regional Economic Outlook: Middle East and North Africa
Description:
Conflict Compounding Economic Challenges
The conflict in Gaza and Israel is yet another shock to the Middle East and North Africa (MENA) region. It
is causing immense human suffering and exacerbating an already challenging environment for
neighboring economies and beyond. This Update covers economies in the MENA region and does not
discuss developments in Israel. Overall, the major factors weighing on regional growth in MENA are
(i) the impact of the conflict; (ii) oil production cuts (even as robust non-oil sector activity continues to
support growth in several oil exporters); and (iii) continued necessary tight policy settings in several
economies. Social unrest has also picked up. Projected growth in the MENA region this year is
downgraded by 0.5 percentage point to 2.9 percent (relative to the October 2023 Regional Economic
Outlook: Middle East and Central Asia), from already weak growth of 2.0 percent in 2023. Primarily driven
by the ongoing conflict in Sudan, average growth across low-income countries (LICs) in MENA is forecast
to remain negative this year, continuing the estimated sharp decline in 2023. Disinflation is expected to
continue in most MENA economies, although price pressures have proven persistent in some cases
because of country-specific factors.
The outlook for the MENA region is highly uncertain, and downside risks are resurgent. An escalation or
spread of the conflict beyond Gaza and Israel, as well as an intensification of the disruptions in the Red
Sea, could have a severe economic impact, including on trade and tourism.
The appropriate policy response will depend on countries’ exposure to the conflict, preexisting
vulnerabilities, and policy space. Crisis management and precautionary policies will be critical where the
impact is acute, or risks are elevated. Elsewhere, countries will need to continue to fortify buffers.
Monetary policy will need to remain focused on price stability, and fiscal policy should be tailored to
country needs and available fiscal space. Structural reforms remain critical to boosting growth and
strengthening resilience in both the near and longer terms.
2023
October 12, 2023
Regional Economic Outlook for the Middle East and Central Asia, October 2023
Description:
Building Resilience and Fostering Sustainable Growth Across the Middle East and Central Asia, the combined effects of global headwinds, domestic challenges, and geopolitical risks weigh on economic momentum, and the outlook is highly uncertain. Growth is set to slow this year in the Middle East and North Africa region, driven by lower oil production, tight policy settings in emerging market and middle-income economies, the conflict in Sudan, and other country-specific factors. In the Caucasus and Central Asia, although migration, trade, and financial inflows following Russia’s war in Ukraine continue to support economic activity, growth is set to moderate slightly this year.
May 3, 2023
Regional Economic Outlook for the Middle East and Central Asia
Description: The economies of the Middle East and Central Asia (ME&CA) proved resilient in 2022, despite a series of global shocks. However, this year—and potentially next—growth is expected to slow in the Middle East and North Africa (MENA) as tight policies to fight inflation, reduce vulnerabilities, and rebuild buffers start to dent economic activity in many countries, and agreed oil production cuts curb growth in oil exporters. Inflation is projected to remain persistent. The outlook for Caucasus and Central Asia (CCA) countries depends heavily on external factors, namely the impact of monetary tightening, growth in their main trading partners, the pace of private transfers, and inflows of migrants from Russia. Uncertainty is high, and risks to the baseline are tilted to the downside amid financial stability concerns—particularly in advanced economies amid contagion fears. Policy trade-offs are even more complex, and policymakers will need to calibrate the policy mix carefully to reduce core inflation without triggering financial stress and excessive tightening and continue to provide targeted fiscal support to vulnerable groups while preserving debt sustainability and financial stability. Tight monetary and fiscal policies across the region amid tight global financial conditions call for accelerating structural reforms to bolster potential growth and enhance resilience.
2022
October 12, 2022
Regional Economic Outlook for the Middle East and Central Asia, October 2022
Description: In a worsening global environment, economies in the Middle East and Central Asia (ME&CA) are being buffeted by a confluence of shocks: a global slowdown, high and volatile food and energy prices, faster and stronger-than-expected tightening of financial conditions, and the risk of fragmentation. The region’s emerging market and middle-income economies (EM&MIs) and low-income countries (LICs) are hit hard, with many facing curtailed access to market financing, while oil-exporting countries are being buffered by still-high energy prices. The adverse impact of Russia’s war in Ukraine on the Caucasus and Central Asia (CCA) has thus far been milder than expected. Still, the CCA’s strong ties to Russia entail substantial risks to the region’s outlook.
April 27, 2022
Regional Economic Outlook April 2022 Middle East Central Asia
Description: The war in Ukraine and sanctions on Russia are exacerbating the divergence in recovery prospects for the Middle East and Central Asia. Despite better-than-expected momentum in 2021, the economic environment in 2022 is defined by extraordinary headwinds and uncertainties, particularly for commodity importers, with higher and more volatile commodity prices, rising inflationary pressures, faster-than-expected monetary policy normalization in advanced economies, and a lingering pandemic.
2021
October 19, 2021
Regional Economic Outlook for the Middle East and Central Asia
Description: A fragile recovery continues in the Middle East and Central Asia region. The region has made good progress since the beginning of the year, but new challenges have emerged. They include a pandemic wave in countries with weak vaccination progress and rising inflation, which has contributed to declining monetary policy space, adding to the difficulties posed by limited fiscal policy space. Additionally, divergent recoveries and concerns about economic scarring persist. Inequities are also on the rise, and countries will need to tackle the pandemic’s impact on debt, labor markets, and the corporate sector. Countries will face difficult tradeoffs amid this challenging environment as they continue to manage the current crisis. Ramping up vaccine acquisition and distribution remains the most urgent short-term priority. Additional support should be well targeted, and central banks may need to raise interest rates if inflation expectations start to increase. Improving policy frameworks will be important to reduce policy tradeoffs. Preparing for a new chapter by investing in a transformational recovery will be vital to the region’s future. Important priorities include reorienting the role of the state toward health, education, and social safety nets; leveraging global trends like digitalization; and investing in climate-resilient technology.
April 11, 2021
Regional Economic Outlook: Trade-Offs Today for Transformation Tomorrow
Description: A year into the coronavirus (COVID-19) pandemic, the race between vaccine and virus entered a new phase in the Middle East and Central Asia region, and the path to recovery in 2021 is expected to be long and divergent. The outlook will vary significantly across countries, depending on the pandemic’s path, vaccine rollouts, underlying fragilities, exposure to tourism and contact-intensive sectors, and policy space and actions. Public gross financing needs in most emerging markets in the region are expected to remain elevated in 2021–22, with downside risks in the event of tighter global financial conditions and/or if fiscal consolidation is delayed due to weaker-than-expected recovery. 2021 will be the year of policies that continue saving lives and livelihoods and promote recovery, while balancing the need for debt sustainability and financial resilience. At the same time, policymakers must not lose sight of the transformational challenges to build forward better and accelerate the creation of more inclusive, resilient, sustainable, and green economies. Regional and international cooperation will be key complements to strong domestic policies.
2020
October 19, 2020
Regional Economic Outlook: Middle East and Central Asia
Description: Countries in the Middle East, North Africa, Afghanistan, and Pakistan (MENAP) region and those in the Caucasus and Central Asia (CCA) responded to the COVID-19 pandemic with swift and stringent measures to mitigate its spread and impact but continue to face an uncertain and difficult environment. Oil exporters were particularly hard hit by a “double-whammy” of the economic impact of lockdowns and the resulting sharp decline in oil demand and prices. Containing the health crisis, cushioning income losses, and expanding social spending remain immediate priorities. However, governments must also begin to lay the groundwork for recovery and rebuilding stronger, including by addressing legacies from the crisis and strengthening inclusion.
July 13, 2020
Regional Economic Outlook Update: Middle East and Central Asia
Description: The Middle East and Central Asia (MCD) region has reacted to the global COVID-19 pandemic with swift and stringent measures that have saved lives. However, these policies have also had a large impact on domestic economic activity. With several countries in the region beginning reopening in past weeks, and a recent uptick in activity, rising infection numbers may pose risks. A sharp decline in oil prices together with production cuts among oil exporters and disruptions in trade and tourism added further headwinds. As a result, growth in the region is now projected at –4.7 percent in 2020, 2 percentage points lower than in April 2020. The unusually high level of uncertainty regarding the length of the pandemic and its impact on firm closures, the resulting downside risks (including social unrest and political instability), and potential renewed volatility in global oil markets dominate the outlook. The pandemic will continue to test countries’ health capacity and economic resilience. While ensuring strong health systems remains the immediate priority, governments should also focus on supporting the recovery and setting up resilient and well-targeted social safety nets. As the pandemic wanes, countries should facilitate recovery by easing the reallocation of workers and resources, as needed, while resuming gradual fiscal adjustment and rebuilding policy buffers. Multilateral support can play a key role in helping countries surmount these shocks.