## Chapter 1 — Regional Developments and Economic Outlook: Resilience amid Uncertainty: Will It Last?

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### Global context: surprising resilience
- Growth and trade:
  - Year-over-year quarterly annualized global growth rates of about 3.5 percent in the first half of 2025.
  - IMF global projections: 3.3 percent in 2024; projected 3.2 percent in 2025; projected 3.1 percent in 2026.
  - Forecast revisions: represent a 0.4 and 0.1 percentage point upward revision from April, respectively.
  - Advanced economies projected growth: 1.6 percent during 2025–26.
  - United States growth: about 2 percent.
  - Euro area growth: 1.2 percent.
  - Emerging markets and developing economies: 4.3 percent in 2024; projected 4.2 percent in 2025 (an upward revision of 0.5 percentage point compared to April).
- Inflation:
  - Global inflation expected to decline to 4.2 percent in 2025 and 3.7 percent in 2026.
  - Expected to remain above target in the United States but subdued in most other regions.
- Trade and policy environment:
  - End of the pause after the April 2 tariff announcement led to slightly lower statutory tariff rates but overall US tariff rates remain well above pre-escalation levels.
  - Short-term factors muting tariff inflation effects: frontloading of consumption and investment, trade diversion through third countries, inventory management, and corporate margin buffers (October 2025 World Economic Outlook).
  - New concerns about tighter immigration restrictions and perceived independence of US economic institutions, and longer-term fiscal sustainability in a few advanced economies.

### Recent developments in MENAP and CCA: resilience amid uncertainty and conflicts
- Macroeconomic conditions and external environment:
  - MENAP and CCA economies showed resilience so far in 2025 despite global uncertainty and renewed geopolitical tensions (including a short-lived Islamic Republic of Iran–Israel conflict in June).
  - External financial conditions accommodative: lower spreads, weaker exchange rates, strong capital inflows, increased access to capital markets for several countries.
- Trade, tariffs, and exports:
  - Expiration of the 90-day pause on US tariffs (April 2) led to moderate increase in effective US tariff rates for most MENAP and CCA economies; by end-September effective rates converged to a range of 10–15 percent, with notable exceptions: Algeria, Iraq, Kazakhstan, Pakistan, Tunisia.
  - US accounts for about 4.5 percent of their total merchandise trade.
  - New US tariffs exempt oil products; overall direct impact on merchandise exports expected to be limited.
  - Merchandise exports (January–May 2025): MENAP emerging market and middle-income economies’ export value increased by 8.0 percent year-on-year.
  - CCA oil importers: export values rose sharply due to rerouting of trade to Russia; CCA oil exporters: overall export value declined reflecting lower oil prices; non-oil exports remained resilient, particularly in GCC economies.
  - Israel–Iran tensions in June had only a short-lived impact on trade through the Strait of Hormuz; Suez Canal trade volumes have yet to recover from the 2024 collapse.
- Oil production and prices:
  - OPEC+ fully unwound 2.2 million barrels per day (mb/d) in voluntary cuts introduced in November 2023.
  - GCC oil production rose by 968,000 b/d between February and June 2025, and by an additional 158,000 b/d between June and August 2025.
  - MENAP non-GCC production remained flat due to capacity constraints, conflicts, and sanctions.
  - September 2025 OPEC+ decision: start phased rollback of cuts from the tranche introduced in April 2023.
  - Oil prices generally remained within the $60–$70 range since mid-2025, aside from a temporary spike related to Iran–Israel tensions in mid-June.
  - September decision details: restore 137,000 barrels per day starting in October 2025, out of the 1.66 mb/d cut introduced in April 2023; combined with 2 mb/d restrictions from November 2022, these cuts total approximately 5.85 mb/d, or about 6 percent of global oil demand.
  - MENAP oil production projection: projected to reach 25.7 mb/d in 2025, 200,000 b/d higher than projected in May 2025 and 400,000 b/d above 2024 levels.
- External flows, finance, and exchange rates:
  - Remittances and tourism:
    - Remittances accelerated in 2025 in the MENAP region (notably Egypt and Pakistan).
    - CCA inward remittances increased in several countries (Kyrgyz Republic, Tajikistan, Uzbekistan); plateaued but elevated in Armenia and Georgia.
    - Tourism inflows rebounded in some MENAP economies (Egypt, Morocco, Tunisia).
  - Capital markets and sovereign debt:
    - Gross inflows into bonds and equities rebounded across MENAP and CCA.
    - Sovereign spreads narrowed, in some cases below pre-pandemic averages.
    - Cumulative bond issuance in MENAP and CCA exceeded $36.8 billion as of September 2025, nearly matching full-year 2024 and surpassing the three-year average.
  - Nominal effective exchange rates generally weakened (in some cases reflecting pegs to the U.S. dollar: GCC economies, Jordan, de-facto Azerbaijan).
  - Private sector credit growth remained robust in many economies due to large-scale investment projects tied to diversification and infrastructure updates.
- Real activity and inflation:
  - Real GDP: strong domestic demand, increased oil production, and accommodative financial conditions sustained activity in H1 2025; many countries’ 2025 Q1 or H1 GDP growth outpaced 2024 averages and year-ago periods.
  - GCC growth supported by diversification efforts and rebound in hydrocarbon production.
  - MENAP oil importers’ growth drivers: tourism (Egypt, Morocco, Tunisia), agricultural rebound (Jordan, Morocco, Tunisia), rising infrastructure investment (Morocco), and remittances (Egypt, Jordan, Pakistan).
  - CCA: accelerated growth in Kazakhstan and Uzbekistan driven by domestic demand, credit expansion, and remittances; moderated yet robust growth in Armenia, Georgia, and Azerbaijan (public investment execution slowdowns and technical oil production issues).
  - Inflation divergence by July 2025:
    - Headline inflation fell in most MENAP economies; remained low or close to targets/historical averages due to lower food and energy prices and tight monetary policy.
    - Islamic Republic of Iran: inflation rose due to exchange rate pressures, loose monetary and fiscal policies, and sanctions.
    - Egypt: inflation eased from previous highs but remained elevated because of supply shocks pass-through, currency depreciation, and energy price adjustments.
    - CCA: headline inflation higher in nearly all countries by July 2025 vs end-2024 (except Turkmenistan); CCA inflation pressures from electricity tariff reforms (Kyrgyz Republic), imported inflation from Russia (Kazakhstan, Kyrgyz Republic), and demand pressures (Kazakhstan, Kyrgyz Republic).

### Outlook: forecasts, medium-term projections, and heterogeneity
- Regional growth forecasts and revisions:
  - MENAP 2025 GDP growth: projected 3.2 percent in 2025 (up from 2.1 percent in 2024); upgrade of 0.6 percentage point compared to May.
    - Upgrade drivers: stronger oil production among oil exporters; progress on structural reforms in emerging market and middle-income economies; improved agricultural production.
    - Heterogeneity: some MENAP LIC growth downgraded due to lower gold production (Mauritania) and cuts in foreign aid (Somalia).
  - CCA 2025 GDP growth: raised to 5.6 percent for 2025 (slightly above 2024’s 5.5 percent); 0.7 percentage point higher than May projection.
    - Upgrade drivers: stronger hydrocarbon production (Kazakhstan); strong domestic demand fueled by credit growth (Armenia, Georgia, Kazakhstan) and fiscal expansion (Armenia, Kazakhstan, Kyrgyz Republic).
  - Pakistan: growth projected to increase to 3.6 percent in 2026 supported by steady reform implementation and improving financial conditions and confidence.
  - GCC: growth projected to accelerate to about 4.1 percent in 2026–27, before moderating to about 3.4 percent as oil production declines while non-oil growth continues.
- Medium-term projections and external positions:
  - Non-GCC oil exporters: medium-term growth "hovers around 2.6 percent."
  - CCA: growth projected to slow gradually to "around 4 percent" over the medium term.
  - External positions projected to worsen over time in many MENAP and CCA economies, though at a slower pace than projected in May.
  - Reserve import coverage: expected to decline across most MENAP and CCA countries; GCC and CCA oil exporters projected to maintain substantial external reserves as buffers.
  - GCC weighted current account surplus: expected to narrow from "7.1 percent of GDP in 2024" to "about 3.7 percent in 2030."
  - Specific external position notes:
    - Algeria: current account deficit expected to widen in the near term.
    - Iraq: external position projected to improve over the medium term.
    - Morocco and Tunisia: current account deficit in 2025 expected to widen slightly.
    - Jordan: current account deficit in 2025 expected to remain broadly stable.
    - MENAP LICs: external positions weaken over the medium term in Djibouti, Somalia, and Sudan.
    - CCA oil exporters: current account deficits projected to widen in near and medium term.
    - Tajikistan: external balances expected to weaken as remittances normalize.
  - Methodological note: Kyrgyz Republic’s marked improvement in current account balance largely reflects a methodological change beginning in 2025 (revenues from re-exports reclassified as proper export revenues).
- Inflation outlook:
  - MENAP inflation expected to remain subdued or decline gradually in 2025–26.
  - CCA inflation projected to rise in 2025 because of strong demand pressures, then begin to decelerate in 2026.
  - MENAP specifics:
    - GCC economies: inflation expected to remain stable and moderate, "averaging about 2 percent over the forecast horizon."
    - Islamic Republic of Iran: annual inflation projected to reach 45 percent by the end of 2025.
    - Tunisia: inflation expected to decelerate only slightly due to continued monetary financing of fiscal deficits.
    - Pakistan: inflation decelerated significantly in 2025 but is expected to increase in 2026.
  - CCA specifics:
    - Turkmenistan: inflation expected to pick up and stabilize at "8 percent."
    - Tajikistan: inflation projected to rise gradually but remain within the "5 ±2 percent target range" over the forecast horizon.

### Key regional vulnerabilities, humanitarian conditions, and conflict-affected recovery needs
- Humanitarian and conflict developments:
  - Lebanon: ceasefire since November 2024 may lay groundwork for recovery but significant needs remain.
  - Syria: political transition noted; significant reconstruction needs remain.
  - Yemen: ceasefire with the United States has held since May 2025 but progress on the 2023 UN road map has stalled.
  - Sudan: severe humanitarian crisis with a sharp rise in people in need in 2025.
  - Gaza: recorded more than 64,000 fatalities by end-July 2025 and over three-quarters of structures damaged or destroyed.
- Long-lasting conflict costs and spillovers:
  - Output per capita remains "about 10 percent below its pre-conflict trend a decade after the start of a severe conflict" (Chapter 2, April 2024 REO).
  - Bordering economies: per capita output drops immediately by "about 1.5 percent" and a further "6 percent over 10 years."

### Risks to the outlook
- Overall tilt:
  - Risks remain tilted to the downside; lagged adverse effects of high global uncertainty remain possible.
- Global uncertainty and financial conditions:
  - A 1 standard deviation shock to the World Uncertainty Index is associated with average output losses in the MENAP and CCA regions peaking at about 2.5 percent two years after the shock.
  - Possible channels: higher-for-longer interest rates from fiscal concerns and inflation in advanced economies; rise in term premiums from fiscal sustainability concerns compounded by geoeconomic fragmentation and trade disputes.
  - Impact on countries with high financing needs and banking exposures: higher sovereign spreads and higher cost of funding (examples cited: Algeria, Egypt, Pakistan).
- Real estate, credit, exchange rate, and oil price risks:
  - Signs of rapidly rising real estate prices in some GCC economies amid rapid credit growth and high valuations; data limitations in Bahrain and Kuwait and consistency issues in Qatar.
  - CCA: rising distressed assets in construction, consumer, and mortgage segments could heighten vulnerability.
  - Exchange rate movements:
    - A sharper-than-projected depreciation of the US dollar could appreciate local currencies for flexible regimes and ease inflationary pressures for importers.
    - For oil exporters with pegs to the US dollar, a depreciation could weaken competitiveness relative to trading partners and raise import costs.
    - Example: "approximately 80 percent of Saudi Arabia’s imports" invoiced in US dollars.
    - A sudden reversal of the recent decline in the US dollar could deter capital and financial inflows and compound the impact of reduced official grants.
  - Oil price scenarios:
    - Baseline path: "around $69 per barrel in 2025," falling to "$66 in 2026" and remaining at that level through 2030; 2024 average was "$79 per barrel."
    - Downside: faster rebound in OPEC+ production and weaker demand could push prices below baseline, hurting exporters' fiscal and external positions.
    - Upside: escalation of geopolitical tensions (including sanctions on Russian and Iranian exports) could drive prices higher, benefiting exporters but posing challenges for importers with fuel subsidies and high energy intensity.
- Geopolitical, war, and climate risks:
  - Risk of renewed escalation in Middle East (including Iran–Israel) remains acute with spillover risks (refugee flows, logistical and energy disruptions).
  - Gaza crisis remains a significant downside risk to regional economic and trade stability.
  - War in Ukraine and CCA exposure: escalation and sanctions on Russia could negatively affect tourism, trade, remittances, investment, and fuel currency depreciation pressures and inflation; protracted conflict could temporarily boost external balances via inflows but would heighten financial integrity and legal risks.
  - Climate risks: recurrence of severe climate events (e.g., drought) could harm activity and employment in agriculturally dependent countries (Egypt, Morocco, Tunisia).
  - Severe flooding in Pakistan in Q3 2025 may have more adverse effects on growth, inflation, and the current account than currently estimated.

### Upside scenarios and opportunities
- Faster-than-expected implementation of structural reforms in many MENAP economies could yield stronger gains than baseline.
- Conflict resolution:
  - Swift and lasting resolution in conflict-affected countries could accelerate reconstruction under enhanced regional and international cooperation.
  - In the CCA, a peace agreement between Armenia and Azerbaijan could open greater regional cooperation and integration.
- CCA-specific upside:
  - Medium-term growth could exceed projections if positive effects from the war in Ukraine and multiyear infrastructure investments are more enduring, potentially lifting potential output above baseline estimates.

### Fiscal, monetary, and structural policy recommendations
- Macroeconomic policy approach:
  - Maintain cautious macroeconomic policies prioritizing buffer building.
  - Continue relatively conservative fiscal policy stances embedded in projections where appropriate.
  - Maintain tight monetary policy in countries experiencing persistent inflationary pressures until inflation expectations are clearly aligned with targets.
- Fiscal policy and public finances:
  - Priorities for countries with limited fiscal space:
    - Rebuild margins of maneuver through a credible process of fiscal consolidation, calibrated to the business cycle and investment needs.
    - Mobilize fiscal revenues by narrowing tax gaps and reducing informality.
    - Rationalize current spending, emphasize better control of public wage bills and more targeted and efficient income support and social protection programs.
    - Improve fiscal frameworks: adopt strong fiscal rules (legally grounded, transparent, well-monitored and enforced, resilient to shocks).
  - Fiscal stance projections:
    - MENAP: fiscal policy stance projected to be contractionary in most economies.
    - CCA: some fiscal consolidation expected from 2026 onward; fiscal stances generally expansionary in 2025 turning contractionary from 2026.
  - MENAP oil exporters: non-oil primary fiscal balances set to strengthen through spending rationalization (Algeria, Kuwait, Oman, Saudi Arabia) and non-hydrocarbon revenue mobilization (Iraq).
  - MENAP oil importers: cyclically adjusted primary fiscal balances projected to improve via tax policy/tax administration reforms (Egypt, Jordan, Morocco, Pakistan) and energy subsidy reforms (Egypt, Morocco, Pakistan).
  - MENAP LICs: fiscal stance expected to improve in Djibouti and Mauritania; primary fiscal balances expected to deteriorate in Sudan and Somalia.
  - CCA specifics: consolidation driven by declining capital expenditures (Azerbaijan) and fiscal reforms boosting non-oil revenue (Kazakhstan); Kyrgyz Republic and Tajikistan fiscal policy projected to remain expansionary in the medium term due to higher capital spending.
- Monetary policy and financial stability:
  - Maintain restrictive monetary policy where medium-term inflation remains elevated (examples: Egypt, Kazakhstan, Tunisia).
  - For fixed exchange rate regimes, monetary policy must remain consistent with maintaining the peg.
  - For more flexible regimes, easing should be contingent on clear evidence that inflation expectations are firmly anchored.
  - Communicate monetary policy decisions clearly and transparently; safeguard central bank independence.
  - Strengthen financial sector frameworks and deploy targeted macroprudential measures to contain emerging risks and safeguard financial stability.
  - Address sovereign-bank nexus vulnerabilities in economies with large banking sector holdings of sovereign bonds.
- Exchange rate flexibility and shock absorption:
  - Exchange rate flexibility may play a greater role in cushioning shocks, especially as financial markets deepen and exports diversify.
  - Adoption of credible inflation-targeting regimes with more flexible exchange rates could reduce output losses associated with adverse global scenarios.
- Structural reforms and long-term growth:
  - Advance economic diversification and private sector development; reduce role of state-owned enterprises, streamline government regulations, enhance financial inclusion for SMEs, and improve governance.
  - Trade diversification: tackle structural barriers to deeper integration to diversify export markets and improve regional connectivity.
  - AI preparedness:
    - Accelerate adoption of AI accompanied by complementary policies (training, labor market, regulatory measures).
    - IMF research indicates emerging markets and LICs in these regions lag GCC economies and peers in other regions on AI preparedness (index, 0 to 1).
  - Labor market reforms: invest in human capital, implement active labor market policies, update labor codes to encourage flexible job formats, and provide targeted support for young job seekers.
- Recovery in economies emerging from conflict:
  - Macroeconomic stabilization: currency reform, elimination of monetary financing, rebuilding foreign exchange reserves; control expenditure and boost domestic revenue mobilization.
  - Adequate financing: debt relief, support from international financial institutions to unlock resources and strengthen policy frameworks.
  - Institutional and governance improvements: strengthen government effectiveness and accountability; prioritize financing for healthcare, infrastructure, and social protection.
- Financial sector and fiscal framework strengthening:
  - Formal adoption and strengthening of fiscal rules: only one-quarter of economies in the MENAP and CCA regions have formal operational fiscal rules; stronger fiscal rules associated with lower sovereign spreads (about 400 basis points difference for "strong" fiscal rules).
  - Empirical finding: economies in the top one-third of the IMF’s Fiscal Rules Strength Index distribution experience smaller output losses one year after an adverse global shock compared to those with weak or no fiscal rules.
  - Monetary frameworks: move toward regimes that preserve credibility and permit shock absorption as financial development and export diversification increase.

### IMF engagement and support
- Financing and technical assistance:
  - Since 2020, the IMF has approved $55.7 billion in financing for countries across MENAP and the CCA.
  - $21.4 billion has been approved since early 2024 for programs in Egypt (augmentation under the Extended Fund Facility, EFF, and a Resilience and Sustainability Facility, RSF), Jordan (EFF and RSF), Morocco (Flexible Credit Line), and Pakistan (EFF and RSF).
  - The IMF delivered more than 385 technical assistance and capacity development projects across 31 countries, amounting to $36.8 million during fiscal year 2024/25.
  - Regional presence: resident representative offices, technical assistance centers, office in Riyadh to support on-the-ground engagement and coordination with the World Bank and regional partners.

*International Monetary Fund, Regional Economic Outlook—Middle East and Central Asia, October 2025 (Chapter 1).*

### 1. Regional Developments and Economic Outlook:

### 1. Regional Developments and Economic Outlook: Resilience amid Uncertainty: Will It Last?

### Global context: surprising resilience
- Recent months: global economy remains resilient amid shocks and high uncertainty; growth held up in the first half of 2025 with year-over-year quarterly annualized growth rates of about 3.5 percent.
- Trade and policy environment:
  - End of the pause after the April 2 tariff announcement led to slightly lower statutory tariff rates but overall US tariff rates remain well above pre-escalation levels.
  - New concerns about tighter immigration restrictions and perceived independence of US economic institutions, and longer-term fiscal sustainability in a few advanced economies.
- Short-term factors muting tariff inflation effects: frontloading of consumption and investment, trade diversion through third countries, inventory management, and corporate margin buffers (October 2025 World Economic Outlook).
- IMF global projections and revisions:
  - Global growth: 3.3 percent in 2024; projected 3.2 percent in 2025; projected 3.1 percent in 2026.
  - These forecasts represent a 0.4 and 0.1 percentage point upward revision from April, respectively.
  - Advanced economies projected growth: 1.6 percent during 2025–26.
  - United States growth: about 2 percent.
  - Euro area growth: 1.2 percent.
  - Emerging markets and developing economies growth: 4.3 percent in 2024; projected 4.2 percent in 2025 (an upward revision of 0.5 percentage point compared to April).
  - Global inflation: expected to decline to 4.2 percent in 2025 and 3.7 percent in 2026; expected to remain above target in the United States but subdued in most other regions.

### Recent developments in MENAP and CCA: economic resilience amid high uncertainty and conflicts
- Overview:
  - MENAP and CCA economies have shown resilience so far in 2025 despite global uncertainty and renewed geopolitical tensions (including a short-lived Islamic Republic of Iran–Israel conflict in June).
  - External financial conditions accommodative: lower spreads, weaker exchange rates, strong capital inflows, increased access to capital markets for several countries.
- Trade and tariffs:
  - Expiration of the 90-day pause on US tariffs (April 2) led to a moderate increase in effective US tariff rates for most MENAP and CCA economies; by end-September effective rates converged to a range of 10–15 percent, with notable exceptions: Algeria, Iraq, Kazakhstan, Pakistan, Tunisia.
  - Regions’ low exposure to the US market: US accounts for about 4.5 percent of their total merchandise trade.
  - New US tariffs exempt oil products; overall direct impact on merchandise exports expected to be limited.
  - Merchandise exports (January–May 2025): MENAP emerging market and middle-income economies’ export value increased by 8.0 percent year-on-year, supported by sustained trade with China and the European Union and intra-regional trade expansion.
  - CCA oil importers: export values rose sharply due to rerouting of trade to Russia; CCA oil exporters: overall export value declined reflecting lower oil prices, while non-oil exports remained resilient, particularly in GCC economies.
  - Israel–Iran tensions in June had only a short-lived impact on trade through the Strait of Hormuz; Suez Canal trade volumes have yet to recover from the 2024 collapse.
- Oil production and prices:
  - OPEC+ fully unwound 2.2 million barrels per day (mb/d) in voluntary cuts introduced in November 2023.
  - GCC oil production rose by 968,000 b/d between February and June 2025, and by an additional 158,000 b/d between June and August 2025.
  - MENAP non-GCC production remained flat due to capacity constraints, conflicts, and sanctions.
  - September 2025 OPEC+ decision: start phased rollback of cuts from the tranche introduced in April 2023.
  - Oil prices: generally remained within the $60–$70 range since mid-2025, aside from a temporary spike related to Iran–Israel tensions in mid-June.
  - September decision details: restore 137,000 barrels per day starting in October 2025, out of the 1.66 mb/d cut introduced in April 2023; combined with 2 mb/d restrictions from November 2022, these cuts total approximately 5.85 mb/d, or about 6 percent of global oil demand.
  - MENAP oil production projection note: oil production in the MENAP region is projected to reach 25.7 mb/d in 2025, 200,000 b/d higher than projected in May 2025 and 400,000 b/d above 2024 levels.
- External flows, finance, and exchange rates:
  - Remittances and tourism:
    - Remittances accelerated in 2025 in the MENAP region (notably Egypt and Pakistan), improving current accounts.
    - CCA inward remittances increased in several countries (Kyrgyz Republic, Tajikistan, Uzbekistan); plateaued but elevated in Armenia and Georgia.
    - Tourism inflows rebounded in some MENAP economies (Egypt, Morocco, Tunisia).
  - Capital markets and sovereign debt:
    - Gross inflows into bonds and equities rebounded across MENAP and CCA.
    - Sovereign spreads narrowed, in some cases below pre-pandemic averages.
    - Cumulative bond issuance in MENAP and CCA exceeded $36.8 billion as of September 2025, nearly matching full-year 2024 and surpassing the three-year average.
  - Nominal effective exchange rates generally weakened (in some cases reflecting pegs to the U.S. dollar: GCC economies, Jordan, de-facto Azerbaijan).
  - Private sector credit growth remained robust in many economies due to large-scale investment projects tied to diversification and infrastructure updates.
- Real activity and inflation:
  - Real GDP: strong domestic demand, increased oil production, and accommodative financial conditions sustained activity in H1 2025; many countries’ 2025 Q1 or H1 GDP growth outpaced 2024 averages and year-ago periods.
  - GCC growth supported by diversification efforts and rebound in hydrocarbon production.
  - MENAP oil importers’ growth drivers: tourism (Egypt, Morocco, Tunisia), agricultural rebound (Jordan, Morocco, Tunisia), rising infrastructure investment (Morocco), and remittances (Egypt, Jordan, Pakistan).
  - CCA: accelerated growth in Kazakhstan and Uzbekistan driven by domestic demand, credit expansion, and remittances; moderated yet robust growth in Armenia, Georgia, and Azerbaijan (public investment execution slowdowns and technical oil production issues).
  - Inflation divergence by July 2025:
    - Headline inflation fell in most MENAP economies; remained low or close to targets/historical averages due to lower food and energy prices and tight monetary policy.
    - Islamic Republic of Iran: inflation rose due to exchange rate pressures, loose monetary and fiscal policies, and sanctions.
    - Egypt: inflation eased from previous highs but remained elevated because of supply shocks pass-through, currency depreciation, and energy price adjustments.
    - CCA: headline inflation higher in nearly all countries by July 2025 vs end-2024 (except Turkmenistan); CCA inflation pressures from electricity tariff reforms (Kyrgyz Republic), imported inflation from Russia (Kazakhstan, Kyrgyz Republic), and demand pressures (Kazakhstan, Kyrgyz Republic).

### Outlook: from economic resilience to stronger growth (regional projections and risks)
- MENAP and CCA forecast revisions and drivers:
  - MENAP 2025 GDP growth: projected 3.2 percent in 2025 (up from 2.1 percent in 2024); upgrade of 0.6 percentage point compared to May.
    - Upgrade drivers: stronger oil production among oil exporters; progress on structural reforms in emerging market and middle-income economies; improved agricultural production.
    - Heterogeneity: some MENAP LIC growth downgraded due to lower gold production (Mauritania) and cuts in foreign aid (Somalia).
  - CCA 2025 GDP growth: raised to 5.6 percent for 2025 (slightly above 2024’s 5.5 percent); 0.7 percentage point higher than May projection.
    - Upgrade drivers: stronger hydrocarbon production (Kazakhstan); strong domestic demand fueled by credit growth (Armenia, Georgia, Kazakhstan) and fiscal expansion (Armenia, Kazakhstan, Kyrgyz Republic).
- Medium-term projections:
  - MENAP: gradual acceleration over the medium term due to payoffs from structural reforms and macro stabilization.
  - CCA: growth expected to moderate over the medium term as activity returns to potential after recent rapid expansion.
  - Pakistan: growth projected to increase to 3.6 percent in 2026 supported by steady reform implementation and improving financial conditions and confidence.
  - GCC: growth projected to accelerate to about 4.1 percent in 2026–27 as strong domestic demand drives non-oil growth alongside higher oil production, before moderating to about 3.4 percent as oil production declines while non-oil growth continues.
- Inflation outlook:
  - MENAP inflation expected to remain subdued or decline gradually in 2025–26 reflecting lower food and energy prices and conservative fiscal and monetary policies.
  - CCA inflation projected to rise in 2025 because of strong demand pressures, then begin to decelerate in 2026.
- Key regional vulnerabilities and humanitarian conditions:
  - Progress toward peace in some countries (Lebanon ceasefire since November 2024; political transition in Syria) may lay groundwork for recovery, but significant humanitarian and reconstruction needs remain.
  - Yemen: ceasefire with the United States has held since May 2025 but progress on the 2023 UN road map has stalled.
  - Sudan and Gaza: severe humanitarian crises—Sudan saw a sharp rise in people in need in 2025; Gaza had recorded more than 64,000 fatalities by end-July 2025 and over three-quarters of structures damaged or destroyed.

*Source: Chapter 1, “Regional Developments and Economic Outlook: Resilience amid Uncertainty: Will It Last?” (October 2025).*

### 1. Regional Developments and Economic Outlook: Resilience amid Uncertainty: Will It Last?

### 1. Regional Developments and Economic Outlook: Resilience amid Uncertainty: Will It Last?

### Growth Outlook and Medium-Term Projections
- Growth:
  - Non-GCC oil exporters: medium-term growth "hovers around 2.6 percent."
  - CCA: growth projected to slow gradually to "around 4 percent" over the medium term.
- Drivers:
  - GCC: upward revision to oil production raises near-term projections (about 2.5 percentage points of GDP for 2025–26).
  - Non-GCC oil exporters: continued heavy dependence on oil production and slower structural reform progress limit growth.
  - CCA: effects from the war in Ukraine fading and hydrocarbon production leveling off.

### External Positions and Current Account Balances
- Regional trends:
  - External positions are projected to worsen over time in many MENAP and CCA economies, though at a slower pace than projected in May.
  - Reserve import coverage: expected to decline across most MENAP and CCA countries; GCC and CCA oil exporters projected to maintain substantial external reserves as buffers.
- Specific current account projections and drivers:
  - GCC weighted current account surplus: expected to narrow from "7.1 percent of GDP in 2024" to "about 3.7 percent in 2030."
  - Algeria: current account deficit expected to widen in the near term (lower oil prices, limited production gains).
  - Iraq: external position projected to improve over the medium term (fiscal consolidation and gradual increase in oil exports).
  - MENAP oil importers:
    - Morocco and Tunisia: current account deficit in 2025 expected to widen slightly.
    - Jordan: current account deficit in 2025 expected to remain broadly stable as robust demand boosts imports.
    - Medium term: external positions projected to strengthen gradually in Jordan and Egypt; deteriorate moderately in Morocco and Tunisia.
  - MENAP LICs: external positions weaken over the medium term in Djibouti, Somalia, and Sudan (import momentum from port expansion and renewable projects in Djibouti; normalization of imports to pre-conflict levels in Sudan; lower official grants in Somalia).
  - CCA oil exporters: current account deficits projected to widen in near and medium term (lower hydrocarbon prices and declining oil and gas production).
  - Tajikistan: external balances expected to weaken as remittances normalize with easing labor demand in destination countries.
- Methodological note:
  - Kyrgyz Republic: marked improvement in current account balance largely reflects a methodological change beginning in 2025 (revenues from re-exports reclassified as proper export revenues).

### Inflation Outlook
- MENAP region:
  - GCC economies: inflation expected to remain stable and moderate, "averaging about 2 percent over the forecast horizon."
  - Non-GCC oil exporters: inflation expected to decline but remain relatively high, "especially in the Islamic Republic of Iran, where annual inflation is projected to reach 45 percent by the end of 2025."
  - MENAP oil importers:
    - Jordan: inflation projected to remain low.
    - Egypt: inflation projected to fall from elevated levels (waning effects of past currency depreciation and energy price hikes).
    - Tunisia: inflation expected to decelerate only slightly due to continued monetary financing of fiscal deficits.
    - Pakistan: inflation decelerated significantly in 2025 but is expected to increase in 2026 owing to normalization of food and energy prices and phasing out short-term electricity subsidies.
  - Conflict-affected economies:
    - Lebanon and Sudan: significant inflationary pressures expected to moderate with macroeconomic stabilization progress.
- CCA region:
  - After increasing in 2025 in all countries except Uzbekistan, inflation projected to fall slowly as domestic demand slows due to tighter fiscal policy stances.
  - Exceptions:
    - Turkmenistan: inflation expected to pick up and stabilize at "8 percent" due to looser monetary policy and higher public sector wages and pensions.
    - Tajikistan: inflation projected to rise gradually but remain within the "5 ±2 percent target range" over the forecast horizon.

### Fiscal Stance and Policy Settings
- Overall:
  - MENAP: fiscal policy stance projected to be contractionary in most economies.
  - CCA: some fiscal consolidation expected to begin in most countries from 2026 onward; fiscal stances generally expansionary in 2025 turning contractionary from 2026.
- MENAP oil exporters:
  - Non-oil primary fiscal balances set to strengthen through spending rationalization (Algeria, Kuwait, Oman, Saudi Arabia) and non-hydrocarbon revenue mobilization (Iraq), resulting in a negative fiscal impulse.
- MENAP oil importers:
  - Cyclically adjusted primary fiscal balances projected to improve via tax policy/tax administration reforms (Egypt, Jordan, Morocco, Pakistan) and energy subsidy reforms (Egypt, Morocco, Pakistan).
- MENAP LICs:
  - Fiscal stance expected to improve in Djibouti and Mauritania.
  - Primary fiscal balances expected to deteriorate in Sudan (reconstruction spending) and Somalia (lower external grants).
- CCA specifics:
  - Consolidation driven by declining capital expenditures (Azerbaijan) and fiscal reforms boosting non-oil revenue (Kazakhstan).
  - Kyrgyz Republic and Tajikistan: fiscal policy projected to remain expansionary in the medium term due to higher capital spending.
- Fiscal impulse metrics:
  - Fiscal impulse is defined as the difference between the primary fiscal balance (with a negative sign), and varies by country group (non-oil primary balance for oil exporters; cyclically adjusted primary balance for oil importers).
  - Notable country fiscal impulse values displayed in Figure 1.14 (percent of GDP), with labels including KWT, OMN, SAU, BHR, UAE and others and large negative impulses (e.g., −25.1, −51.9 shown in the figure).

### Risks to the Outlook
- Overall tilt: risks remain tilted to the downside; lagged adverse effects of high global uncertainty remain possible.
- Global uncertainty:
  - IMF analysis: "a 1 standard deviation shock to the World Uncertainty Index is associated with average output losses in the MENAP and CCA regions peaking at about 2.5 percent two years after the shock" (Figure 1.15).
  - Transmission: reduced domestic demand (consumption and investment), lower imports, and lower exports.
- Global financial conditions:
  - Possible channels: higher-for-longer interest rates from fiscal concerns and inflation in advanced economies; rise in term premiums from fiscal sustainability concerns compounded by geoeconomic fragmentation and trade disputes.
  - Impact: higher sovereign spreads and higher cost of funding for MENAP and CCA economies, especially those with high government financing needs and banking sectors exposed to sovereign bonds (countries cited: Algeria, Egypt, Pakistan).
  - Figure 1.16 highlights sovereign nexus and gross financing needs (2024) across countries (labels include ALG, ARM, AZE, BHR, DJI, EGY, GEO, IRQ, JOR, KAZ, KWT, KGZ, MAR, OMN, PAK, QAT, SOM, TUN, UAE, UZB).
- Real estate and credit risks:
  - Signs of rapidly rising real estate prices in some GCC economies amid rapid credit growth and high valuations; data limitations in Bahrain and Kuwait (absence of real estate indices) and Qatar (need for greater consistency in daily property transaction data).
  - CCA: rising distressed assets in construction, consumer, and mortgage segments could heighten vulnerability.
- Exchange rate and dollar movements:
  - A sharper-than-projected depreciation of the US dollar could:
    - For oil importers with exchange rate flexibility: appreciate local currencies, ease inflationary pressures, reduce import bills, and lower local currency cost of US dollar-denominated debt.
    - For oil exporters with exchange rates pegged to the US dollar: weaken competitiveness of their currencies relative to trading partners; could improve competitiveness of non-oil exports but raise the cost of imports and contribute to imported inflation.
  - Example: "approximately 80 percent of Saudi Arabia’s imports" invoiced in US dollars.
  - A sudden reversal of the recent decline in the US dollar could deter capital and financial inflows and compound the impact of reduced official grants.
- Oil price risk:
  - Baseline oil price path:
    - Projected to average "around $69 per barrel in 2025," falling to "$66 in 2026" and remaining at that level through 2030, based on early September 2025 futures prices.
    - 2024 average was "$79 per barrel."
  - Downside: faster rebound in OPEC+ production and weaker demand could push prices below baseline, hurting oil exporters' fiscal and external positions.
  - Upside: escalation of geopolitical tensions (including sanctions on Russian and Iranian exports) could drive prices higher, benefiting exporters but posing challenges for importers with fuel subsidies and high energy intensity.
- Geopolitical and conflict risks:
  - Recent Iran–Israel war was short-lived, but risk of renewed escalation remains acute with spillover risks (refugee flows, logistical and energy disruptions).
  - Gaza crisis remains a significant downside risk to regional economic and trade stability.
  - Long-lasting conflict costs:
    - Chapter 2 (April 2024 REO): in MENAP and CCA, output per capita remains "about 10 percent below its pre-conflict trend a decade after the start of a severe conflict" (Figure 1.18).
    - Bordering economies: per capita output drops immediately by "about 1.5 percent" and a further "6 percent over 10 years."
- War in Ukraine and CCA exposure:
  - Risks tied to timing and nature of any peace agreement, geopolitical implications, and spillovers.
  - Escalation and sanctions on Russia could negatively affect tourism, trade, remittances, investment, and fuel currency depreciation pressures and inflation.
  - Protracted conflict could also temporarily boost demand and external balances via capital and migrant inflows from Russia, but would heighten financial integrity and legal risks and likely be unsustainable.
- Climate risks:
  - Recurrence of severe climate events (e.g., drought) could harm activity and employment in agriculturally dependent countries (Egypt, Morocco, Tunisia).
  - Severe flooding in Pakistan in Q3 2025 may have more adverse effects on growth, inflation, and the current account than currently estimated.

### Upside Scenarios and Opportunities
- Faster-than-expected implementation of structural reforms in many MENAP economies could yield stronger gains than baseline.
- Conflict resolution:
  - Swift and lasting resolution in conflict-affected countries could accelerate reconstruction under enhanced regional and international cooperation.
  - In the CCA, a peace agreement between Armenia and Azerbaijan could open greater regional cooperation and integration.
- CCA-specific upside:
  - Medium-term growth could exceed projections if positive effects from the war in Ukraine and multiyear infrastructure investments are more enduring, potentially lifting potential output above baseline estimates.

### Policy Recommendations: Build Buffers, Strengthen Resilience, and Seize Opportunities
- Macroeconomic policy approach:
  - Maintain cautious macroeconomic policies prioritizing buffer building.
  - Continue relatively conservative fiscal policy stances embedded in projections where appropriate.
  - Maintain tight monetary policy in countries experiencing persistent inflationary pressures until inflation expectations are clearly aligned with targets.
- Institutional strengthening:
  - Enhance institutional fiscal and monetary frameworks where needed to better anchor long-term fiscal and inflation expectations.
- Financial sector resilience:
  - Strengthen financial sector frameworks and deploy targeted macroprudential measures to contain emerging risks and safeguard financial stability.
  - Address sovereign-bank nexus vulnerabilities in economies with large banking sector holdings of sovereign bonds.
- Structural reforms:
  - Advance economic diversification and private sector development to capitalize on changing global opportunities.
  - Accelerate adoption of artificial intelligence (AI) to support income convergence, accompanied by complementary policies (training, labor market, regulatory measures implied in text).
- Conflict and climate preparedness:
  - Prepare for and mitigate economic costs of conflicts and severe climate events through reconstruction planning, regional cooperation, and economic policies that strengthen resilience.

*Italic: International Monetary Fund, Regional Economic Outlook—Middle East and Central Asia, October 2025*

### 1. Regional Developments and Economic Outlook: Resilience amid Uncertainty: Will It Last?

### 1. Regional Developments and Economic Outlook: Resilience amid Uncertainty: Will It Last?

### Fiscal positions and policy recommendations
- Fiscal positions in MENAP and CCA economies have generally improved since the deterioration associated with the pandemic crisis, in line with the rebound in growth.
- Fiscal deficits remain above pre-pandemic levels in some countries: Armenia, Libya, Tunisia.
- Public debt is projected to rise over the medium term in: Algeria, Bahrain, Iraq.
- Public debt is projected to stabilize at, or modestly decline from, relatively high levels in: Egypt, Jordan, Morocco, Tunisia.
- Recommended priorities for countries with limited fiscal space:
  - Rebuild margins of maneuver through a credible process of fiscal consolidation, calibrated to the business cycle and investment needs.
  - Mobilize fiscal revenues by narrowing tax gaps and reducing informality.
  - Rationalize current spending, with emphasis on better control of public wage bills and more targeted and efficient income support and social protection programs (as recently implemented in Egypt and Morocco).
  - Improve fiscal frameworks to better anchor long-term fiscal expectations; strong fiscal rules (legally grounded, transparent, well-monitored and enforced, resilient to shocks) are associated with lower sovereign risk premiums and greater fiscal space for countercyclical responses.

### Monetary policy and financial stability
- Medium-term inflation is projected to remain elevated—and above target levels—in a few MENAP and CCA economies (Egypt, Kazakhstan, Tunisia), warranting a restrictive monetary policy stance.
- In countries where inflation is projected to converge to targets, returning to a neutral or accommodative stance should be carefully calibrated.
- For fixed exchange rate regimes, monetary policy must remain consistent with maintaining the peg.
- For more flexible exchange rate regimes, easing should be contingent on clear evidence that inflation expectations are firmly anchored.
- Communication: monetary policy decisions should be communicated clearly and transparently, with emphasis on safeguarding actual and perceived central bank independence.
- Risks of compromising central bank independence include higher inflation and risk premiums and the need for a more prolonged period of tight monetary policy to re-anchor expectations.
- Forthcoming IMF research (Gershenson and others forthcoming) finds that a 1 standard deviation improvement in central bank independence in the MENAP region could lead to a cumulative decline in inflation of between 0.5 and 0.75 percentage point (compared to the baseline) after four years.
- To maintain financial stability: closely monitor potential tighter financial conditions on bank asset quality, be ready to recalibrate macroprudential policies, and continue strengthening supervisory and regulatory frameworks.

### Exchange rate flexibility and shock absorption
- Given the risk of more frequent global shocks, exchange rate flexibility may play a greater role in cushioning shocks to economic activity.
- Staff empirical analysis (Box 1.3) shows that the effectiveness of exchange rate flexibility as a shock absorber is greater as countries deepen financial markets and diversify away from commodities.
- Adoption of a credible inflation-targeting monetary policy regime with more flexible exchange rates could reduce output losses associated with an adverse global scenario in both MENAP and CCA economies.

### Structural reforms and growth drivers
- Recent reforms supporting resilience and private-sector-led growth include tax and energy sector measures in Pakistan, energy price reform in Uzbekistan, and diversification agendas in Jordan, Morocco, and Saudi Arabia.
- Further progress is needed in:
  - Private Sector Development:
    - Reduce dominant role of state-owned enterprises.
    - Streamline burdensome government regulations.
    - Enhance financial inclusion, especially for SMEs.
    - Improve general governance.
  - Trade Diversification:
    - Tackle structural barriers to deeper integration to diversify export markets and improve regional connectivity.
    - Forthcoming IMF research (Rayner and others forthcoming) shows a package of reforms increasing North Africa’s linkages with Europe and Sub-Saharan Africa would boost North Africa’s real exports by 10 percent after 5 years.
  - AI Preparedness:
    - IMF research (Cazzaniga and others 2024) indicates emerging markets and LICs in these regions lag GCC economies and peers in other regions on AI preparedness (index, 0 to 1).
    - Gaps reflect shortcomings in digital infrastructure, regulation, and innovation.
    - Rapid progress is needed to avoid widening the income gap with more advanced economies.
  - Labor Market Reforms:
    - AI adoption could reduce job opportunities for young people; MENAP and CCA economies face much higher youth unemployment rates compared to peer regions.
    - Recommended: invest in human capital, implement effective active labor market policies, update labor codes to encourage flexible job formats, and provide targeted support for young job seekers.

### Recovery in economies emerging from conflict
- Successful economic recovery requires swift progress on:
  - Macroeconomic stabilization:
    - Reduce volatility in real output growth and inflation to increase odds of successful recovery.
    - Monetary measures: currency reform, elimination of monetary financing, rebuilding foreign exchange reserves.
    - Fiscal measures: control expenditure and boost domestic revenue mobilization to create space for reconstruction and social spending, protect basic services, and fund humanitarian aid.
  - Adequate financing:
    - Debt relief can free resources for rebuilding and help restore investors’ and donors’ confidence.
    - Support from international financial institutions, including the IMF, can be catalytic by unlocking further resources and strengthening policy frameworks.
  - Institutional and governance improvements:
    - Strengthen government effectiveness and accountability to improve public service delivery and support structural reform implementation.
    - Prioritize financing for healthcare, infrastructure, and social protection to jumpstart economic activity and improve living conditions.

### IMF engagement and support to MENAP and CCA
- Since 2020, the IMF has approved $55.7 billion in financing for countries across MENAP and the CCA.
- $21.4 billion has been approved since early 2024 for programs in Egypt (augmentation under the Extended Fund Facility, EFF, and a Resilience and Sustainability Facility, RSF), Jordan (EFF and RSF), Morocco (Flexible Credit Line), and Pakistan (EFF and RSF).
- The IMF delivered more than 385 technical assistance and capacity development projects across 31 countries in these regions, amounting to $36.8 million during fiscal year 2024/25.
- The IMF’s regional presence (resident representative offices, technical assistance centers, office in Riyadh) supports close on-the-ground engagement and coordination with the World Bank and regional partners to support recovery in conflict-affected states.

### Box 1.1 — Caucasus and Central Asia: Growth Beyond Recovery
- The CCA region experienced accelerated GDP growth over the past four years, reshaped by the war in Ukraine and geopolitical realignments, sustained inflows of skilled migrants (mainly from Russia), surges in financial capital, boosted investment in infrastructure, and greater regional integration.
- Potential output estimation approach: production function, perpetual inventory method for capital, labor input from participation rates/NAIRU/average hours, total factor productivity as residual.
- Regional weighted average potential growth rose from 4.2 percent in 2018–21 to 4.8 percent in 2022–25.
- Heterogeneity across countries:
  - Oil-importing economies: potential growth increased from 5.0 to 6.1 percent, driven primarily by gains in total factor productivity due to high-quality capital and labor inflows concentrated in information technology and capital-intensive industries.
  - Oil-exporting economies: only modest improvements in potential growth, constrained by reliance on resource sectors and limited structural flexibility.

*Source: International Monetary Fund — October 2025 Regional Economic Outlook: Middle East and Central Asia (Chapter 1).*

### 1. Regional Developments and Economic Outlook: Resilience amid Uncertainty: Will It Last?

### 1. Regional Developments and Economic Outlook: Resilience amid Uncertainty: Will It Last?

### Fiscal rules, sovereign spreads, and resilience to global shocks
- Strong fiscal frameworks help anchor private sector expectations and can indirectly contribute to lower sovereign spreads and higher credit ratings.
- Formal adoption of fiscal rules in MENAP and CCA:
  - Only one-quarter of economies in the MENAP and CCA regions have formal operational fiscal rules.
  - Two-thirds of emerging market and developing economies have formal operational fiscal rules.
  - Over 80 percent of advanced economies have formal operational fiscal rules.
- Fiscal Rule Strength and regional standing:
  - MENAP and CCA regions are generally behind other regions on the IMF’s Fiscal Rule Strength Index, with fiscal strength below the average for advanced and other emerging markets (the only exception being Georgia).
- Sovereign spreads:
  - Countries with “strong” fiscal rules typically enjoy lower sovereign spreads by about 400 basis points compared to those with weak or no fiscal rules.
  - Differences in spreads across countries are also determined by government effectiveness, the size of economic buffers, and debt levels; for example, large buffers help explain better creditworthiness for GCC countries despite lacking formal fiscal rules.
- Empirical analysis details:
  - Sample: 57 countries over the period of 1996–2021.
  - Adverse shocks captured by a 1 standard deviation rise in the GDP-weighted World Uncertainty Index, equivalent to a jump from the 10th to 50th percentile of the historical distribution.
  - Economies in the top one-third of the IMF’s Fiscal Rules Strength Index distribution experience smaller output losses one year after an adverse global shock compared to those with weak or no fiscal rules.
  - Post-shock behavior:
    - Economies with weaker fiscal frameworks tend to be more fiscally constrained and mount a more limited countercyclical policy response (smaller decrease in the primary balance).
    - Economies with weaker frameworks experience a significant increase in borrowing costs (higher spreads).

### Monetary policy frameworks and the economic impact of shocks
- Regional preferences and regimes:
  - Monetary policy frameworks in the MENAP region show a strong preference for exchange rate stability.
  - MENAP oil exporters primarily use pegged exchange rate regimes; GCC countries favor more open capital accounts.
  - MENAP oil importers typically use managed exchange rate regimes with less open capital accounts, preserving some monetary policy autonomy.
  - CCA countries lean toward greater monetary autonomy with more open capital accounts.
  - According to the IMF’s Annual Report on Exchange Arrangements and Exchange Restrictions (IMF 2023), about half of MENAP and CCA countries operate under some form of de facto peg.
  - Recent years have seen a gradual shift toward greater exchange rate flexibility, but most countries continue to favor managed regimes that balance exchange rate stability and room for adjustment.
- Interaction with financial development and diversification:
  - Empirical results indicate that the benefits of a floating exchange rate in reducing output losses after an adverse global shock are significant only for economies with higher levels of financial market development and diversified exports.
  - For economies with low financial development and concentrated exports, there is no discernible difference in impacts between fixed and floating regimes.
- Model-based scenario:
  - MCDMOD from the IMF’s Flexible System of Global Models suggests that adopting credible inflation targeting regimes with flexible exchange rates could mitigate the adverse output effects of global shocks for MENAP and CCA economies compared to current monetary policy arrangements.
  - The model-based analysis abstracts from questions about how best to transition to more flexible exchange rate arrangements while maintaining or enhancing policy credibility.

*Prepared by IMF staff (boxes prepared by Karmen Naidoo and Salem Nechi; Hasan Dudu, Karmen Naidoo, and Salem Nechi).*

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_Source: https://www.imf.org/-/media/files/publications/reo/mcd-cca/2025/october/english/ch1.pdf_