Regional Economic Outlook: Middle East and North Africa
Regional Economic Outlook, January 2024
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- Published: January 31, 2024
Conflict and near-term outlook
- The conflict in Gaza and Israel is described as "yet another shock to the Middle East and North Africa (MENA) region" and 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."
- Major factors weighing on regional growth:
- (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);
- (iii) continued necessary tight policy settings in several economies.
- Social unrest has "also picked up."
Growth projections and disparities
- 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."
Inflation and price pressures
- "Disinflation is expected to continue in most MENA economies."
- "Price pressures have proven persistent in some cases because of country-specific factors."
Risks and scenarios
- The outlook is described as "highly uncertain, and downside risks are resurgent."
- Key downside scenarios highlighted:
- An escalation or spread of the conflict beyond Gaza and Israel.
- An intensification of the disruptions in the Red Sea.
- Potential impacts of escalation or maritime disruptions include "severe economic impact, including on trade and tourism."
Policy guidance and recommendations
- "The appropriate policy response will depend on countries’ exposure to the conflict, preexisting vulnerabilities, and policy space."
- Recommended approaches:
- Where the impact is acute or risks are elevated: prioritize crisis management and precautionary policies.
- Elsewhere: continue to fortify buffers.
- Monetary policy: "will need to remain focused on price stability."
- 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."
Regional Economic Outlook Update — Middle East and North Africa, January 2024.
Content in this bundle
- Middle East and North Africa: Conflict Compounding Economic Challenges
- Full Report