{
  "title": "Regional Economic Outlook for the Middle East and Central Asia",
  "publication": "Regional Economic Outlook, May 2023",
  "sourceUrl": "https://www.imf.org/en/publications/reo/meca/issues/2023/04/13/regional-economic-outlook-mcd-april-2023",
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  "summary": "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 rebui",
  "sections": [
    {
      "heading": "Overview and outlook",
      "content": "- The economies of the Middle East and Central Asia (ME&CA) proved resilient in 2022, despite a series of global shocks.\n- Growth is expected to slow in the Middle East and North Africa (MENA) in 2023—and potentially 2024—as:\n  - tight policies to fight inflation, reduce vulnerabilities, and rebuild buffers start to dent economic activity in many countries, and\n  - agreed oil production cuts curb growth in oil exporters.\n- Inflation is projected to remain persistent.\n- The outlook for Caucasus and Central Asia (CCA) countries depends heavily on external factors, namely:\n  - the impact of monetary tightening,\n  - growth in their main trading partners,\n  - the pace of private transfers, and\n  - inflows of migrants from Russia.\n- Uncertainty is high, and risks to the baseline are tilted to the downside amid financial stability concerns—particularly in advanced economies amid contagion fears."
    },
    {
      "heading": "Policy trade-offs and priorities",
      "content": "- Policymakers will need to:\n  - calibrate the policy mix carefully to reduce core inflation without triggering financial stress and excessive tightening, and\n  - continue to provide targeted fiscal support to vulnerable groups while preserving debt sustainability and financial stability.\n- 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."
    },
    {
      "heading": "Monetary policy: stance, transmission, and recommendations",
      "content": "- The monetary policy response of Middle East and Central Asian (ME&CA) countries to the 2021–22 surge in inflation has varied widely.\n- The current stance is appropriately tight or neutral for many countries using a policy rate, but it needs further tightening in others.\n- The response to the latest inflation shock has been in line with or, in some cases, even more forceful than during previous inflation episodes.\n- Implementation challenges:\n  - In several countries monetary policy implementation continues to be undermined by a lack of coordination with fiscal policy or fiscal dominance.\n  - Monetary policy transmission is stronger in countries with floating or managed exchange rate regimes than in those with a peg; it operates mainly through the exchange rate channel, and the credit channel is relatively weak.\n  - In countries where state-owned banks play an important role in financial intermediation, quasi-monetary and quasi-fiscal activities by those banks weaken transmission.\n- Recommendations to strengthen monetary policy effectiveness:\n  - Strengthen monetary policy frameworks and foster financial development.\n  - Activate additional transmission channels to enhance central bankers’ ability to fight inflation while reducing their economic costs.\n  - Increase exchange rate flexibility and use macroprudential policies to help strengthen monetary policy effectiveness.\n  - Reduce quasi-monetary and quasi-fiscal activities of state-owned banks where they impede transmission.\n\nRegional Economic Outlook: The Middle East and Central Asia, May 2023.\n\n---\n\n Content in this bundle\n\n- Sub-Saharan Africa Regional Economic Outlook; A New Shock and Little Room to Maneuver, April 2022\n  - Sub-Saharan Africa Regional Economic Outlook; A New Shock and Little Room to Maneuver, April 2022 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Sub-Saharan Africa Regional Economic Outlook; A New Shock and Little Room to Maneuver, April 2022 (PDF){rel=\"external\" type=\"application/pdf\"}\n- Chapter 2\n  - Chapter 2 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Chapter 2 (PDF){rel=\"external\" type=\"application/pdf\"}\n- May 2023 REO: Middle East and Central Asia — Key Messages\n  - May 2023 REO: Middle East and Central Asia — Key Messages (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - May 2023 REO: Middle East and Central Asia — Key Messages (PDF){rel=\"external\" type=\"application/pdf\"}\n- Launch of the IMF’s May 2023 Regional Economic Outlook for the Middle East and North Africa\n  - Launch of the IMF’s May 2023 Regional Economic Outlook for the Middle East and North Africa (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Launch of the IMF’s May 2023 Regional Economic Outlook for the Middle East and North Africa (PDF){rel=\"external\" type=\"application/pdf\"}\n- may-2023-meca-regional-economic-outlook-statistical-appendix-eng\n  - may-2023-meca-regional-economic-outlook-statistical-appendix-eng (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - may-2023-meca-regional-economic-outlook-statistical-appendix-eng (PDF){rel=\"external\" type=\"application/pdf\"}\n- reo-sei\n  - reo-sei (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - reo-sei (PDF){rel=\"external\" type=\"application/pdf\"}\n- Full Report\n  - Full Report (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Full Report (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\n References\n\n- Press Conference\n- watch the panel discussion\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/publications/reo/meca/issues/2023/04/13/regional-economic-outlook-mcd-april-2023"
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    "Published: May 3, 2023",
    "The economies of the Middle East and Central Asia (ME&CA) proved resilient in 2022, despite a series of global shocks.",
    "Growth is expected to slow in the Middle East and North Africa (MENA) in 2023—and potentially 2024—as:",
    "Inflation is projected to remain persistent.",
    "The outlook for Caucasus and Central Asia (CCA) countries depends heavily on external factors, namely:",
    "Uncertainty is high, and risks to the baseline are tilted to the downside amid financial stability concerns—particularly in advanced economies amid contagion fears.",
    "Policymakers will need to:",
    "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.",
    "The monetary policy response of Middle East and Central Asian (ME&CA) countries to the 2021–22 surge in inflation has varied widely.",
    "The current stance is appropriately tight or neutral for many countries using a policy rate, but it needs further tightening in others.",
    "The response to the latest inflation shock has been in line with or, in some cases, even more forceful than during previous inflation episodes.",
    "Implementation challenges:",
    "Recommendations to strengthen monetary policy effectiveness:",
    "**Sub-Saharan Africa Regional Economic Outlook; A New Shock and Little Room to Maneuver, April 2022**",
    "**Chapter 2**",
    "**May 2023 REO: Middle East and Central Asia — Key Messages**",
    "**Launch of the IMF’s May 2023 Regional Economic Outlook for the Middle East and North Africa**",
    "**may-2023-meca-regional-economic-outlook-statistical-appendix-eng**",
    "**reo-sei**",
    "**Full Report**",
    "[Press Conference](https://www.imf.org/en/Videos/view?vid=6324973521112)",
    "[watch the panel discussion](https://www.imf.org/en/Videos/view?vid=6325048845112)"
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