The World Bank expects the economy of the Middle East and North Africa region to grow by 2.8% in 2024 and 4.2% in 2025, due to the gradual increase in oil production and improved activity since the last quarter of 2024.
Expectations for 2024 are lower compared to what was expected in January, and this reflects the impact of extending oil production cuts on the ongoing conflict in the region, according to what the bank stated in its latest edition of the Global Economic Prospects report, a copy of which was obtained by Al Jazeera Net. .
The growth rate in the Gulf Cooperation Council countries is expected to rise to 2.8% in 2024 and 4.7% in 2025.
In Saudi Arabia, non-oil activities are expected to support growth rates in 2024, and the gradual resumption of oil activity is expected to lead to increased growth in 2025, according to the report.
Among non-GCC oil exporting countries, the expected recovery in the oil sector in 2025 will help boost growth in Algeria and Iraq.
In oil-importing countries, the growth rate is expected to increase in 2024 to 2.9% and then to 4% annually in 2025-2026. In Egypt, the growth rate is expected to increase due to investment growth, which was partially stimulated by the major deal concluded with the Emirates (Ras El Hekma), according to the report.
Growth is expected to remain stable in Jordan, although tourism-related activities will suffer in the short term.
In Tunisia, growth is expected to rebound, but activity in Djibouti and Morocco is expected to decline in 2024.
The economy of the West Bank and Gaza Strip is supposed to contract by at least another 6.5%, with the possibility of a contraction of up to 9.4%, in 2024.
In Syria and Yemen, the prospects appear not promising and shrouded in uncertainty due to the ongoing conflict, incidents of violence, internal unrest, and tensions in the Red Sea.
Risks
Some of the risks threatening the region are the possibility of an escalation of armed conflicts there, and for oil-importing countries, a tightening of global financial conditions may lead to an outflow of capital and a decline in the exchange rate.
The bank expects that countries suffering from high government debt will see an increase in debt service burdens due to higher borrowing costs and higher risks of financial instability.
Global growth
The bank expected global economic growth to stabilize at 2.6% in 2024 before rising to 2.7% on average in the period 2025-2026, which is much lower than the average of 3.1% in the decade before the outbreak of the Corona pandemic.
Projections indicate that over the period 2024-2026, countries that together account for more than 80% of the world’s population and global GDP will continue to grow at a slower pace than in the decade before the pandemic.
Developing economies
Overall, developing economies are expected to grow by 4% on average over the period 2024-2025, slightly slower than in 2023.
Growth in low-income economies is expected to accelerate to 5% in 2024, up from 3.8% in 2023.
However, growth forecasts for 2024 reflect a downward revision in forecasts in 3 out of 4 low-income economies since January.
As for advanced economies, the growth rate is expected to remain stable at 1.5% in 2024 before rising to 1.7% in 2025.
World Bank Group Chief Economist and First Vice President, Indermeet Gill, said: “After 4 years of turmoil caused by the Covid-19 pandemic, conflicts, inflation, and tightening monetary policies, global economic growth appears to be stabilizing… but it has come at lower levels than expected.” “It was before 2020. The outlook for the world’s poorest economies is even more worrying, as they face severe levels of debt servicing, narrowing trade opportunities, and high-cost extreme weather events.”
He added: “Developing economies must find ways to encourage private investment, reduce public debt, and improve the level of education, health services and basic infrastructure. The poorest countries, especially the 75 countries eligible for assistance on concessional terms from the International Development Association, will not be able to advance.” in these areas without international support.”
According to the report, it is expected that the income gap between developing economies and advanced economies will widen in about half of developing economies during the period 2020-2024, which is the highest percentage since the 1990s.
Per capita
According to the report, per capita income in these economies, which is an important indicator of living standards, is expected to grow by 3% on average until 2026, which is much lower than the average of 3.8% in the ten years prior to the pandemic.
The global inflation rate is expected to decline to 3.5% in 2024 and to 2.9% in 2025, but at a slower pace of decline than expected just 6 months ago.
As a result, it is expected that many central banks will remain cautious in lowering key interest rates, and global interest rates are likely to remain high by the standards of recent decades, with an average of about 4% during the period 2025-2026, that is, almost double the average for the period 2000-2019. .
