DUBAI, UAE – The MENA region’s growth is projected to decelerate to 3.1 percent in 2023 and slightly pick up to 3.4 percent in 2024, said Jihad Azour, Director of International Monetary Fund’s Middle East and Central Asia Department, at an event in Dubai.
“For oil exporters, we project growth to slow to 3.1 percent in 2023, down from 5.7 percent in 2022, with the main driver of growth shifting from oil to nonhydrocarbon activities in most countries,” he said at the launch of IMF’s May 2023 Regional Economic Outlook for Middle East and North Africa.
“Growth is also set to slow in the region’s emerging markets, falling from 5.1 percent in 2022 to 3.4 percent this year, as tighter monetary and fiscal policies to safeguard macroeconomic stability dampen domestic demand,” he added.
The 2022 GDP growth is estimated at 5.3 percent, driven by robust domestic demand and rebounding oil production, according the latest IMF report.
“Low-income countries are facing challenges including instability, food insecurity, high inflation, and country-specific vulnerabilities,” said Azour.
IMF projections, he pointed out, did not account for recent oil production cuts, which may impact growth for oil exporters.
Inflation, according to the report, has been predicted to be around 15 percent in 2023, remaining persistent with upward revisions since October.
Fiscal and external vulnerabilities are likely to remain elevated in the region’s emerging markets, the report highlights.
“So far, the recent financial stress in advanced economies has had limited spillovers to the region’s banks, reflecting no direct exposure of the region to Silicon Valley Bank and a limited exposure to Credit Suisse. The region’s financial markets have largely moved in line with global trends,” the IMF official said.
Highlights of the report
Key risks include financial sector instability, tighter global financial conditions, and escalation of the war in Ukraine
Striking the right policy balance crucial, focusing on price stability, risk management, and crisis management frameworks
Fiscal policy should support debt sustainability and provide targeted support to the most vulnerable
Structural reforms needed to enhance potential growth, resilience, inclusion, and social safety nets
IMF – which is committed to supporting MENA countries through policy advice, lending arrangements, and technical assistance — has provided $25 billion of new financing since end-March 2020, establishing initiatives to address evolving needs.
“The upcoming IMF–World Bank Annual Meetings in Marrakech will also provide a platform for wide-ranging policy discussions on challenges facing the region and the world,” said Azour.