A.SREENIVASA REDDY (ABU DHABI)

A rebound in the MENA region’s economy is expected in 2025 with a likely 4% growth in the GDP, the International Monetary Fund (IMF) said on Thursday. 

The rebound is contingent on the expiration of oil production cuts and easing of geopolitical headwinds, Jihad Azour, the IMF’s director for the Middle East and Central Asia, said in a press conference in Dubai. He released the IMF’s Regional Outlook for Middle East and Central Asia. 

In the current year, the growth in the MENA region will remain sluggish at 2.1%, which is a downward revision of 0.6 percentage points from April projections, the IMF director said. 

The slowdown in the current year in the MENA region is attributed to “global geoeconomic fragmentation, conflicts, climate-related shocks, and country-specific factors”.

The IMF painted an optimistic picture for the oil exporting countries in the region.  “We project growth to accelerate to 4% in 2025, up from 2.3% this year for the oil exporting countries,” Azour said. But this assumes phaseout of the voluntary oil production cuts, he added. 

The IMF said the inflation has eased in MENA region in line with global trends but remains elevated in some economies (Egypt, Sudan, Iran) due to country-specific challenges.  “Excluding these economies, inflation is projected to ease to 3.3% in 2024 and 3% in 2025,” the IMF said. 

In Caucasus and Central Asian (CCA) economies, growth is projected to remain robust and broad-based at 4.3% in 2024 and 4.5 % in 2025. 

“Notwithstanding the positive outlook, growth remains subject to high uncertainty, mainly because of the region’s exposure to broader geoeconomic developments,” the IMF said. 

In this context, the IMF called for the adoption of policies that bolster growth, especially structural reforms, particularly in governance. It called for policies that promote job creation and participation of women in the economy. It also stressed the need for greater private sector participation and a reduction in the role of state-led banks in the economy for greater financial development. 

In the World Economic Outlook released on October 22, the IMF projected a growth rate of 4% in 2024 and 5.1% in 2025 for the UAE.