In mid-January 2025 the World Bank (2025, a)[1] released the first edition of this year of the macroeconomic report, Global Economic Prospects, entitled “Emerging and Developing Economies in the 21st Century”.

This report includes the macroeconomic forecasts for 2025-2026 for the member countries and groups of countries, updated by the incorporation of the most recent developments, on the real and financial sides of the economy.

Within the report the experts of the international financial institution based in Washington pointed out the persistence of the uncertainty at a high level in Middle East and North Africa (MENA) region, especially in the countries affected by the conflicts. For instance, the GDP of Lebanon contracted by an annual pace of 5.7% in 2024, according to the WB estimates. At the same time, the attack of the Houthi rebels in Red Sea determined disruptions for the international trade and security threats for the neighbors of Yemen.

In this context, the pace of economic activity in MENA region was subdued, being estimated at only 1.8% in 2024 (slightly up from 1.7% in 2024), according to the estimates of the specialists of World Bank.

According to the results of the econometric estimates implemented employing standard methods and using the statistics of the World Bank (2025, b), the annual pace of the GDP in MENA was below its potential for the second year in a row in 2024, as can be noticed in the following chart.

Figure 1. Annual pace of the GDP vs. Potential GDP (%)

Source: representation of the author based on the results of the econometric estimates, using the statistics of the World Bank (WB)[2], January 2025

There can be noticed the increase of the economic activity in the oil importing countries by a higher pace than in the oil exporting countries for the second year in a row in 2024. The GDP in the former group of countries grew by an annual pace of 2.2% in 2024 (down from 2.7% in 2023), while in the later group the economic activity increased by an annual pace of 1.7% in 2024 (up from 1.4% in 2023).

Within the oil importing countries, the annual growth pace decelerated to an estimated 2.4% in 2024 in Egypt, due to the contraction of the transport through Suez, the low level of the gas production, and the decline of the non-oil manufacturing sector.

At the same time, the economies of Tunisia and Morocco grew by annual paces of 1.2% and 2.9% in 2024, an evolution strongly determined by the drought.

As regards the oil exporting countries, there can be noticed the divergence between the rebound of the annual growth pace in Saudi Arabia (to 1.1%) and the slowing-down in Iran (to 3%) in 2024.

In the winter 2025 core macroeconomic scenario of the World Bank (WB) the GDP of MENA group would increase by accelerating annual paces to 3.4% in 2025, and 4.1% in 2026. Compared to the June 2024 forecasts, the experts of the World Bank revised on the downside the prospects for 2025 by 0.8pps, and on the upside the prospects for 2026 by 0.5pps.

According to this scenario, the economic activity in the oil exporting countries would increase by annual paces in acceleration to 3.3% in 2025 and 4.1% in 2026. At the same time, the annual dynamic of the GDP in the oil importing countries would improve to 3.7% in 2025 and 4.0% in 2026.

The WB experts forecast the acceleration of the annual growth pace in Saudi Arabia to 3.4% in 2025 and 5.4% in 2026. At the same time, the GDP of United Arab Emirates would increase by annual paces improving from 3.3% in 2024 to 4.0% in 2025 and 4.1% in 2026. Furthermore, the economy of Qatar would climb by annual paces accelerating from 2.0% in 2024 to 2.7% in 2025, and 5.5% in 2026. In this scenario the GDP of Iraq would resume growth in 2025 (after contracting for two years in a row, by 2.9% in 2023, and by 0.8% in 2024), with an increase by 3.5%, followed by a slowing-down to 3.0% in 2026.

On the other hand, the GDP of Iran would increase by slowing-down annual paces to 2.7% in 2025 and 2.2% in 2026.

As regards the oil importing countries, the economy of Egypt is forecasted to accelerate in the mid-run, with annual paces of 3.5% in 2025, and 4.2% in 2026. At the same time, the GDP of Tunisia would increase by annual paces in acceleration to 2.2% in 2025 and 2.3% in 2026. The GDP of Morocco would accelerate in 2025 (annual pace of 3.9%), but may slowdown to 3.4% in 2026.

In this scenario the economy of Syria would contract for the third year in a row in 2025, by annual pace of 1.0%, a slower pace compared to 1.2% in 2023 and 1.5% in 2024. Last, but not least, the GDP of West Bank and Gaza may increase by annual paces of 4.7% in 2025 and 16.5% in 2026, after contracting for two years in a row (due to the war), by 5.4% in 2023, and 25.6% in 2024, according to the winter macroeconomic scenario of World Bank.

Among the risk factors for the evolution of the economies in MENA region in the short-run the experts of the international financial institution emphasized: the possibility of intensification of the military conflict, the international trade tensions, the risk of severe social unrest, the climate change, the fluctuation of international oil prices, and the possibility of intensification of the risk perception on the international financial markets (with unfavourable impact for the financing costs in the region).

[1] World Bank (2025). Global Economic Prospects, available at https://www.worldbank.org/en/publication/global-economic-prospects

[2] World Bank (2025, b). Database available at https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?locations=ZQ

About the author

Dr. Andrei RĂDULESCU

Dr. Andrei RĂDULESCU, Expert in global macroeconomy.