Economic growth in the Middle East and North Africa (MENA) region remains modest amid rising uncertainties as the conflict in the region extends. In its latest report, Growth in the Middle East and North Africa, the World Bank expects the MENA region’s gross domestic product (GDP) to grow modestly to 2.2 percent in 2024 in real terms, up from 1.8 percent in 2023
This uptick is driven by Gulf Cooperation Council (GCC) countries, where growth is projected to rise from 0.5 percent in 2023 to 1.9 percent in 2024. Meanwhile, the rest of the MENA region’s GDP growth is expected to decelerate.
The World Bank also expects oil importers’ growth to slow from 3.2 percent in 2023 to 2.1 percent in 2024, and non-GCC oil exporters’ growth to decline from 3.2 percent to 2.7 percent.
Regional tensions cause unprecedented fiscal crisis
The ongoing conflict in the Middle East has already inflicted a heavy human and economic toll. The Palestinian territories are nearing economic collapse, with their largest economic contraction on record. Gaza’s economy shrank by 86 percent in the first half of 2024 and the West Bank is facing its largest fiscal and private sector crisis.
In Lebanon, the outlook remains highly uncertain and will depend on the trajectory of the conflict. Meanwhile, other neighboring countries like Jordan and Egypt have faced significant declines in tourism receipts and fiscal revenues.
The World Bank estimates that GDP per capita in conflict-affected countries in the MENA region could have been on average 45 percent higher, measured seven years after the onset of conflict. Such a loss is equivalent to the average progress the region has made in the last 35 years.
Closing gender gap to increase per capita income by 51 percent
The World Bank’s report also delves into the areas the MENA region must focus on to rapidly advance inclusive GDP growth. This includes rebalancing the footprint of the public and the private sectors, better allocating talent in the labor market, closing the gender gap, and promoting innovation.
Despite the significant gains in levels of education over the last 50 years, the rate of female labor force participation in the MENA region stands at 19 percent, the lowest in the world. Therefore, closing gender employment gaps would result in a remarkable 51 percent increase in per capita income in the typical MENA country.
“For example, the region has the largest share of public sector employees in the world, particularly women. But unfortunately, in MENA, a larger public sector does not necessarily correspond to better public goods and services. Mobilizing talent toward the private sector would improve the allocation of resources, with aggregate productivity gains up to 45 percent,” stated Roberta Gatti, World Bank Chief Economist for the MENA.
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Advancing tech and innovation to boost growth
Tapping into the frontier of global knowledge and technology will also boost growth in MENA. More international trade, leveraging the region’s strategic geographic location, can facilitate this process of infusion and innovation.
Improving data quality and transparency – which are lagging behind by international standards – is another key lever to facilitate the diffusion of ideas.
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