The International Monetary Fund (IMF) has forecasted that global growth will stabilize at 3.3 percent this year and the following year, before tapering to just over 3 percent in the next five years, significantly below historical averages.
IMF Managing Director Kristalina Georgieva indicated that growth in the Middle East and North Africa (MENA) is anticipated to rebound to approximately 3.6 percent in 2025. This recovery is expected to be fueled by an uptick in oil production and a reduction in regional conflicts, WAM reported.
Inflation concerns and interest rates
“Policymakers have generally succeeded in taming inflation, but not everywhere, with inflation picking up again in some countries. This could lead to a divergence in interest rates across countries and higher borrowing costs for emerging market and developing economies,” Georgieva stated during the 9th Arab Fiscal Forum, part of the preliminary day of the World Governments Summit (WGS) 2025 in Dubai.
IMF projects 3.3 percent global growth in 2025, inflation to fall to 3.5 percent by 2026
She cautioned that global public debt is on track to reach 100 percent of global GDP by 2030. “Many countries in this region face similar pressures, with debt levels exceeding 70 percent of GDP. This poses the risk of them becoming trapped in a low-growth, high-debt scenario,” she added.
Challenges for governments
Georgieva outlined several challenges that governments are currently facing, including job creation, bolstering social safety nets, adapting to national security and reconstruction needs, enhancing resilience against natural disasters, and promoting economic diversification.
She also remarked, “Digital innovation, with AI technologies, is expected to raise UAE’s GDP significantly by 2030. More R&D spending will further enhance productivity.”
IMF’s commitment to developing nations
Jihad Azour, director of the Middle East and Central Asia Department at the IMF, highlighted the varying growth rates between emerging economies and middle-income countries, noting that some are experiencing substantial slowdowns due to financial and geopolitical pressures.
He emphasized the ongoing role of the IMF in delivering financial and technical support to developing nations, while also reinforcing structural reforms to encourage sustainable growth.
