Economic growth in the Middle East and North Africa (Mena) will be at a modest rate of 2.7 per cent in 2024 up from 1.9 per cent in 2023, according to World Bank economists.
The latest edition of the World Bank’s Mena Economic Update noted that oil importers and exporters are expected to grow at similar rates in 2024.
“The difference between forecast growth in the GCC economies and developing oil importers (excluding Egypt) in 2024 is almost a percentage point. In contrast, in 2022 the GCC grew 5.6 percentage points faster.
The low growth is expected to bring tepid improvements in living standards in the region, with GDP per capita expected to grow a modest 1.3 per cent in 2024. While this is an overall improvement from 2023, the increase is driven almost entirely by the GCC economies,” they said.
The report underscores how the Gaza conflict has increased uncertainty in the rest of the Mena region. It discusses how maritime transportation particularly through the Suez Canal has been disrupted, affecting the Mena region and global trade.
In its Spring 2024 Gulf Economic Update, the Washington-based bank noted that growth in the GCC region is expected to rebound by 2.8 per cent and 4.7 per cent in 2024 and 2025, respectively.
“The encouraging regional prospects and rebound are not just due to the anticipated recovery in oil output, as Opec+ gradually relaxes production quotas during the second half of 2024, but also builds on the strong momentum of the non-oil economy, which is expected to continue to expand at a robust pace over the medium term. The commitment of the GCC to diversifying their economies highlights their strategic approach to fostering resilience and sustainable development during a volatile global economic period,” the report said.
Over the past decade, most Mena economies experienced a surge in their debt-to-GDP ratios. Mena oil importers have difficulty in growing out of debt as episodes of growth coincide with faster debt accumulation, which offsets the reduction in debt-to-GDP typically experienced due to growth. In addition, oil importers in the region have been unable to reduce their debt-to-GDP ratio through inflation largely due to exchange rate fluctuations and unaccounted factors that are beyond the fiscal budget, often called stock-flow adjustments, pointing to the need for greater debt transparency, the World Bank said.
For Mena oil exporters, the report noted that episodes of high GDP growth typically coincide with periods of smaller increases in nominal debt stocks, both of which contribute to a slower increase – or a faster decrease – in the debt-to-GDP ratio.