São Paulo – The World Bank expects the growth of Middle East and North Africa (MENA)’s gross domestic product (GDP) to rise to 2.7% in 2024, which is a tepid increase from 1.9% in 2023, as rising indebtedness and heightened uncertainty due to the conflict in the Middle East are impacting economies across the region.
As in 2023, oil importing and oil exporting countries are likely to grow at less disparate rates than 2022, when higher oil prices boosted growth in oil exporters. GDP growth in almost all oil importing countries is expected to decelerate, though.
The report looks at the economic impact of the conflict in the Middle East. The GDP of Gaza dropped by 86% in last quarter of 2023. The West Bank has plunged into a recession, with simultaneous public and private sector crises. And the shipping industry has coped with shocks to maritime transport by rerouting vessels away from the Red Sea.
Challenges
The World Bank report also looks at rising indebtedness in the MENA region. Between 2013 and 2019, the median debt-to-GDP ratio for MENA economies increased by more than 23 percentage points. The pandemic made things worse as declines in revenue, together with pandemic support spending, increased financing needs for many countries. This, however, is heavily concentrated in oil-importing economies.
The challenge for oil exporters is one of revenue diversification, given the structural change in global oil markets and the rising demand for renewable sources of energy. For oil importers, on the other hand, the biggest challenge is tackling the indebtedness, as they now have a debt-to-GDP ratio 50 percent higher than the global average of emerging market and developing economies. Overall, MENA economies need to undertake structural reforms.
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Translated by Guilherme Miranda
