The Middle East and North Africa (MENA) region is poised for a modest economic growth of 2.6% this year, a significant increase from last year’s 1.8%. Jihad Azour, director for Middle East and Central Asia at the International Monetary Fund (IMF), expects global economic uncertainties to weigh heavily on this growth. In the high migration scenario, he projects a potential decline of as much as 4.5%.
Several factors contribute to this cautious outlook. The United States has retreated from its place as the world’s largest aid donor. This change started under Donald Trump. With foreign aid receding, this loss will severely impact the economic viability of many MENA countries. These countries always rely on external assistance to fill the gap in their development and recovery efforts.
Azour emphasized the implications of reduced international assistance, stating, “The drop in international assistance, especially for countries in fragility, is something that is creating new risks for the region.” The MENA countries face additional complications. Ongoing geopolitical tensions and new tariff plans from the U.S. and elsewhere only add to the climate of economic uncertainty.
The economies of the Persian Gulf have succeeded in attracting a huge influx of foreign direct investment (FDI), inflating GDP by almost 2% since the pandemic. In stark contrast, other MENA countries are struggling to receive similar inflows. Foreign investment – specifically U.S. investment – continues to be key for promoting regional prosperity and stability.
To overcome these daunting conditions, Azour calls for structural reforms and diversification of economic relations between MENA countries. He asserts, “Therefore countries need to react and need to devise policies in order to protect their economies.” These are all proactive steps that could go a long way toward curbing the unintended effects of externalities on unpredictable factors—namely, recessions—on local economies.
The Syria recovery process, through a complicated cycle of conflict and humanitarian need, presents an additional challenge. Azour notes that rebuilding efforts will require mobilization of both regional and international support, alongside comprehensive programs aimed at institutional development, economic reform, and addressing essential issues such as infrastructure and refugee resettlement.
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