The ongoing wars in the region are not only affecting immediate economic conditions but also long-term structural reforms, leading to potential social discontent and political resistance.
The resilience of the non-oil sector in the GCC indicates a shift in economic dynamics, but reliance on oil production remains a critical factor for overall growth.
If conflicts in the region escalate, the IMF warns of further reductions in growth forecasts, potentially leading to more severe economic ramifications.
Countries neighboring conflict zones may experience increased economic strain, necessitating precautionary measures to maintain stability.
The International Monetary Fund (IMF) has revised its economic growth forecast for the Middle East and North Africa, projecting a decline to 2.1% for this year, down from earlier estimates of 2.7% in April and 2.2% in July. The IMF has also slightly adjusted its forecast for next year to 4%, which, while an increase from July's prediction, reflects ongoing geopolitical tensions and reduced oil production in the region.
The report highlights the impact of ongoing conflicts, particularly the war in Gaza and Lebanon, and the civil war in Sudan, which pose risks of permanent economic losses. Jihad Azour, the IMF's director for the region, noted that any escalation in these conflicts could significantly affect regional economic stability.
Additionally, the IMF pointed out that production cuts by the OPEC+ alliance, which includes major oil exporters like Saudi Arabia and Russia, have contributed to the lowered growth forecasts. Although the non-oil sector in the Gulf Cooperation Council (GCC) has shown resilience and led growth in the past two years, the overall economic outlook remains uncertain due to high debt levels and challenges in attracting foreign direct investment.
- The IMF's global growth forecast for next year has also been cut to 3.2%, reflecting broader concerns about wars and trade protectionism. Central banks have been commended for managing inflation without triggering recessions across various economies.
