Middle East and North Africa Macro Poverty Outlook Country-by-country Analysis and Projections for the Developing World Spring Meetings 2024 © 2024 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW, Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclu- sions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Rights and Permissions The material in this work is subject to copyright. Because The World Bank encourages dissemination of its knowledge, this work may be reproduced, in whole or in part, for noncommercial purposes as long as full attribution to this work is given. All queries on rights and licenses, including subsidiary rights, should be addressed to World Bank Publications, The World Bank, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2625; e-mail: pubrights@worldbank.org. Middle East and North Africa Algeria Kuwait Saudi Arabia Bahrain Lebanon Syrian Arab Republic Djibouti Libya Tunisia Egypt, Arab Republic Morocco United Arab Emirates Iran, Islamic Republic Oman Yemen, Republic Iraq, Republic Palestinian Territories Jordan Qatar MPO 1 Apr 24 likely to be constrained by high and rigid spending on wages and subsidies. ALGERIA Key conditions and challenges Table 1 2023 Recent developments The oil and natural gas sector accounted Population, million 45.6 for 18 percent of GDP, 93 percent of National accounts data have not been pub- GDP, current US$ billion 252.3 product exports, and 41 percent of bud- lished since Q4-2022 but available admin- GDP per capita, current US$ 5531.4 get revenues between 2016 and 2022, istrative data and World Bank use of big a 5.5 National poverty rate which means that Algeria remains ex- data indicate robust hydrocarbon and non- a 0.5 posed to hydrocarbon price volatility. hydrocarbon activity in 2023. Hydrocar- International poverty rate ($2.15) a 4.0 Double-digit fiscal and current account bon output and exports continued to in- Lower middle-income poverty rate ($3.65) Gini index a 27.6 deficits persisted during the pre- crease as growing natural gas production School enrollment, primary (% gross) b 108.3 COVID-19 years. As public debt increased compensated for falling oil production b 76.4 rapidly, large scale monetization and rapid amid OPEC quota cuts. Night-time lights Life expectancy at birth, years currency depreciation, coupled with im- data suggest that non-hydrocarbon growth Total GHG emissions (mtCO2e) 286.6 port reduction policies posed further chal- has remained robust in 2023 while satellite Source: WDI, Macro Poverty Outlook, and official data. lenges to economic stability. image analysis indicates subdued agricul- a/ Most recent value (2011). b/ WDI for School enrollment (2022); Life expectancy Economic output recovered to its pre- tural output amid drought episodes. The (2021). COVID-19 level in 2022 and rising gas de- strong increase in equipment and automo- mand from Europe combined with high bile imports suggest dynamic investment hydrocarbon prices boosted the current and consumption driven by higher public Algeria’s growth remained robust in 2023 account surplus and budget revenues to spending, large investment projects, and and, although lower hydrocarbon prices their highest level in a decade. Notwith- the selective relaxation of import controls. standing, unemployment and inflation With hydrocarbon prices moderating and narrowed the current account surplus from are still relatively elevated, and poverty imports increasing, external surpluses nar- its 2022 peak, the rebuilding of official re- remains high for Algeria’s level of devel- rowed sharply in 2023. At end-November serves continued. Lower hydrocarbon bud- opment, despite improvements in educa- 2023 the trade surplus stood at 5 percent get revenues put pressure on the fiscal tion, health, and living standards during of GDP, down from 11.5 percent of GDP the pre-pandemic years. in 2022. Nevertheless, official reserves in- deficit as the increase in public sector wages The government aims to accelerate private creased by US$8.0 billion during 2023 and continued amid high inflation. With high investment and jobs through the 2019 Hy- reached US$69.7 billion, or an estimated imports and rigid public spending expos- drocarbon Law, the 2022 Investment Law, 16.8 months of imports. ing Algeria to global oil market risk, di- banking sector reforms, large mining and The budget deficit is estimated to have versifying the economy, enabling private infrastructure projects, as well as greater widened from 2.5 percent in 2022, the regional integration. Successful implemen- lowest level in a decade, to 6.5 percent sector investment, and strengthening the in 2023, driven by falling hydrocarbon tation of these reforms is important in a macroeconomic policy framework remain context in which public investment, pre- revenues, a second year of public sector key development priorities. viously the engine of Algeria’s growth, is wage increases, and an expansion of FIGURE 1 Algeria / Annual GDP growth FIGURE 2 Algeria / Current account, exports, and imports Percent Billion USD 12 75 60 8 45 4 30 0 15 -4 0 Hydrocarbon GDP Non-hydrocarbon GDP -15 -8 GDP -30 -12 2019 2020 2021 2022 2023e 2024f 2025f 2026f 2019 2020 2021 2022 2023e 2024f 2025f 2026f Exports Imports Current account balance Sources: Algerian authorities and World Bank staff estimates. Sources: Algerian authorities and World Bank staff estimates. MPO 2 Apr 24 public employment. Partially offsetting accommodative with interest rates un- deficit would widen further in 2024 as these effects, tax revenues increased from changed at 3 percent since May 2020, hydrocarbon receipts decline and the the growing public wage bill and the which means that real policy rates are government implements the third effect of non-hydrocarbon dynamism on significantly negative. tranche of public sector wage increases. corporate income, consumption, and im- The government’s medium-term budget ports, while dividends from the national framework indicates slow fiscal consoli- oil company Sonatrach surged to reach dation in 2025 and 2026, including sub- 2.9 percent of GDP. The deficit is expect- Outlook dued public investment growth. Public ed to have been mostly financed by hy- debt would increase above 60 percent drocarbon savings accumulated in 2021 GDP growth is expected to moderate of GDP by 2026 as hydrocarbon savings and 2022. Consequently, public debt de- in 2024 amid declining oil production would only partially finance deficits. creased from 48.1 percent to 46.8 percent in line with OPEC quota cuts. Non-hy- The fluctuation of hydrocarbon prices of GDP in 2023 and remains nearly all drocarbon growth would stabilize driven amid geopolitical uncertainties remains domestically held at long-term maturities by strong public spending and its im- the most important risk to Algeria’s fiscal and low interest rates. pacts on household consumption, indus- and external balances pointing to the im- Inflation remained elevated at 9.3 percent trial output, and services. Lead crop portance of accelerating private sector in- over 2023 but began to moderate in Q4. growth indicators suggest that agricultur- vestment in non-hydrocarbon sectors to Fueled by fresh produce prices, inflation al production would remain subdued in support diversification and increase the hurts vulnerable Algerians the most as 2024. Growth would accelerate in 2025 as economy’s resilience. Structural reforms food accounts for over half of the spend- agricultural output recovers and crude oil to foster productivity growth would also ing for the bottom 40 percent of the pop- production tracks recovering OPEC quo- support lower consumer prices and high- ulation. The government responded via tas, and then slows slightly in 2026 with er job creation, key to reducing youth un- increases in public sector wages, unem- stabilizing hydrocarbon output. employment and raising Algeria’s stan- ployment transfers, and food subsidies, The current account would return to a dards of living. Lastly, two years of weak as well as by pursuing a stable currency. modest deficit, driven by declining glob- agricultural output underscore vulnerabil- Although broad money growth slowed al oil prices, quota cuts, and rebound- ity to climate change, with shocks having in H2-2023, monetary policy remained ing equipment-led imports. The budget become more frequent in recent years. TABLE 2 Algeria / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2021 2022 2023e 2024f 2025f 2026f Real GDP growth, at constant market prices 3.8 3.6 3.5 2.7 3.5 2.9 Private consumption 1.6 3.5 4.7 3.4 3.2 2.5 Government consumption 1.2 2.8 4.2 3.0 1.1 1.2 Gross fixed capital investment 0.4 2.6 8.3 6.3 5.8 5.3 Exports, goods and services 11.5 0.2 3.9 -2.6 2.6 0.9 Imports, goods and services -4.5 -0.2 16.1 5.8 4.3 3.6 Real GDP growth, at constant factor prices 4.3 3.8 3.5 2.7 3.5 2.9 Agriculture -1.1 5.0 -1.1 0.5 3.1 2.6 Industry 6.3 4.0 3.4 1.8 3.3 2.5 Services 3.9 3.5 4.3 3.6 3.6 3.1 Inflation (consumer price index) 7.2 9.3 9.3 7.5 6.4 6.1 Current account balance (% of GDP) -2.4 8.6 3.1 -0.3 -2.2 -3.3 Fiscal balance (% of GDP) -6.3 -2.5 -6.5 -9.2 -9.3 -8.5 Revenues (% of GDP) 26.2 29.6 30.2 27.8 26.6 25.6 Debt (% of GDP) 55.2 48.1 46.8 51.2 57.0 61.4 Primary balance (% of GDP) -5.7 -1.3 -5.2 -8.0 -8.0 -7.0 GHG emissions growth (mtCO2e) 2.8 2.4 2.1 1.7 2.4 2.1 Energy related GHG emissions (% of total) 52.6 53.7 54.6 55.3 56.2 57.0 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. MPO 3 Apr 24 structural reforms including those related to increase employment opportunities BAHRAIN Key conditions and among youth, would ensure a private sec- tor-led inclusive recovery. challenges Table 1 2023 The non-oil sector remains the driving force Population, million 1.5 of the economy thanks to ongoing diversifi- Recent developments GDP, current US$ billion 44.9 cation efforts. Fiscal consolidation is on GDP per capita, current US$ 30221.9 track, notably helped by contained spend- Bahrain’s economy has moderated in 2023, a 92.3 School enrollment, primary (% gross) ing and increased revenue—thanks notably amid limited hydrocarbon sector growth, a 78.8 to the doubling of the VAT rate to 10 percent and tight fiscal and monetary policies. Fol- Life expectancy at birth, years Total GHG emissions (mtCO2e) 57.7 in 2022—as the government remains com- lowing a strong performance in 2022, eco- Source: WDI, Macro Poverty Outlook, and official data. mitted to its Fiscal Balance Program (FBP). nomic growth has slowed down to an esti- a/ WDI for School enrollment (2022); Life expectancy The new four-year program 2023-26 prior- mated 2.6 percent in 2023. Preliminary of- (2021). itizes several objectives that aim to raise ficial data reveals that the economy grew living standards, including improving in- by 2 percent in the first nine months of frastructure and accelerating digital trans- 2023 (9M-2023 y/y), driven primarily by 3.1 formation. A new National Labor Market percent expansion in the non-oil sectors as Notwithstanding the advancement of the Plan (NLMP) has also been approved in Ju- a result of the ongoing diversification ef- ly 2023 to encourage Bahraini employment forts. Manufacturing, construction, and diversification agenda, hydrocarbon rev- in the private sector. In November 2023, government services led the growth in enues still account for more than 60 per- the kingdom unveiled the national energy non-oil activities, which outpaced the con- cent of total budget revenues which ex- strategy, aiming for a 30 percent reduction traction in the oil sector (falling by 3.4 per- poses the economy to the volatility of en- in emissions by 2035 and net-zero emis- cent) due to seasonal operational mainte- ergy prices. Bahrain continues to face sions by 2060, while ensuring reliable and nance. Inflation decelerated to 0.1 percent affordable access to the energy. in 2023, mainly owing to fading base ef- structural challenges, notably these relat- Downside risks to the outlook are mostly fects, lower global commodity prices, and ing to fiscal sustainability, as debt and linked to a drop in hydrocarbon prices lower transportation costs. gross financing needs remain elevated. and tightening global financial condi- Official fiscal data for 2023 have not been Despite progress, female labor force par- tions, which could put pressure on the released yet. However, the state budget for fiscal position and delay implementation 2023-2024 aims for public finances to re- ticipation is low and public sector re- of fiscal reforms. The depletion of under- main on a stable footing, as part of the gov- mains the largest employer. Larger than ground water resources could have se- ernment’s multi-year Fiscal Balance Pro- forecasted drop in oil prices, potential de- rious long-term growth implications. On gram. This includes the progress so far to en- lays in implementing fiscal reforms, and the upside, sustained high oil prices and hance non-hydrocarbon revenue mobiliza- climate change, pose significant risks to enacting additional fiscal reforms would tion and the continued spending restraint. reduce fiscal and external vulnerabilities Despite lower imports in the 9M-2023, Bahrain’s economic outlook. and put debt on a firm downward path the current account balance posted a while rebuilding fiscal buffers. Advancing deficit of US$3.1 billion (6.4 percent of FIGURE 1 Bahrain / Real annual GDP growth FIGURE 2 Bahrain / General government operations Percent change Percent of GDP 8 40 6 30 4 20 2 10 0 0 -2 -10 -4 -20 2021 2022 2023e 2024f 2025f 2026f 2021 2022 2023e 2024f 2025f 2026f Hydrocarbon GDP Non-hydrocarbon GDP Real GDP Revenues Expenditures Budget balance Sources: Bahrain authorities, World Bank, and IMF projections. Sources: Bahrain authorities and World Bank projections. MPO 4 Apr 24 GDP), reflecting lower oil exports (down implementation of structural reforms. Limited spending growth under the FBP by 22.8 percent y/y). However, official re- Growth is estimated to pick up to 3.5 and higher oil and non-oil revenues serve assets remained stable at around percent in 2024 in line with higher oil are expected to result in a lower fiscal US$4 billion in 2023—an increase of output, while the non-oil sector re- deficit of 3.2 percent in 2024, down from US$297 million compared to 2022. mains the main growth driver. The more than 5 percent in 2023. Achiev- According to the most recent Internation- hydrocarbon sector is expected to ex- ing fiscal balance would require higher al Labor Organization (ILO modeled) es- pand by 1.3 percent in 2024, far below oil prices. The budget deficit is expected timates, the labor force participation rate the non-hydrocarbon sectors’ projected to increase in 2025-26 reflecting project- and employment-to-population ratio are growth of almost 4 percent supported ed lower oil prices and higher interest projected at 71.8 percent (-0.1 ppt rela- by the recovery in tourism and the burden. The debt-to-GDP ratio is pro- tive to 2023) and 70.9 percent (+0.1 ppt service sectors, in addition to the con- jected to slightly decline in 2024 but re- relative to 2023) respectively in 2024. The tinuation of infrastructure projects. In mains elevated (above 100 percent) in unemployment rate is expected to hold the medium term, growth is expected the medium term—requiring deeper fis- steady at around 1.4 percent in 2024, to slow down—hovering slightly cal consolidation measures. with the rate among women at 4.1 per- above 3 percent—as fiscal consolida- The current account surplus is forecast cent and among men at 0.5 percent. tion accelerates while the non-oil econ- to expand to 7.3 percent of GDP in omy stays resilient. Inflation is esti- 2024, helped by higher oil export mated to remain low at 1.5 percent in prices but would narrow down during 2024 and to converge to less than 2 2025-26, in line with the projected oil Outlook percent in the medium term reflecting price outlook. The comfortable exter- the positive impact of tighter mone- nal position is expected to boost for- Bahrain’s economic outlook hangs on tary policy and in line with the currency eign reserves and strengthen resilience oil market prospects and the accelerated peg to U.S. dollar. against future external shocks. TABLE 2 Bahrain / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2021 2022 2023e 2024f 2025f 2026f Real GDP growth, at constant market prices 2.6 4.9 2.6 3.5 3.3 3.4 Private consumption 18.9 2.8 2.4 2.6 2.5 2.7 Government consumption 6.5 3.3 2.5 2.0 1.5 1.7 Gross fixed capital investment -4.2 2.3 3.6 4.1 4.4 4.7 Exports, goods and services 29.5 4.5 1.6 2.6 2.5 2.3 Imports, goods and services 15.2 3.5 2.7 3.0 3.1 3.0 Real GDP growth, at constant factor prices 2.4 3.3 2.6 3.5 3.3 3.4 Agriculture 7.2 4.4 3.8 3.4 3.3 3.3 Industry 0.5 1.2 0.7 2.3 3.9 3.5 Services 3.9 4.9 4.1 4.4 2.9 3.3 Inflation (consumer price index) -0.6 3.6 0.1 1.5 1.8 2.1 Current account balance (% of GDP) 6.6 15.4 6.7 7.3 6.6 5.3 Net foreign direct investment inflow (% of GDP) -4.4 0.0 -2.6 -2.6 -2.7 -2.7 Fiscal balance (% of GDP) -11.0 -6.2 -5.1 -3.2 -6.5 -7.3 Revenues (% of GDP) 20.8 23.1 24.0 24.4 20.0 18.7 Debt (% of GDP) 127.2 117.4 120.9 118.7 121.2 124.0 Primary balance (% of GDP) -6.3 -1.8 -0.6 1.4 -1.9 -2.2 GHG emissions growth (mtCO2e) -5.6 0.8 7.2 4.0 0.7 0.3 Energy related GHG emissions (% of total) 58.6 58.4 60.2 60.9 60.3 60.4 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. MPO 5 Apr 24 high at around 36 percent, down from 44 percent in 2017. Ongoing disruptions in DJIBOUTI Key conditions and the Red Sea produce mixed impacts. On the one hand, Djibouti's port activity has challenges surged because of the ship diversion, no- tably in transshipment services, to the Table 1 2023 Djibouti experienced rapid economic point that it is overwhelming its (new) port Population, million 1.1 growth, averaging over 4 percent annually capacity. On the other, escalating sea GDP, current US$ billion 4.1 over the period 2000-21, driven by signifi- freight costs and higher insurance premi- GDP per capita, current US$ 3606.4 cant investments in transport and port in- ums due to maritime risks are anticipated a 19.1 International poverty rate ($2.15) frastructure. However, this growth, fi- to increase consumer goods prices, exacer- a 43.8 nanced by increasingly expensive borrow- bating Djibouti's vulnerability to such fluc- Lower middle-income poverty rate ($3.65) a 21.1 ing, has heightened debt vulnerabilities, tuations. Additionally, the Red Sea ten- National poverty rate Gini index a 41.6 thereby limiting fiscal space for essential sions may have significant fiscal implica- School enrollment, primary (% gross) b 64.4 social spending. The pandemic, conflict in tions, potentially impacting customs rev- b 62.3 neighboring Ethiopia, and the Russian in- enue, and fuel pricing strategies. Life expectancy at birth, years vasion in Ukraine exacerbated economic Total GHG emissions (mtCO2e) 1.4 and fiscal strains through foreign trade, fi- Source: WDI, Macro Poverty Outlook, and official data. nancial, and commodity price channels, a/ Most recent value (2017), 2017 PPPs. b/ WDI for School enrollment (2022); Life expectancy rendering debt unsustainable since Febru- Recent developments (2021). ary 2022. Also, Djibouti's ambition to better exploit its unique geographic position at In 2023, Djibouti experienced a robust eco- the entrance of the Red Sea and become nomic rebound, with GDP growth sur- In 2023, Djibouti's economy rebounded a major transport and logistics hub faces passing expectations at 6.7 percent. This impressively with a GDP growth of +6.7 challenges. Heavy dependence on imports resurgence was fueled by a significant in- exposes the economy to global price fluc- crease in port activity, particularly in con- percent, but Djibouti’s growth model faces tuations and transport disruptions. More- tainer traffic, which increased by 41 per- vulnerabilities, including heavy depen- over, Djibouti's subsidy for fuel pricing cent in 2023 compared to 2022, driven by dence on global maritime transport and ex- strains government finances without effec- renewed trade with Ethiopia following the posure to conflict-prone neighbors. tively reducing poverty, necessitating al- peace agreement reached in November ternative approaches. This is particularly 2022 between the federal government and Ethiopian demand for transport and logis- true as the fuel subsidy is primarily con- the Tigrayan People's Liberation Front. De- tics services and domestic infrastructure sumed by richer households. Still, poverty spite disruptions in the Red Sea, Djibouti's projects are expected to drive growth, with rates are projected to have declined from port activity continued to increase in Jan- GDP forecasted to gradually increase to their 19 percent baseline in 2017 to around uary 2024, driven by the strong boom in 5.1 percent in 2024-2025. Poverty at 14.7 14.7 percent in 2024. This is a slower reduc- transshipment activity as carriers have tion than previously anticipated, primari- rapidly expanded transshipment opera- percent in 2024 (international poverty tions in Djibouti, strategically positioned ly due to factors influenced by COVID-19 line) is expected to decline, yet risks per- and regional instability. Poverty at the in the south of the Red Sea, to circumvent sist amid the fragile regional context. lower middle-income poverty line remains the Red Sea corridor and Houthi-impacted FIGURE 1 Djibouti / Real GDP growth, fiscal, and current FIGURE 2 Djibouti / Actual and projected poverty rates and account balances real GDP per capita Percent change Percent of GDP Poverty rate (%) Real GDP per capita (constant LCU) 35 8 90 700000 30 80 6 600000 25 70 4 500000 60 20 2 50 400000 15 40 300000 0 10 30 200000 5 -2 20 100000 0 -4 10 2019 2020 2021 2022e 2023f 2024f 2025f 0 0 Real GDP growth (rhs) 2012 2014 2016 2018 2020 2022 2024 2026 Current account balance (lhs) International poverty rate Lower middle-income pov. rate Government fiscal balance (rhs) Upper middle-income pov. rate Real GDP pc Sources: Government of Djibouti and World Bank staff projections. Sources: World Bank. Notes: see Table 2. MPO 6 Apr 24 areas. Domestically, construction and pub- discussions with Exim Bank India for debt over the past three decades. In the medi- lic works sectors thrived, with cement restructuring. On the external front, Dji- um term, Djibouti's economic prospects sales surging by 80 percent as projects pre- bouti's sector exhibited positive trends, appear promising, driven by foreign viously disrupted by the COVID-19 pan- recording a notable current account sur- trade and public works. GDP is fore- demic resumed. Inflation peaked at 11 per- plus due to increased trade and logistics casted to remain strong at 5.1 percent cent in July 2022 but decelerated to 3.8 per- demand from Ethiopia. Foreign exchange from 2024 to 2026, propelled by con- cent by December 2023, attributed to glob- reserves remained strong, providing suffi- tinued Ethiopian demand for transport al food price slowdowns and government cient coverage for prospective imports for and logistics services. Locally, the devel- measures. However, Djibouti continued to four months. Despite previous challenges, opment of the Damerjog Industrial Park face fiscal challenges marked by a decline the banking sector remained stable, reflect- Project and infrastructure programs un- in (already low) revenues due to new tax ing the resilience of Djibouti’s economy. der the National Development Plan exemptions introduced in the 2023 budget. (NDP) are expected to boost Gross Fixed Total public spending surged, driven by Capital Investment. Fiscal consolidation increased capital expenditure, widening measures, including reprioritizing central the budget deficit to 1.9 percent of GDP. Outlook government investment spending and External debt reached 69.4 percent of GDP improving fiscal management, aim to in 2023 from 66.5 percent of GDP in 2022, Djibouti's economic outlook is heavily in- gradually reduce the budget deficit, stabi- due to new loans and inclusion of last fluenced by regional uncertainties, includ- lizing at 1.4 percent of GDP by 2025-2026. year's debt arrears. Also, Djibouti's stock of ing exposure to conflict-prone neighbors Projected poverty rates are expected to external arrears increased significantly to and unexpected inflationary pressures, decline alongside GDP growth, with 6 percent of GDP by the end of Septem- which pose challenges to its trajectory. Re- poverty rates projected to reach 13.5 per- ber 2023. Djiboutian authorities reached a cent developments in Ethiopia, such as de- cent in 2026 (at the international poverty preliminary agreement for debt reprofiling faulting on euro bond payments and im- line) and 33.1 percent (at the lower mid- in late 2023 with its main creditor, EXIM- posing restrictions on imports, further add dle-income poverty line). However, there BANK CHINA, including a 4-year mora- to uncertainties. Additionally, Ethiopia's are risks, including the ongoing accumu- torium for rail and water supply projects, pursuit of direct access to the Red Sea lation of public debt and arrears, region- aiming to secure more favorable terms. evidenced by recent agreements with So- al tensions, and climatic shocks. The per- However, addressing outstanding arrears maliland and a recent MOU signing in sistence of these risks could jeopardize with other creditors remains crucial to mit- Lamu complicates further the regional Djibouti's ability to manage future chal- igate continued debt distress. Authorities landscape. Despite this, Djibouti main- lenges and fund essential public services, engaged with the Paris Club for arrears tains confidence in its strategic position particularly given its reliance on trade clearance plans and intend to also reopen and world-class port complex, fortified and transport activities with Ethiopia. TABLE 2 Djibouti / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2021 2022 2023e 2024f 2025f 2026f Real GDP growth, at constant market prices 4.5 3.7 6.7 5.1 5.1 5.2 Private consumption 9.6 -0.6 4.4 5.0 5.0 5.0 Government consumption -2.5 -14.3 8.1 2.9 2.2 2.2 Gross fixed capital investment 4.9 2.7 12.4 8.5 6.8 7.6 Exports, goods and services 29.5 -12.5 8.4 9.0 10.0 10.0 Imports, goods and services 18.2 -6.2 10.4 11.0 11.3 11.3 Real GDP growth, at constant factor prices 4.1 4.0 6.7 5.1 5.1 5.2 Agriculture 16.5 -0.5 5.9 5.5 5.5 5.5 Industry 11.4 7.2 10.0 10.0 10.0 10.0 Services 2.5 3.4 6.0 4.0 4.0 4.0 Inflation (consumer price index) 1.5 5.1 1.4 2.6 2.0 2.5 Current account balance (% of GDP) 31.2 17.9 15.6 13.0 12.3 11.2 Fiscal balance (% of GDP) -2.9 -1.4 -1.9 -1.3 -1.4 -1.4 Revenues (% of GDP) 20.0 18.9 18.9 18.9 18.9 18.8 Debt (% of GDP) 71.3 66.5 69.4 66.6 63.7 61.0 Primary balance (% of GDP) -2.7 -0.7 -1.1 -0.5 -0.5 -0.6 a,b International poverty rate ($2.15 in 2017 PPP) 16.9 16.5 15.5 14.7 14.1 13.5 a,b Lower middle-income poverty rate ($3.65 in 2017 PPP) 39.9 39.1 36.9 35.8 34.6 33.1 a,b Upper middle-income poverty rate ($6.85 in 2017 PPP) 75.2 74.2 72.5 70.8 69.5 68.0 GHG emissions growth (mtCO2e) 0.2 -0.4 0.0 0.2 0.3 0.3 Energy related GHG emissions (% of total) 23.8 23.3 22.9 22.4 21.9 21.4 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. a/ Calculations based on 2017-EDAM. Actual data: 2017. Nowcast: 2018-2023. Forecasts are from 2024 to 2026. b/ Projection using neutral distribution (2017) with pass-through = 0.7 (Low (0.7)) based on GDP per capita in constant LCU. MPO 7 Apr 24 Furthermore, despite on-budget consolida- tion, government debt increased to 95.2 per- ARAB REPUBLIC Key conditions and cent of GDP at end-FY23, reflecting off-bud- get borrowing and the depreciation. Addi- challenges OF EGYPT tionally, contingent liabilities reached 28.7 percent of GDP at end-January 2023. Thus, In early March 2024, the CBE resumed its fiscal space remains constrained by high in- move towards a flexible exchange rate terest payments (7.6 percent of GDP in FY23) Table 1 2023 regime to address severe foreign exchange as well as low domestic resource mobiliza- Population, million 105.2 market distortions, after more than a year of tion (tax-to-GDP ratio of 12.4 percent). GDP, current US$ billion 395.9 delayed macroeconomic adjustments, Hence, public expenditures for human GDP per capita, current US$ 3764.5 build-up of foreign currency backlogs, as capital development and social protection Lower middle-income poverty rate ($3.65) a 17.6 well as a soaring parallel market rate. To an- remain well below the needs of the rapidly a 29.7 chor inflation expectations, the CBE hiked rising population of above 105 million. National poverty rate a key policy rates by 600 basis points (bps) in The national poverty rate is expected to Gini index 31.9 b March (bringing policy rates to 27.25 per- have increased substantially (last reported School enrollment, primary (% gross) 91.6 cent and 28.25 percent for the overnight at 29.7 percent in 2019), due to double-digit b 70.2 Life expectancy at birth, years deposit and lending transactions, respec- inflation since March 2022, with partial Total GHG emissions (mtCO2e) 320.8 tively; 1,900 bps above their levels prior to mitigation from the government's social Source: WDI, Macro Poverty Outlook, and official data. March 2022). In tandem, the government packages. Low labor force participation a/ Most recent value (2019), 2017 PPPs. announced mitigation packages, including and employment rates (at 43.1 percent and b/ WDI for School enrollment (2022); Life expectancy (2021). scaling-up cash transfers, hiking the mini- 40.1 percent, respectively, of the working- mum wage, among other measures. These age population in Q2-FY24) are also not adjustments are underpinned by the large- conducive to poverty reduction. Leveraging large-scale investments and scale UAE investments and the completion of the IMF Extended Fund Facility (EFF) financing, Egypt undertook monetary ad- reviews (originally slated for March and justments to address the foreign currency September 2023). Recent developments crisis sparked by macroeconomic imbal- The effective implementation of the recent ances and global shocks. Growth is fore- policy announcements to redefine the role Growth declined to 2.7 percent in Q1-FY24 of the state, contain public investments, from 4.4 percent in Q1-FY23, reflecting the cast to decline to 2.8 percent in FY24 and enable the private sector will be cru- contraction of non-oil manufacturing and due to eroded real incomes, before a pro- cial to address the long-standing external gas extractives; impacted by the foreign ex- jected rebound in FY25-FY26. On- (and and fiscal imbalances that have been ex- change crisis, import restrictions, capital off) budget consolidation (in line with acerbated by the multiple global shocks. controls, as well as domestic production external sustainability) and transforma- Non-oil exports and FDI have been under- problems. Shockwaves from the Middle performing with the gradual shift in the East conflict which caused a sharp drop tive investment climate reforms are crit- economy towards non-tradable and low in Suez Canal traffic and dampened the ical for private sector-driven, inclusive, value-added sectors, and away from high strong recovery of tourism are also con- and sustainable growth. productivity and export-oriented sectors. straining growth in recent months. FIGURE 1 Arab Republic of Egypt / Real GDP growth, FIGURE 2 Arab Republic of Egypt / Annual inflation rates employment and labor force participation rates Percent Percent of working-age population Percent 12 50 80 Headline CPI 10 70 40 Core CPI 8 60 Food & Beverage 6 30 50 4 20 40 2 30 10 0 20 -2 0 10 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 0 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 -10 GDP Growth (lhs) Employment rate (rhs) Labor force participation rate (rhs) Sources: World Bank estimates based on Central Agency for Public Mobilization Sources: Central Bank of Egypt (CBE) and CAPMAS. and Statistics (CAPMAS) and Ministry of Planning and Economic Development (MPED). MPO 8 Apr 24 Annual urban inflation accelerated to an improved private consumption with the (US$45 billion at end-February 2024) are average 33.8 percent in January—Decem- projected pickup in remittances and the expected to be boosted by the one-off ber 2023 (up from 13.8 percent in 2022), gradually abating inflation. US$24 billion in FDI inflows (the remain- even though 21.4 percent of the Con- Fiscal consolidation is expected to slow der of the UAE deal), state asset sales sumer Price Index basket is regulated. down in FY24. The tax-to-GDP ratio is ex- (US$2.3 billion during July-February Food items (63.9 percent inflation in 2023) pected to decline due to sluggish economic FY24), the IMF EFF and financing from remain the main driver of the headline activity, while interest payments rise with the World Bank and other development rate and account for over 44 percent of monetary tightening and a depreciated partners. Eliminating the parallel market bottom quintile expenditures. currency. The government debt-to-GDP ra- premium will encourage formal-channel Despite the successive monetary tighten- tio is thus expected to increase to 97.6 per- remittances, which had declined by ing, real interest rates remained negative cent at end-FY24, due to the valuation effect US$10 billion in FY23. Nevertheless, through March 2024. Government credit of the exchange rate depreciation, as well as clearing the arrears owed to international remains the main driver of credit growth, in- the higher deficit. Fiscal consolidation and oil companies and import backlogs (joint- dicating that excess demand from the public debt reduction (including from off-budget ly reportedly estimated at above US$14 sector has been another contributor to infla- borrowing) are expected to resume by FY25, billion at end-February), in addition to tion, on top of the cost-push factors. Mean- as tax reforms kick in (the payroll tax sys- medium- and long-term debt servicing while, private sector credit remains limited tems standardization, enhanced adminis- scheduled for payment in the second half (29.6 percent of total domestic credit). tration, and exemptions rationalization), of FY24 (US$15.9 billion) will remain a besides streamlining of energy subsidy. drain on reserves. While external accounts are expected to High inflation, especially for food, re- remain under pressure till end-FY24 due mains a source of concern for poverty re- Outlook to the pre-existing backlogs, the UAE in- duction. Going forward, continued imple- vestment deal, along with major external mentation of the ambitious reforms envis- Growth is forecast to decline to 2.8 percent financing will gradually alleviate the for- aged under Egypt’s State Ownership Pol- in FY24 from 3.8 percent in FY23, exacer- eign currency crisis. The banking sys- icy, while ensuring wider public sector bated by the repercussions of the Middle tem’s net foreign assets position (-US$29 fiscal consolidation is critical for creating East conflict notably on key foreign in- billion at end-January 2024) is expected to space for human development and social come-generating sectors (Suez Canal and immediately improve—at least by US$11 protection spending, and for external sus- tourism). Growth is expected to start re- billion: the UAE deposits at the CBE that tainability. Business environment reforms bounding in FY25-FY26 driven by growth have been converted to investments. Of- will be crucial to enable private sector in investment (albeit from a low base), and ficial reserves and foreign currency assets growth and job-creation. TABLE 2 Arab Republic of Egypt / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2021 2022 2023e 2024f 2025f 2026f Real GDP growth, at constant market prices 3.3 6.6 3.8 2.8 4.2 4.6 Private consumption 6.2 2.8 3.8 3.2 3.4 3.7 Government consumption 3.4 4.9 -2.8 3.0 2.0 2.5 Gross fixed capital investment -3.2 18.5 -24.1 -7.4 16.0 10.0 Exports, goods and services -13.9 57.4 31.4 12.9 13.5 14.0 Imports, goods and services 0.5 24.3 1.1 -0.5 15.5 13.0 Real GDP growth, at constant factor prices 2.0 6.2 3.6 2.7 4.2 4.5 Agriculture 3.8 4.0 4.1 3.3 3.3 3.3 Industry -1.2 6.9 -0.6 -1.1 3.4 4.7 Services 3.7 6.2 6.2 4.8 4.8 4.7 Inflation (consumer price index) 4.5 8.5 24.1 33.4 24.9 12.6 Current account balance (% of GDP) -4.3 -3.5 -1.2 -3.2 -3.3 -3.0 Net foreign direct investment inflow (% of GDP) 1.1 1.8 2.5 6.8 2.7 1.9 Fiscal balance (% of GDP) -7.1 -6.2 -6.0 -6.5 -6.4 -6.3 Revenues (% of GDP) 16.6 17.2 15.4 15.5 16.5 16.9 Tax revenues (% of GDP) 12.5 12.6 12.4 12.2 12.8 13.4 Debt (% of GDP) 87.9 88.3 95.2 97.6 91.3 88.0 External government debt (% of GDP) 19.0 19.5 25.1 31.7 27.2 23.3 Primary balance (% of GDP) 1.4 1.3 1.6 2.2 3.0 3.0 a,b Lower middle-income poverty rate ($3.65 in 2017 PPP) 19.8 19.3 21.5 23.8 23.4 23.1 GHG emissions growth (mtCO2e) 4.0 1.8 1.0 0.7 1.1 1.3 Energy related GHG emissions (% of total) 64.9 65.0 65.4 65.9 67.8 69.5 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. a/ Calculations based on 2010-HIECS, 2015-HIECS, and 2019-HIECS. Actual data: 2019. Nowcast: 2020-2023. Forecasts are from 2024 to 2026. b/ Projection using annualized elasticity (2010-2015) with pass-through = 0.02 based on GDP per capita in constant LCU. Poverty estimates for 2020, 2023, and 2024 are based on microsimulations of the impacts of Covid, high inflation, and government mitigating measures. MPO 9 Apr 24 opportunities and persistently high infla- tion have negatively impacted purchasing IRAN, ISLAMIC Key conditions and power and poverty outcomes. An estimat- ed 40 percent of households are vulner- challenges REPUBLIC able, in that they have a high probabili- ty of falling back into poverty if they ex- Economic growth has proven resilient perience a shock. The gradual aging of the over the past four years, despite ongoing population, significant emigration of high- Table 1 2023 economic sanctions and heightened ly skilled workers, and a declining birth Population, million 89.2 geopolitical uncertainty. While the econ- rate not only impact growth prospects but GDP, current US$ billion 401.9 omy has benefitted from improved oil also strain an already struggling pension GDP per capita, current US$ 4506.4 sector growth, the non-oil sector, notably system. Financial sector challenges, includ- Upper middle-income poverty rate ($6.85) a 21.9 services and manufacturing, has been the ing the undercapitalized banking sector a 34.8 main driver of growth. Tradable sector and liquidity shortages, also restrict Gini index b production has shifted towards meeting prospects of private sector-led growth. School enrollment, primary (% gross) 104.5 b domestic consumption, which has partly Life expectancy at birth, years 73.9 mitigated the impact of the financial and Total GHG emissions (mtCO2e) 921.8 trade embargos and the limited access to Source: WDI, Macro Poverty Outlook, and official data. foreign exchange reserves. Employment Recent developments a/ Most recent value (2022), 2017 PPPs. b/ WDI for School enrollment (2020); Life expectancy has also recently returned to pre-pan- (2021). demic levels. Fiscal policy, notably the GDP growth accelerated to 5.1 percent social protection system with its qua- year-on-year (Y-o-Y) in the first half of si-universal cash transfer, has partly 2023/24 (Iranian year ending March 20), buffered the impact of external shocks primarily driven by the oil sector and ser- on the most vulnerable households and vices. The oil sector value-added surged by helped sustain consumption-led growth. 17.1 percent (Y-o-Y), fueled by a tight glob- Iran’s economy is continuing its oil-driven The economy continues to face structural al oil market and greater success in mar- growth in 2023/24, helping employment challenges that impact sustainable devel- keting oil exports, including through price to return to pre-pandemic levels. Inflation opmental outcomes. Ongoing sanctions discounts. The non-oil sector also showed remained elevated despite tighter mone- limit technology transfer and investments robust growth of 3.8 percent (Y-o-Y), to boost productivity. Energy subsidies which drove employment to pre-pandemic tary policy, in part due to inflationary ex- and other administered prices are con- levels in Q3-23/24, as job creation increased pectations. Economic prospects are hin- tributing to supply-demand mismatches, by 2.9 percent and the unemployment rate dered by long-lasting structural chal- wasteful consumption, and allocative in- reached a record low of 7.6 percent. lenges that are exacerbated by economic efficiencies; this comes at a significant fis- Lower-than-expected government rev- cal burden and at a detriment to the envi- enues in the first seven months of 2023/ sanctions, heightened geopolitical ten- ronment. Climate change exacerbates the 24 (Apr-Oct 2023) led to a reprioritization sions, and the impact of climate change. energy and water shortages, negatively of expenditures. Only 72 percent of the impacting food security and jobs in the budgeted revenues were realized in the stagnating agriculture sector. Limited job period, as less than half of the planned FIGURE 1 Islamic Republic of Iran / Real GDP growth and FIGURE 2 Islamic Republic of Iran / Actual and projected supply-side contributions to real GDP growth poverty rates and real GDP per capita Percent, percentage points Poverty rate (%) Real GDP per capita (constant million LCU) 6 35 250.0 4 30 200.0 2 25 20 150.0 0 15 100.0 -2 10 -4 50.0 5 -6 0 0.0 2017/18 2019/20 2021/22 2023/24e 2025/26f 2009 2011 2013 2015 2017 2019 2021 2023 2025 Oil Agriculture Non-oil industries International poverty rate Lower middle-income pov. rate Services GDP growth Upper middle-income pov. rate Real GDP pc Sources: Central Bank of Iran (CBI) and World Bank staff calculations. Source: World Bank. Notes: see Table 2. MPO 10 Apr 24 oil revenues materialized due to lower than the top 60 percent of households, re- prices, and heightened global competition Iranian oil export prices. This revenue ducing inequalities. This has also reduced in key markets. shortfall forced the government to cut ex- overall inequality, with the Gini index Poverty is projected to decrease, but at a penditures, especially capital investments, dropping from 35.8 to 34.8. A combination slower pace. Poverty at the US$6.85 line is and to finance the growing deficit from of increased wages, an increase in self-em- expected to drop by a further 3 percent- the National Development Fund. ployed earnings, and a top-up to the na- age points over the next three years, and Inflation edged down in 11M-23/24 but tional cash-transfer program contributed poverty at the US$3.65 percentage line will remained above 40 percent. The decline to the growth in consumption and the cor- decrease only slightly. Building on the last was attributed to reduced inflationary ex- responding reduction in poverty. two years of inclusive growth, while en- pectations, spurring hopes of progress in suring a robust safety net, will help ensure nuclear negotiations, and tighter mone- the trend of poverty reduction continues. tary policy. Headline and core CPI re- The economic outlook is influenced by mained elevated, at 41.6 percent and 41.4 Outlook various risks, including global oil market percent in this period, respectively, dri- dynamics, climate change, the intensifica- ven by high food prices and housing Real GDP growth is forecasted to mod- tion of economic sanctions, and prospects costs. To curb inflation, the central bank erate to an annual average of 2.8 percent of conflict in the Middle East. A decline started implementing measures, includ- from 2024/25 to 2026/27. The initial boost in oil prices resulting from reduced global ing constraining bank balance sheet in oil production and exports in 2023/ demand would adversely affect economic growth, increasing reserve requirements 24 is projected to moderate significantly prospects. Growing economic linkage for riskier banks, and raising deposit and with a similar spillover effect into the with China makes the economy suscep- interbank interest rates. non-oil sector. Weaker global demand, tible to fluctuations in China's economy. Between 2020/21 and 2022/23, poverty de- ongoing sanctions, energy shortages, liq- Increased extreme weather events threaten clined as the economy recovered. Over two uidity constraints, underinvestment, and agricultural production and employment, years, poverty as measured at the US$6.85 geopolitical tensions further contribute to posing risks to food security and liveli- poverty line declined by a cumulative 7.4 this outlook. While inflation is expected hoods. The intensification of economic percentage points to 21.9 percent in 2022/ to decelerate further, it is expected to re- sanctions, especially impacting trade with 23, meaning an estimated 6.5 million peo- main elevated. Despite government plans neighbors and existing trade partners, ple were lifted out of poverty. For the low- to consolidate the budget in 2024/25, fis- would significantly weigh on growth. An er-middle income poverty line of US$3.65, cal pressures are forecast to persist, re- expansion of the conflict in the Middle East poverty declined by 2.2 percentage points sulting in a fiscal deficit, compounded by would have significant ramifications for to 3.8 percent. Between 2020/21 and 2022/ off-budget expenditures. The current ac- Iran and the region. Conversely, the re- 23, the bottom 40 percent of households count surplus is projected to gradually moval or partial waiver of sanctions would experienced higher consumption growth decrease, influenced by lower commodity significantly boost growth. TABLE 2 Islamic Republic of Iran / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2021/22 2022/23 2023/24e 2024/25f 2025/26f 2026/27f Real GDP growth, at constant market prices 4.7 3.8 5.0 3.2 2.7 2.4 Private consumption 3.9 8.7 3.2 2.4 2.1 1.8 Government consumption 8.3 -3.6 1.6 1.9 2.1 2.2 Gross fixed capital investment 0.0 6.7 5.8 4.5 4.2 3.1 Exports, goods and services 5.2 8.2 15.4 7.1 5.2 5.2 Imports, goods and services 24.1 7.5 1.6 1.8 2.1 2.1 Real GDP growth, at constant factor prices 4.4 4.0 5.0 3.2 2.7 2.4 Agriculture -2.6 1.1 1.0 0.9 0.8 0.8 Industry 3.2 7.4 8.8 4.9 3.7 3.7 Services 6.5 2.7 3.6 2.7 2.5 1.9 Inflation (consumer price index) 46.2 46.5 40.8 35.3 32.0 30.5 Current account balance (% of GDP) 3.1 3.4 2.9 2.7 2.3 2.2 Fiscal balance (% of GDP) -3.2 -1.9 -2.0 -2.2 -2.4 -2.5 Revenues (% of GDP) 11.0 11.7 11.8 11.8 11.8 11.9 Gross public debt (% of GDP) 42.4 30.1 30.7 32.3 34.1 35.9 Primary balance (% of GDP) -2.7 -1.5 -1.6 -1.8 -2.0 -2.1 a,b International poverty rate ($2.15 in 2017 PPP) 0.7 0.5 0.4 0.4 0.4 0.3 a,b Lower middle-income poverty rate ($3.65 in 2017 PPP) 5.0 3.8 3.3 3.1 2.9 2.8 a,b Upper middle-income poverty rate ($6.85 in 2017 PPP) 24.8 21.9 20.0 19.0 18.2 17.6 GHG emissions growth (mtCO2e) 2.9 2.9 3.1 2.0 1.8 1.6 Energy related GHG emissions (% of total) 67.8 67.6 67.8 67.7 67.5 67.3 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. a/ Calculations based on 2019-HEIS and 2022-HEIS. Actual data: 2022. Nowcast: 2023. Forecasts are from 2024 to 2026. b/ Projection using annualized elasticity (2019-2022) with pass-through = 0.7 based on GDP per capita in constant LCU. MPO 11 Apr 24 expenditures, notably rightsizing the wage bill, better targeting transfers, and a more REPUBLIC OF Key conditions and concerted effort on domestic revenue mo- bilization, could free up fiscal space for challenges IRAQ growth-enhancing investment in human and physical capital and improve the long- Iraq’s economy, among the world’s most term fiscal sustainability. Leveraging the oil-dependent, is contracting due to crude oil wealth toward sustainable growth and Table 1 2023 oil production cuts and lower global oil diversification, reducing the dominance of Population, million 45.5 prices. GDP contraction reflects the OPEC+ the public sector, and enhancing the busi- GDP, current US$ billion 285.8 production cuts and the halting of oil ex- ness environment will be essential for eco- GDP per capita, current US$ 6279.7 ports from the northern oil pipeline since nomic sustainability and private sector-led Lower middle-income poverty rate ($3.65) a 2.4 late March 2023, following the Internation- growth. Climate change adaptation and a 24.7 al Chamber of Commerce’s ruling on a mitigation measures can help tackle Iraq’s Upper middle-income poverty rate ($6.85) a case between Iraq and Türkiye. The econ- intertwined climate and developmental National poverty rate 22.5 a omy was kept afloat by the non-oil sector, challenges such as addressing food insecu- Gini index 29.5 in part helped by the large 2023 fiscal ex- rity and water shortages. b 103.7 School enrollment, primary (% gross) pansion. Lower oil revenues and signifi- b 70.4 Life expectancy at birth, years cant increase in government expenditures Total GHG emissions (mtCO2e) 231.6 have sharply narrowed the fiscal surplus. Source: WDI, Macro Poverty Outlook, and official data. Looser fiscal policy and over dependence Recent developments a/ Most recent value (2012), 2017 PPPs. on oil have raised vulnerabilities to ex- b/ WDI for School enrollment (2007); Life expectancy (2021). ternal shocks, especially considering the Iraq’s economy is contracting due to lower risks of spillover from the recent conflict oil production and despite a rebound in in the Middle East. The 71 percent surge the non-oil sector. Following the strong ex- (relative to 2022 outturn) in government pansion seen in 2022, GDP is estimated to Iraq’s economy contracted in 2023 due spending envisaged in the budget law have contracted by 2.5 percent in 2023. to OPEC+ production cuts that more for 2023 to 2025, driven by a surge in Growth was weighed down by OPEC+ than off-set a non-oil sector rebound. A the wage bill and funded by oil rev- production cuts, including Iraq’s volun- sharp fiscal expansion is fueling con- enues, leaves little room for discretionary tary cuts, and the halting of oil exports sumption but weighs on fiscal and ex- spending, and fragilizes the goal of sta- through the Iraq-Türkiye pipeline, which bilizing the economy and consumption led oil GDP to contract by 7.4 percent. The ternal balances, and undermines fiscal smoothing. Iraq’s dependence on oil al- 5.9 percent y/y bounce back in the non-oil sustainability in the medium term. so translates into low labor force partic- sector reported in the first nine months of Downside risks to the outlook include oil ipation, exposes households to volatility, 2023 (9M-23), was led by the agriculture market volatility, climate change risks, and limits the role of jobs in increasing sector and non-oil industries that benefit- household incomes. ted from CBI lending initiatives, albeit a and the impact of heightened geopolitical Current reform efforts have to be sustained temporary impact. tensions. The long-term development and deepened to put the economy on a Inflationary pressures have eased in part prospects remain uncertain. more sustainable path. Reprioritization of due to the impact of exchange rate FIGURE 1 Republic of Iraq / Fiscal account outlook FIGURE 2 Republic of Iraq / Consumer price inflation and the parallel market pressures Percent of GDP US$ per barrel Percent Percent 45 100 8 5 6 4 30 80 4 3 15 2 60 2 0 0 1 40 -2 -15 0 -4 20 -1 -30 -6 -45 0 -8 -2 2020 2021 2022 2023e 2024f 2025f 2026f Other expenditures (lhs) Wages and pension (lhs) Non-Oil revenues (lhs) Oil revenues (lhs) M/M inflation (rhs) Y/Y inflation (lhs) Fiscal balance (lhs) Oil price (rhs) IQD depreciation* (lhs) Sources: Ministry of Finance, Ministry of Oil, and World Bank staff calculations. Sources: Iraq’s Central Statistical Organization, Central Bank of Iraq, media, and World Bank staff calculations. Note: *Positive values represent dinar’s depreciation against the dollar in the parallel market. MPO 12 Apr 24 revaluation in February 2023 and tighter small surplus of 0.8 percent of GDP (cash to increase gross financing needs to an monetary policy. After an initial spike in basis), down from a 12.7 percent of GDP average of US$24.2 billion per year in inflation in January-February 2023, surplus in 2022. The current account sur- 2024 to 2026, while the public debt bur- sparked by the depreciation of the Iraqi di- plus almost halved in 9M-23 with low- den is projected to increase to over 60 nar in the parallel market, the revaluation er oil exports and is estimated to have percent of GDP in 2025. of the dinar against the dollar up by 11.5 narrowed to 2.1 percent of GDP in 2023 Downside risks to the outlook stem from percent in February 2023 and the moder- given a surge in imports in the last quar- oil market volatility, spillovers from con- ation of global commodity prices helped ter. The shift in the current account halt- flict, and climate change. The recent out- lower inflation. The Central Bank of Iraq ed the previous years’ rapid accumula- break of conflict in the Middle East has (CBI) raised the policy rate by 3.5 per- tions of official reserves, although these introduced significant downside risks but centage points to 7.5 percent, which fur- still remain sizeable, at US$102.7 billion also upside risks if global oil prices in- ther curbed inflation and moderate cap- or 12.6 months of imports at end-2023. crease. Iraq's heavy reliance on oil makes ital outflows. As a result, headline and it particularly susceptible to oil shocks core inflation eased to 4.3 and 4.0 percent stemming from the conflict, which could in 2023 y/y, respectively. CBI measures to lead to disruptions in the flow of oil ex- manage the volatility in the exchange mar- Outlook ports and price fluctuations. The conflict kets have helped reduce the gap between could significantly impact fiscal and exter- the official rate to 17 percent in February, The economic outlook hinges on global nal balances, and worsen household food which is still elevated due to continued FX oil market prospects and the implemen- security and welfare, necessitating coping demand in the parallel market. tation of the 3-year budget plans. GDP mechanisms such as dissaving and reduc- Lower oil revenues and the fiscal expan- growth is expected to recover to an av- ing investments in human capital. sion have narrowed the fiscal and cur- erage of 4.0 percent in 2024-2026 due Spillovers from a broader conflict are also rent account surplus. Government rev- to a projected rebound in the oil sec- likely to have adverse humanitarian im- enues, heavily dependent on oil, declined tor. Growth is forecast to peak in 2025 pacts in Iraq, including civilian casualties by 16.1 percent y/y in 2023 due to lower with the planned expiry of oil produc- and displacement. These developments oil prices and despite marginally higher tion cuts. Despite higher projected oil would reverse gains in poverty reduction export volumes. Total expenditures in- exports, the fiscal expansion is forecast made in recent years. Climate change im- creased by 21.8 percent y/y but remained to more than offset this rebound, lead- pact and severe weather events such as El significantly below the budget targets. As ing to double deficits starting in 2024. Niño, could intensify food security risks a result, the fiscal account recorded a The growing fiscal pressures are forecast and add to public grievances. TABLE 2 Republic of Iraq / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2021 2022 2023e 2024f 2025f 2026f Real GDP growth, at constant market prices 0.1 7.6 -2.5 1.6 6.1 4.2 Private consumption 2.6 3.9 6.5 4.5 4.0 4.0 Government consumption 4.6 2.2 21.8 8.5 4.7 4.7 Gross fixed capital investment 33.6 11.7 11.8 20.4 9.4 8.5 Exports, goods and services -13.3 9.7 -7.4 -0.2 8.4 5.2 Imports, goods and services 7.7 4.2 22.0 13.7 7.0 7.0 Real GDP growth, at constant factor prices 1.6 7.6 -2.5 1.6 6.1 4.2 Agriculture -20.6 -33.3 3.0 2.5 2.2 2.2 Industry -0.7 13.3 -5.9 0.3 8.0 5.0 Services 9.8 1.3 4.2 4.0 2.8 2.8 Inflation (consumer price index) 6.0 5.0 4.3 3.8 3.4 3.2 a Current account balance (% of GDP) 12.0 19.1 2.1 -3.7 -4.0 -4.2 a Net foreign direct investment inflow (% of GDP) -1.3 -0.8 -0.8 -0.8 -0.8 -0.8 a Fiscal balance (% of GDP) 4.0 12.7 0.8 -5.1 -5.7 -5.8 Revenues (% of GDP) 36.2 38.9 36.1 34.3 33.8 33.6 a Debt (% of GDP) 58.8 40.9 45.5 54.2 64.8 72.1 a Primary balance (% of GDP) 4.5 13.5 1.3 -4.8 -5.3 -5.1 GHG emissions growth (mtCO2e) -13.8 -5.2 6.5 7.8 13.4 10.0 Energy related GHG emissions (% of total) 42.3 42.0 42.8 44.5 46.1 48.6 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. a/ Share of factor cost GDP. MPO 13 Apr 24 and its vulnerability to extreme weather conditions, including rising temperatures JORDAN Key conditions and and lower precipitation, exacerbates the risks to water scarcity and food security. challenges While no new official poverty rate has been released since 2018, it is likely that any Table 1 2023 Despite consecutive regional and global negative economic effects of the neighbor- Population, million 11.3 external shocks, Jordan has maintained ing conflict would adversely affect the GDP, current US$ billion 50.9 modest economic growth, averaging poorest and most vulnerable households. GDP per capita, current US$ 4491.1 around 2.2 percent annually over the past Declining tourism rates will particularly a 15.7 National poverty rate decade, supported by a prudent fiscal affect those relying on informal employ- b 87.6 and monetary policy mix. Jordan's pru- ment with little job security. The refugee School enrollment, primary (% gross) b 74.3 dent monetary policy has maintained population in Jordan is particularly vul- Life expectancy at birth, years Total GHG emissions (mtCO2e) 39.2 macroeconomic stability, while the coun- nerable. According to the Vulnerability try has also achieved progress in domes- Assessment Framework by the WB and Source: WDI, Macro Poverty Outlook, and official data. a/ Most recent value (2017/8). tic revenue mobilization. However, key UNHCR, two-thirds of registered refugees b/ WDI for School enrollment (2014); Life expectancy structural constraints remain entrenched, live under the poverty line. (2021). notably those related to labor market and business environment. Jordan can break out of its low-growth equilibrium by rais- Jordan has demonstrated resilience ing productivity, pursuing investment, Recent developments amidst consecutive external shocks, pre- and export-led growth. serving macroeconomic stability albeit The latest conflict in the Middle East, The remarkable performance in the man- that erupted on October 7, 2023, initially ufacturing and agriculture sectors, cou- with growing vulnerabilities associated affected tourism, trade, and investment pled with the continued robust contribu- with climate change and regional con- sentiment across the region, but especial- tion of services, led to a slight increase in flicts. However, addressing structural ly so for neighboring countries like Jor- growth to 2.7 percent (y-o-y) in Q3-2023. challenges in the labor market and the dan. The risk of a prolonged and wider Revised national accounts in October 2023 business environment remains essential conflict could exacerbate existing chal- showed that manufacturing and agricul- lenges such as trade disruptions and ris- ture registered their highest average to achieve sustainable higher economic ing shipping costs, further squeezing fis- growth rates since 9M-2011 and 9M-2010, growth and employment. The country's cal space in Jordan. Additionally, the fi- respectively. The restaurants and hotels susceptibility to climate-related shocks nancial sustainability of the water and sector also witnessed its highest average further emphasizes the need to tackle wa- electricity sectors remains a concern. growth rate since 9M-2012. Despite the Navigating the current complex external initial setback in tourist arrivals due to ter, and energy concerns. A sustained fo- environment requires policy agility to the eruption of the conflict, the sector is cus on reform implementation would help preserve macroeconomic stability while showing some signs of recovery. Jordan break out of its low-growth, low also focusing on the implementation of Labor markets slightly improved after employment equilibrium. structural reforms. Jordan is one of the declining for three consecutive quarters. most water-scarce countries in the world, Labor force participation improved to FIGURE 1 Jordan / Tourist arrivals took a hit as the Conflict FIGURE 2 Jordan / Fiscal performance benefited from lower in the Middle East erupted before gradually picking up again subsidies in 2023 Growth rate percent, y/y Percent of GDP 60 35 Overnight 30 45 Same Day 25 30 20 15 15 10 0 5 -15 0 -5 -30 -10 2018 2019 2020 2021 2022 2023 -45 Jun'23 Jul'23 Aug'23 Sep'23 Oct'23 Nov'23 Dec'23 Jan'24 Feb'24 Total Expenditures Total Revenues Overall Balance Sources: Ministry of Tourism and Antiquities and World Bank staff calculations. Sources: Ministry of Finance and World Bank staff calculations. MPO 14 Apr 24 34.1 percent in Q4-2023, driven mainly 9M-2023. Portfolio investments increased Fiscal consolidation is projected to contin- by higher female participation which in 9M-2023, supported by the Eurobond is- ue, albeit at a tepid pace. Revenue-enhanc- recorded the highest level since Q1-2019 suance by MoF in April 2023 which more ing measures, along with the expected eas- at 15.1 percent in Q4-2023. Meanwhile, than offset the decline in net FDIs, relative ing of monetary policy are expected to unemployment declined slightly to 21.4 to the same period in 2022. At the end of support domestic revenues. Meanwhile, percent in Q4-2023, yet it remained 2023, CBJ’s gross reserves of foreign cur- the primary fiscal deficit is projected to above the pre-COVID average. Inflation rencies and gold stood at USD19.1 billion continue narrowing, turning into a surplus decelerated to 2.1 percent in 2023, mainly (7.6 months of next year's imports of in 2025 as primary expenditure remain reflecting lower commodity prices and GNFS), relative to USD18.2 (7.2 months of contained. However, the overall fiscal monetary tightening. imports of GNFS) in December 2022. deficit is projected to increase slightly in Fiscal consolidation continued in 2023, but 2024 due to higher interest payments, be- at a pace that leaves debt at an elevated fore beginning to narrow in subsequent level. The overall fiscal deficit narrowed years. Nevertheless, remaining fiscal pres- slightly, to 5.2 percent in 2023, down from Outlook sures from the water and electricity sectors 5.6 percent of GDP in 2022. Total revenues are expected to keep Central Government declined mainly due to lower grants and Growth is forecasted to register 2.6 percent debt levels elevated and growing in the slightly lower tax revenues, which more in 2023, reflecting slower growth in Q4 short- to medium-term, while the General than offset the increase in non-tax rev- 2023 attributed to the impact of the conflict Government debt is projected to decrease enue. Spending declined slightly due to in the Middle East. The ongoing conflict thanks to continued operating surpluses of the phasing out of fuel subsidies, which is expected to weigh on the performance the Social Security Investment Fund. offset the increase in interest payments. of sectors that have backward and forward The CAD is projected to continue narrow- Meanwhile, capital expenditure increased linkages with the tourism sector. More- ing supported mainly by the lower trade to 3.8 percent of GDP in 2023, staying over, the shift in consumer behavior is also deficit and higher tourism receipts in 2023, below the budgeted amount of 4.4 per- expected to weigh on domestic consump- relative to the previous year. Further con- cent of GDP. However, general govern- tion. Agriculture sector growth is expected tainment of imports and higher current ment debt level remains elevated, reach- to normalize in 2024 after experiencing a transfers are projected to support lower ing 89.4 percent of GDP in 2023. strong rebound in H1 2023 due to a favor- CAD in 2024. However, while the baseline The CAD halved to 4.2 percent of the es- able base-effect. Accordingly, a subsequent projections assume that the conflict in timated full year GDP in 9M-2023, relative deceleration of real GDP growth rate to the Middle East will end in the short to the same period in 2022. This was main- 2.5 percent is anticipated in 2024, followed term, the duration and extent of the con- ly driven by lower imports, supported by by a resurgence to 2.6 percent thereafter. flict may impact the pace of improvement the decline in international prices of key Relatively stable prices for imported com- through lower tourism receipts, changes imports (i.e., oil, wheat, and maize) and modities and muted core inflation are pro- in domestic consumption patterns, trade improved tourism receipts which collec- jected to keep inflation in check, despite flow disruptions, and increased shipping tively more than offset the slight decrease some transitory impact from higher ship- costs, which can affect value chains and in exports and current transfers in ping costs due to the Red Sea disruptions. production costs. TABLE 2 Jordan / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2021 2022 2023e 2024f 2025f 2026f Real GDP growth, at constant market prices 3.7 2.4 2.6 2.5 2.6 2.6 Real GDP growth, at constant factor prices 3.7 2.5 2.7 2.6 2.7 2.7 Agriculture 6.6 3.3 5.4 2.4 2.4 2.4 Industry 2.7 3.3 3.0 2.6 2.5 2.4 Services 4.0 2.0 2.4 2.6 2.8 2.8 Inflation (consumer price index) 1.3 4.2 2.1 2.0 2.1 2.1 Current account balance (% of GDP) -8.0 -7.7 -6.8 -6.4 -5.7 -4.8 Net foreign direct investment inflow (% of GDP) 1.3 2.6 2.5 2.6 2.8 3.0 a Fiscal balance (% of GDP) -6.2 -5.6 -5.2 -5.6 -5.4 -5.1 Revenues (% of GDP) 24.7 25.8 25.3 25.9 26.2 26.3 a Expenditures (% of GDP) 30.9 31.5 30.5 31.5 31.6 31.4 b Central government debt (% of GDP) 108.8 111.4 114.1 115.2 116.1 116.5 b General government debt (% of GDP) 87.5 88.8 89.4 88.9 88.2 87.1 a Primary balance (% of GDP) -1.9 -1.5 -0.4 -0.3 0.1 0.5 GHG emissions growth (mtCO2e) 3.2 3.3 4.2 2.4 2.6 2.6 Energy related GHG emissions (% of total) 62.1 61.3 61.3 61.2 61.0 60.8 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. a/ Including the Adjustment on receivables and payables (use of cash) as per IMF Country Report No. 23/49. b/ GG coverage refers to CG debt excl. the holdings of the Social Security Corporation (SSC) investment arm. Based on current pension entitlements, the SSC's financial surplus is projected to gradually decline and turn into a deficit, leading GG debt ratio to converge to CG debt ratio over the longer term. MPO 15 Apr 24 unsustainable fiscal policies and promote private sector expansion by enhancing liq- KUWAIT Key conditions and uidity management, implementing tax re- forms, and adjusting subsidies. Moreover, challenges expectations of sustained high oil prices in the medium term could support the fi- Table 1 2023 Kuwait's long-term economic outlook is nancing of the economic transition to- Population, million 4.3 significantly impacted by its heavy depen- wards sustainable, inclusive, and environ- GDP, current US$ billion 161.8 dence on oil, while structural reforms are mentally friendly growth. GDP per capita, current US$ 37528.6 being delayed. Key risks are oil market a 78.7 Life expectancy at birth, years volatility, global economic slowdown, es- Total GHG emissions (mtCO2e) 161.7 calation of geopolitical tensions and cli- Source: WDI, Macro Poverty Outlook, and official data. mate shocks, as well as domestic chal- Recent developments a/ WDI for Life expectancy (2021). lenges, including an oversized public sec- tor, frequent government changes and a In 2023, economic growth significantly lack of reforms momentum. On the upside, decelerated mainly due to OPEC+'s pro- a decrease in global inflation and an in- duction quota cuts, and a global slow- crease in global demand could lead to fa- down, resulting in an overall GDP decline vorable outcomes. Key challenges include of -0.1 percent. Annual oil output is esti- In 2023, Kuwait’s economy significantly substantial public sector employment, re- mated to have declined by 3.8 percent, af- decelerated following strong performance gional competitiveness lag, fostering a fected by a 9 percent year-on-year decline in 2022, with expectations of stabilization dynamic economy for youth, alignment in Q3 2023 only (for the second consecutive in the medium term. This downturn is behind a national vision, and enhancing quarter), due to oil production cuts under- economic productivity. Macroeconomic taken as part of Kuwait’s OPEC+ obliga- largely attributed to OPEC+ oil produc- stability is underpinned by the world's tions. Nonetheless, the economy benefitted tion cuts and weak global economic activ- largest sovereign wealth fund, the Kuwait from the expansion of the Al Zour oil re- ity. A negative fiscal balance has oc- Investment Authority (KIA) and its sig- finery. The non-oil sector, however, show- curred, driven by low energy prices and nificant foreign assets, yet such resources cased resilience, recording a 1.5 percent cannot fully buffer against short-term oil growth in Q2 2023, and expanded further fiscal expansion, and is expected to persist market volatility. Addressing these vul- by 2.8 percent in Q3 2023, leading to an es- into 2024. The economic forecast remains nerabilities requires comprehensive fiscal timated 3.3 percent in 2023. This was dri- uncertain, clouded by geopolitical ten- and structural reforms. Overcoming polit- ven by both domestic and international de- sions, slowdowns in major economies, oil ical deadlock and enhancing government mand, high oil prices, increased govern- price fluctuations, and political gridlock stability is critical to accelerate economic ment expenditure, and the restart of pro- diversification and related structural re- jects disrupted by the pandemic. on reforms, with the potential for political forms. The government's 2024-27 work Tight monetary policy, coupled with transformation from a change in govern- plan for Kuwait, outlined in February slow economic growth and substantial ment offering new prospects for reform. 2024, aims to reduce unsustainable public government subsidies for food and ener- spending, and decrease reliance on oil rev- gy, contributed to a containment of infla- enues. Additionally, it endeavors to curb tionary pressures to 3.6 percent in 2023, FIGURE 1 Kuwait / Annual real GDP growth FIGURE 2 Kuwait / Public finances Percent change Percent of GDP 15 70 Oil GDP 60 12 Non-Oil GDP 50 GDP 9 40 6 30 3 20 10 0 0 -3 -10 2021 2022 2023 2024 2025 2026 -6 2021 2022 2023 2024 2025 2026 Expenditure Revenue Fiscal Balance Sources: Kuwait CSB, IMF WEO, and World Bank staff estimates. Sources: World Bank and IMF WEO. Notes: Based on the fiscal year cycle (April to March 31). Fiscal balances exclude investment income and FGF transfers. MPO 16 Apr 24 with a further decline to 3.3 percent ob- many indicators have not yet rebounded to still relatively elevated interest rates may served in January 2024. their pre-pandemic levels. The labor force restrain domestic consumption, prevent- The fiscal account recorded a deficit of 6.8 participation rate is projected at 71.3 per- ing the economy from achieving its full po- percent of GDP (excluding investment in- cent in 2024 (ILO modelled estimates), be- tential. Moreover, ongoing political un- come and the Future Generation Fund low the projections for 2023 as well as the certainties may delay the implementation transfers), due to a 27 percent drop in rev- pre-pandemic rate. The employment-to- of new infrastructure projects and slow enue and a 55 percent surge in expendi- population ratio is projected at 69.9 per- the pace of reform initiatives. tures, primarily from increased salaries, cent in 2024, remaining about 1.6 percent- The fiscal deficit is projected to persist in grants, and subsidies spending in the first age points lower than in 2019. Unemploy- the medium term, influenced by the cur- three quarters of FY2023-24. ment rates are projected to remain rela- rent expansionary fiscal stance. In the ab- The banking sector remains stable despite tively steady in 2023 at 0.9 percent among sence of economic diversification, oil rev- a slowdown and continues to be well-cap- men and 5.7 percent among women, still enue remains the government's predomi- italized and liquid. Nonperforming loans higher than the 2019 rates by 0.2 and nant source of income. To ensure fiscal sta- are contained at a low level (1.7 percent in 0.6 percentage points, respectively. Un- bility and reduce procyclicality, it is key Q3-2023). In 2023, domestic credit growth employment rate projections are especial- to further reduce oil revenue dependen- decelerated to 1.7 percent from 7.7 percent ly high for young women (aged 15-24), at cy and advance the Vision 2035 goals, in 2022, with a slight uptick of 0.9 percent 28.7 percent for 2024. alongside strengthening public financial in Q4 driven by strong credit for securities management. Creating space for pri- purchases and financial institutions, de- vate sector activity, introducing VAT in spite a significant decline in business and alignment with other GCC countries), as household credit. Following global trends Outlook well as other fiscal adjustments could and the US Federal Reserve (given the broaden revenue sources and support predominant role of the US dollar in the Economic growth is expected to recover to the diversification agenda. Kuwaiti Dinar's pegged basket), the cen- 2.8 percent in 2024, supported by expan- External accounts are expected to maintain tral bank increased policy rates multiple sionary fiscal policies, higher oil produc- a strong trade surplus at 22.7 percent of times, from 1.5 percent in January 2022 tion, and increased output from Al Zour GDP in 2024, driven by oil exports. Bene- and stabilizing at 4.25 percent as of Jan- refinery. Oil output is expected to grow fits from the recovering tourism industry uary 2023, while maintaining reserves at by 3.6 percent, as OPEC+ announces exten- are expected to be offset by a deficit in comfortable levels of 4.6 months of im- sion by mid-2024 of additional voluntary services and increased payments to inter- port in first 3 quarters of 2023. The cur- cuts (135 tb/d for Kuwait), with global oil national contractors engaged in the Vi- rent account surplus declined to 29.3 per- prices remaining robust. An improvement sion 2035 strategic development plan and cent of GDP in 2023 (down from 32.1 per- in domestic credit is expected in 2024, dri- 2024-2027 work plan. This is expected to cent in 2022), owing to declining oil rev- ven by a sharp pick up in project awards, trigger a gradual narrowing of the cur- enues and a reduction in global demand. stable or declining interest rates, and the rent-account surplus to 20.7 percent of Kuwait's labor market continues to recover low base effect from 2023. The non-oil sec- GDP by 2026, down from an estimated from the impact of the pandemic, although tor is projected to grow by 2.1 percent, but 29.3 percent in 2023. TABLE 2 Kuwait / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2021 2022 2023e 2024f 2025f 2026f Real GDP growth, at constant market prices 1.3 7.9 -0.1 2.8 3.1 2.7 Private consumption 3.2 4.8 2.0 2.5 2.6 2.5 Government consumption 1.1 2.0 2.3 2.4 2.5 2.5 Gross fixed capital investment 3.9 4.4 1.8 2.5 2.9 2.3 Exports, goods and services 2.2 12.0 -1.9 3.1 3.2 3.2 Imports, goods and services 5.7 5.3 1.6 2.5 2.3 2.8 Real GDP growth, at constant factor prices 1.4 7.9 -0.1 2.8 3.1 2.7 Agriculture 0.5 1.1 0.1 1.1 1.1 1.2 Industry 2.2 8.3 0.2 3.3 3.3 3.3 Services 0.4 7.3 -0.6 2.1 2.8 1.9 Inflation (consumer price index) 3.4 4.0 3.6 3.0 2.6 2.4 Current account balance (% of GDP) 23.9 32.1 29.3 22.7 21.9 20.7 a Fiscal balance (% of GDP) -7.2 2.2 -6.8 -6.3 -8.0 -8.0 GHG emissions growth (mtCO2e) 10.7 6.1 1.4 5.0 6.7 6.9 Energy related GHG emissions (% of total) 68.0 68.1 66.8 66.5 66.7 66.9 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. a/ Based on fiscal year cycle (April to March 31). Fiscal balances exclude investment income and FGF transfers. MPO 17 Apr 24 prices, which were further exacerbated by the war in Ukraine. Almost two-thirds of LEBANON Key conditions and households surveyed in early 2023 reported having to reduce their food purchases com- challenges pared to pre-crisis 2019, with many relying on less preferred or cheaper food options. Table 1 2023 Military confrontation between Lebanon Close to a third of households have had to Population, million 5.4 and Israel has been escalating and widen- cut back on meals or limited adult consump- GDP, current US$ billion 17.9 ing in South Lebanon since October 2023, tion to feed children, with Syrian refugee GDP per capita, current US$ 3350.3 resulting in hundreds of casualties and in- households being disproportionately af- a 27.4 National poverty rate juries, and mass displacement of close to fected. Recent surveys by Gallup and Arab a 31.8 90,000 individuals in Lebanon. Tens of Barometer further confirm the severity of Gini index b 75.0 thousands of households in South the situation, with a high percentage of Life expectancy at birth, years Total GHG emissions (mtCO2e) 23.3 Lebanon have lost their livelihoods, and households running out of food or lacking hundreds of houses have been destroyed money to buy more, and many children Source: WDI, Macro Poverty Outlook, and official data. a/ Most recent value (2011). amid massive destruction to local infra- going to bed hungry or skipping meals. b/ Most recent WDI value (2021). structure. Agricultural lands in the south have suffered substantial damage, burning and contamination. For a tourism depen- dent economy, the shock to tourism that Recent developments In Q4 2023, Lebanon was hit by yet started in Q4 of 2023 has knock-off effects for economic growth. After four years of sharp contraction, another large shock: the spillover effects The conflict is further weighing on equivalent to 33.7 percent of real GDP be- from the conflict in the Middle East Lebanon which remains mired in a crip- tween 2018-2022 and marking one of the centered in Gaza. The escalation in mili- pling socio-economic crisis, amidst politi- worst economic downturns in modern his- tary confrontation in southern Lebanon cal and institutional vacuum. A presiden- tory, the pace of Lebanon’s contraction in tial vacuum since October 2022, a caretaker economic activity decelerated to 0.2 per- has caused substantive infrastructural government with restricted executive cent in 2023. Prior to the conflict, a slight damage, and primarily affected the powers, an interim central bank governor, economic expansion of 0.2 percent was tourism and agriculture sectors, further limited legislative action by parliament, projected for 2023, in part driven by strong weighing down on Lebanon’s crisis-rid- and no political appetite to undertake ur- tourism receipts in the first 9 months of den economy, amidst prolonged political gent reforms necessary to get the country the year. The continued contraction in eco- out of the four-year-old unprecedented cri- nomic activity is primarily driven by the paralysis. With the ongoing conflict the sis, all contribute to a bleak outlook on sus- sharp shock to tourism spending under- economy is expected to have contracted by tainable economic recovery. mining consumption growth, compound- 0.2 percent in 2023. Subject to high un- Food insecurity is on the rise in Lebanon, ed by reduced business activity, and a dis- certainty, and assuming a cessation of with average annual and food inflation ruption to trade activity, all materializing rates soaring in recent years. The gradual in Q4 of 2023. clashes in H2-2024, real GDP growth is removal of foreign exchange subsidies on Increased revenue, resulting from the cor- projected at 0.5 percent for 2024. food has led to significant increases in food rection of exchange rate mis-valuations FIGURE 1 Lebanon / Exchange rate depreciation drives the FIGURE 2 Lebanon / Inflation in basic items has been a key surge in inflation driver of overall inflation, hurting the poor and the middle class Index (Aug 2019=100) Percent Contributions to overall inflation in 2023, percent 7,000 200 250 Headline inflation growth 6,000 Food & non-alcoholic beverages 160 Owner occupied 5,000 200 Transportation 4,000 120 Health Water, electricity, gas, & other fuels 3,000 80 150 Education 2,000 Communication 40 Clothing & footwear 1,000 100 Furnishings, household equipment 0 0 Other Aug'19 Apr'20 Dec'20 Aug'21 Apr'22 Dec'22 Aug'23 Alcoholic beverages & tobacco 50 World Bank average exchange rate (lhs) Actual rent Inflation rate (lhs) Currency in circulation (lhs) CPI-Exchange rate pass through (rhs) 0 Sources: Lebanese authorities and World Bank staff calculations. Sources: Lebanese authorities and World Bank staff calculations. MPO 18 Apr 24 for customs and taxes, coupled with ex- Lebanese pound has stabilized at an ex- been driven by a narrowing trade-in- penditure restraints in the absence of a change rate of 89,700 LBP/US$ since goods deficit. According to customs data, ratified budget and monetary financing, mid-2023, in tandem with the change in imports of goods have decreased by 9.4 resulted in a fiscal surplus of 0.5 percent BdL management. The stabilization of the percent (yoy) in 7M-2023. A 10 percent of of GDP in 2023. Revenues are estimated exchange rate is primarily owed to (i) the GDP surplus in trade-in-services, primar- to have increased from 6.1 percent of stoppage of the Sayrafa platform (the main ily driven by tourism receipts in the first GDP in 2022 to 15.3 percent of GDP in platform used for foreign exchange inter- three quarters of 2023, also contributed to 2023 thanks to revenue mobilization mea- ventions by the central bank) in July 2023, a lower CA deficit. sures in the 2022 budget which material- (ii) an increase in foreign exchange inflows ized in 2023 and the decision to collect from tourism and remittances for the most port and airport fees in US$ starting in of 2023, and a (iii) a decrease in currency 2023. The new BdL management’s halt of circulation which is easing exchange rate Outlook decades long monetary financing of the pressures. Central bank gross reserves (liq- budget in the second half of 2023, has al- uid reserves) have increased by US$883 As the country adjusts to a volatile secu- so supported the overall fiscal and pri- million in the last five months of 2023, pri- rity situation, and assuming a cessation mary surplus. Parliament ratified the 2024 marily driven by the halt of the Sayrafa of hostilities in 2024 H2, real GDP government budget in February 2024, platform and BdL purchases of US$ supply growth is projected at 0.5 percent in 2024. within the constitutional deadline for the from foreign currency inflows. Growth in private consumption support- first time in two decades. The 2024 gov- Inflation accelerated to 221.3 percent in ed by tourism, remittances and a stabi- ernment budget projects a zero fiscal bal- 2023, primarily on account of the steep de- lization in private sector activity will un- ance, with revenues and expenditures at preciation of the LBP in the first half of derpin a continued yet volatile bottom- 17.3 percent of GDP. The fiscal balance, 2023. The exchange rate stabilization in ing out of the economy and drive modest however, does not take into account past the second half of 2023 has, however, growth in 2024. Because tourism tends to arrears and foreign currency loans of the steadily decreased month-to-month infla- be volatile and subject to external and government. In essence, the budget 2024 tion to an average of 1.2 percent between internal shocks (the spillover of the cur- represents a missed opportunity to enact August and December 2023 (excluding rent conflict being a case in point), the much needed comprehensive change to October that witnessed a more than six- sector cannot substitute for more sustain- deficient budget processes and fiscal pol- fold increase in the education CPI compo- able and diverse drivers of growth. With- icy. The ratified budget remains a simple nent); this supports a positive outlook for out a crisis resolution plan, and a new summation of the cost of inputs for each decelerating inflation in 2024. sustainable growth model, further ero- of the ministries, and a compilation of The current account (CA) deficit is project- sion of the country’s physical, human, so- regressive tax revenues, as tax revenues ed to narrow to 11 percent of GDP in 2023, cial, and natural capital stock is likely. As constitute 79 percent of total revenues, of following a dramatic increase to 32.7 per- the components of the CPI basket are in- which 76 percent are indirect taxes. cent of GDP in 2022. The estimated con- creasingly dollarized, inflation is project- After losing more than 98 percent of its traction in the CA deficit, from US$6.9 bil- ed to decrease in 2024 to double digits at value since the onset of the crisis, the lion in 2022 to US$2 billion in 2023, has 83.9 percent. TABLE 2 Lebanon / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2021 2022 2023e 2024f Real GDP growth, at constant market prices -7.0 -0.6 -0.2 0.5 Private consumption 2.1 2.3 0.2 0.4 Government consumption -76.0 34.9 -18.4 1.5 Gross fixed capital investment -67.6 -88.6 -57.9 -18.1 Exports, goods and services 13.1 0.3 2.8 -0.9 Imports, goods and services -12.2 3.5 -0.3 -0.6 Real GDP growth, at constant factor prices -5.3 -0.6 -0.2 0.5 Agriculture -7.1 -0.8 0.5 0.5 Industry -6.9 -0.6 0.7 -0.2 Services -4.9 -0.6 -0.4 0.7 Inflation (consumer price index) 150.0 171.2 221.3 83.9 Current account balance (% of GDP) -12.5 -32.7 -11.0 -10.4 Net foreign direct investment inflow (% of GDP) 8.5 0.8 0.6 1.5 Fiscal balance (% of GDP) 0.9 -2.9 0.5 0.0 Revenues (% of GDP) 7.5 6.1 15.3 17.3 Debt (% of GDP) 172.5 179.7 201.2 180.4 Primary balance (% of GDP) 1.8 -2.5 1.6 0.4 GHG emissions growth (mtCO2e) -16.6 -6.1 3.2 -3.8 Energy related GHG emissions (% of total) 68.5 68.6 73.2 72.5 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. MPO 19 Apr 24 low labor force participation, income dis- parities, and poor public infrastructure LIBYA Key conditions and and services. Only half of the working- age population is active in the labor mar- challenges ket and mostly engaged in the public sector (44 percent). The unemployment Table 1 2023 The devastation of part of Libya’s east- rate is estimated at 15.3 percent (National Population, million 6.9 ern coastal region caused by storm Labor Force Survey 2022), with higher GDP, current US$ billion 50.5 Daniel and the floodings led to a mo- rates among women and youth (18.4 and GDP per capita, current US$ 7327.2 ment of national solidarity but did not 23.1 percent respectively). While no offi- a 106.9 School enrollment, primary (% gross) trigger more lasting political reconcilia- cial poverty estimates are available yet, a 71.9 tion and consensus. The effectiveness of the average monthly household consump- Life expectancy at birth, years Total GHG emissions (mtCO2e) 99.5 the authorities’ response quickly ran in- tion expenditure is 3094 libyan dinar or Source: WDI, Macro Poverty Outlook, and official data. to political divisions and two distinct re- about US$645 according to the recently a/ Most recent WDI value (2021). construction funds were announced by released Household Consumption Survey the parallel governments. (2023). Reported consumption inequality, More recently influential Libyan politi- measured by a Gini coefficient of 0.31, is cal leaders from both the eastern and slightly lower than income inequality at western parts of the country and some 0.33 (Household Consumption Survey geopolitical leaders are renewing efforts 2023). Access to basic services such as wa- to unlock the country’s political dead- ter has become more challenging, particu- Challenges in deploying a unified and lock through the formation of an interim larly in the aftermath of the floods in Der- effective State response to the devastat- government to organize elections. Diplo- na and groundwater upsurge in Zliten. ing floodings in the eastern part of the matic efforts from the United Nations and geopolitical leaders have also in- country in September 2023 have high- creased discussions with the internation- lighted Libya's fragilities. Competition ally recognized Government of National Recent developments over the control of the oil wealth and Unity which rejects the formation of a rent seeking continue to weaken the caretaker government. The Libyan GDP at factor prices grew The Libyan economy is dominated by the by 10.5 percent in 2023 mainly driven health of the economy and citizen trust. hydrocarbon sector and remains undiver- by the hydrocarbon sector. Oil produc- Libya’s key challenges remain to find a sified with a bloated public sector. The tion increased by 11 percent on an annu- peaceful resolution of the political divi- oil and gas sector represents 60 percent al basis to 1.18 million bpd thanks to the sions, improve the transparent and effec- of GDP, 94 percent of goods and services improved security conditions and lim- exports, and 97 percent of total govern- ited disruptions from the Derna flood- tive management of the oil wealth, and ment revenues in 2023. The private sector ings,the resumption of activities by rebuild and diversify the economy. is underdeveloped and employs less than several companies, higher financing 14 percent of the workforce. for investment and maintenance for Social conditions have deteriorated over the National Oil Company as well the past years due to high unemployment, as exemption from the Organization FIGURE 1 Libya / LYD/USD exchange rate in the official and FIGURE 2 Libya / Official inflation rate in the region of Tripoli parallel markets LYD/USD Percent change, y/y 10 8 Official Parallel 6 8 4 2 6 0 -2 4 -4 Inflation rate 2 -6 Food & Beverage -8 0 -10 Jan'17 Jan'18 Jan'19 Jan'20 Jan'21 Jan'22 Jan'23 Jan'24 Jan'19 Jul'19 Jan'20 Jul'20 Jan'21 Jul'21 Jan'22 Jul'22 Jan'23 Jul'23 Source: Central Bank of Libya. Sources: Central Bank of Libya and World Bank staff calculations. MPO 20 Apr 24 of the Petroleum Exporting Countries The GNU budget was overall balanced in is also expected assuming at least part (OPEC) output cuts. 2023 with a deficit of 0.1 percent of GDP. of a reconstruction program is imple- External surpluses have narrowed in 2023 Government revenues dropped by 6 mented under agreed political and insti- driven by lower global oil prices. During percent in nominal terms compared to tutional arrangements. the initial ten months of 2023, the trade 2022 while spending decreased by 1.7 Inflation is projected to stabilize at 2.4 surplus contracted by 56 percent in nom- percent despite a 26 percent increase of percent in 2024 and 2025 thanks to less inal terms compared to the same period the wage bill. In 2023, the GNU trans- volatile global commodity prices and in 2022 as export revenues dropped by 44 ferred an extra budgetary allocation of progress toward the full reunification of percent and imports fell by 27 percent. 11 percent of GDP to the NOC and the central bank. According to official figures, inflation General Electricity Company of Libya On the fiscal front, the Budget of the GNU eased from 4.6 to 2.3 percent between 2022 (GECOL). The public wage bill, subsi- is expected to be nearly balanced as im- and 2023. Inflation remains mainly driven dies, and social transfers represent re- proved government revenues are counter- by food prices which affects more poor spectively 51 and 16 percent of gov- balanced by more spending on wages and and vulnerable households. While the di- ernment spending. Notwithstanding oil subsidies and part of the needed recon- nar was overall stable in nominal terms in revenues and fuel subsidies are under- struction. The current account surplus is 2023, the gap between the official and par- represented since 2021 when the NOC projected to stabilize at around 26-28 per- allel market rates has widened since Octo- established a barter system oil for fuel. cent of GDP during the 2024-2026 period ber 2023. The gap reached 27 and 43 per- assuming oil production stabilizes. cent in December 2023 and February 2024 This outlook is subject to significant un- respectively, in comparison to 7 percent on certainty and downside risks. Recent social average during the first nine months of Outlook unrests in January 2024 in southern Libya 2023. The widening gap is driven by high- and threats to shut down oil fields across er demand for foreign exchange fueled by The Libyan economy is expected to the country by the Petroleum Facility weak fiscal discipline and high public grow between 4.8 and 5.8 percent over Guards (PFG) in February 2024, along with spending, trade and financial policies defi- 2024-2026 assuming overall political and clashes in Tripoli, highlight the fragility of ciencies translating into large informal and oil sector stability is maintained. On the situation. Prospects for political stabil- illicit trade. In March 2024, the Central the demand side, growth would be dri- ity and consensus remain uncertain but Bank of Libya (CBL) announced the intro- ven by government spending and in- would be a major upside for the Libyan duction of a tax on FX sales of 27 percent. vestment. A public investment rebound economy and citizens. TABLE 2 Libya / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2021 2022 2023e 2024f 2025f 2026f Real GDP growth, at constant market prices 153.5 1.3 -1.7 4.8 5.3 5.8 Private consumption 136.8 -4.2 -12.8 2.8 4.5 4.1 Government consumption 41.6 23.2 -2.2 3.9 5.4 7.2 Gross fixed capital investment 255.2 5.5 -19.6 8.4 1.6 -1.1 Exports, goods and services 126.1 -19.9 7.1 5.8 6.8 7.1 Imports, goods and services 46.6 -13.9 -16.5 5.4 5.7 5.2 Real GDP growth, at constant factor prices 114.5 2.4 10.5 4.8 5.3 5.8 Agriculture 6.0 10.0 6.8 4.0 6.0 4.0 Industry 223.0 -12.1 12.5 5.1 5.7 6.3 Services 28.8 32.4 7.8 4.4 4.7 5.1 Inflation (consumer price index) 2.8 4.6 2.3 2.5 2.4 2.9 Current account balance (% of GDP) 11.9 22.1 24.6 26.3 28.0 28.5 Fiscal balance (% of GDP) 9.2 2.1 -0.1 -0.1 -0.7 -2.2 Revenues (% of GDP) 49.0 49.6 51.7 51.6 52.9 52.2 Debt (% of GDP) 72.5 57.6 54.5 58.1 62.2 58.9 Primary balance (% of GDP) 9.2 2.1 -0.1 -0.1 -0.7 -2.2 GHG emissions growth (mtCO2e) 68.9 -10.1 -13.0 4.0 13.4 11.4 Energy related GHG emissions (% of total) 58.8 60.9 62.6 62.4 61.1 62.1 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. MPO 21 Apr 24 After five consecutive years of drought, water scarcity is posing a growing threat MOROCCO Key conditions and to the Moroccan economy and society. Rainfall has remained well below histor- challenges ical averages since 2019, reducing dams’ filling rates to little over 25 percent and Table 1 2023 Despite a challenging global environ- aggravating the overexploitation of un- Population, million 37.8 ment, Morocco is leveraging its presence derground water sources. The govern- GDP, current US$ billion 143.1 in international markets. Dynamic man- ment is responding to the looming water GDP per capita, current US$ 3782.4 ufacturing and services exports together crisis with the deployment of new infra- a 4.8 National poverty rate with workers’ remittances are contribut- structure, including desalination plants. It a 9.8 ing to a pronounced improvement in is also imposing water restrictions on ir- Lower middle-income poverty rate ($3.65) a 39.5 the current account balance. The suc- rigated agriculture and other activities, Gini index School enrollment, primary (% gross) b 114.2 cession of greenfield FDI projects an- which may need to be tightened if cli- Life expectancy at birth, years b 74.0 nounced in recent months suggests that matic conditions do not improve. Total GHG emissions (mtCO2e) 90.5 Morocco has become increasingly attrac- tive for foreign investors. Low sovereign Source: WDI, Macro Poverty Outlook, and official data. spreads and a stable currency are ad- a/ Most recent value (2014). b/ WDI for School enrollment (2022); Life expectancy ditional signs of the confidence instilled Recent developments (2021). by the Moroccan economy. Yet, the private sector still lacks the dy- The expansion of the agricultural sector namism that would be required to meet owing to a base effect and the strong per- Economic growth has accelerated thanks the landmark targets of the New De- formance of tourism-related services have to a partial recovery of agricultural out- velopment Model. Estimated potential pulled real GDP growth to 2.8 percent in growth is half of that which would be 2023. Although some export-oriented nich- put, solid manufacturing and services ex- needed to double per capita income lev- es are growing at double digits, industrial ports, and supportive macroeconomic els by 2035. Gross capital formation con- growth has been dampened by the con- policies. But the country faces adverse la- tinues to be led by the public sector, traction of phosphates - fertilizers and the bor market dynamics as the private sector while domestic private investment is construction sector. On the demand side, is still recovering from recent shocks and still recovering from recent shocks. The growth has been pulled by net exports performance of labor markets remains and (mostly public) investment. After a five-year long drought is destroying underwhelming, with a spike in un- contracting in 2022, private consumption rural jobs. Limited employment opportu- employment and a sustained increase increased moderately in 2023 supported nities and eroded real disposable incomes of inactivity that disproportionately af- by a decline in inflation from 10.1 percent due to the recent inflationary surge are fects women and the youth. Although in February 2023 to 2.3 percent in January the recent inflationary shock is subdu- 2024. In the context of weakening price likely to have negative impacts on welfare, ing, labor income losses, especially in pressures, the central bank has main- which will be partly mitigated by ongoing rural areas, could have a negative im- tained the monetary policy rate un- social protection reforms. pact on households’ purchasing power changed at 3 percent since March 2023, and welfare. back in positive territory in real terms. FIGURE 1 Morocco / Real GDP growth and contributions to FIGURE 2 Morocco / Actual and projected poverty rates and real GDP growth real GDP per capita Percent, percentage points Poverty rate (%) Real GDP per capita (constant LCU) 10 45 40000 8 40 35000 6 35 30000 4 30 25000 2 25 0 20000 20 -2 15000 15 -4 10000 10 -6 5 5000 -8 2018 2019 2020 2021 2022 2023e 2024f 0 0 Private consumption Government consumption 2013 2015 2017 2019 2021 2023 2025 Investment Net exports International poverty rate Lower middle-income pov. rate GDP growth Upper middle-income pov. rate Real GDP pc Sources: HCP and World Bank staff estimates. Source: World Bank. Notes: see Table 2. MPO 22 Apr 24 The current account deficit declined from materialize. The solid progression of tax 3.5 to 0.4 percent of GDP due to a rebound and non-tax revenues will allow the gov- of tourism inflows, a 27.5 percent expan- Outlook ernment to maintain the budget deficit on sion of automobile and electronics exports, a downward trend despite a solid growth lower energy prices, and strong remit- Real GDP growth is projected to decline to of public spending pulled by social sector tances. Gross FDI inflows contracted by 2.4 percent in 2024 and to accelerate to 3.7 reforms and ongoing water investments. 17.8 percent, to 2.2 percent of GDP, but percent in 2025. The agricultural sector is This would allow public debt to slightly new greenfield investment projects contin- expected to contract by 2.8 percent, as un- decline over time (as a ratio of GDP). ue to be announced. usually dry and warm conditions are com- The balance of risks remains tilted to the The budget deficit declined from 5.4 to 4.3 promising key crops. On the contrary, the downside. A continuation of the drought percent of GDP in 2023. An emergency manufacturing sector is expected to accel- would depress agricultural output and plan for the water sector and ongoing so- erate to 2.3 percent, supported by the con- potentially affect other sectors. More cial sector reforms are exerting pressures tinued momentum of the automotive and geopolitical tensions could adversely af- on public spending, which increased by 5.8 electronic industry, an improved perfor- fect Morocco’s terms-of-trade and slow percent in 2023. But this was more than off- mance of phosphates and fertilizers, and a the disinflation process. The ongoing fis- set by the dynamism of tax and especial- more dynamic construction sector pulled cal consolidation increasingly relies on ly non-tax revenues originating from asset by new programs of direct financial sup- asset monetization operations that create monetization operations. port to home-buyers and the post-earth- a stream of future payment obligations Despite rising economic growth, the labor quake reconstruction effort. The services from the State. force participation rate decreased to 43.6 sector is expected to slow moderately (to In 2023, poverty fell to its pre-covid levels percent in 2023 (-0.7 p.p), with a gender 3.7 percent), as tourism begins to revert and will continue to slowly decrease in gap of 50 p.p. Unemployment increased to long-term growth patterns. On the de- 2024, despite the announced negative per- to 13 percent. Although most of the job mand side, private consumption is project- formance of the agricultural sector. At the losses are in rural, non-remunerated ac- ed to gradually firm-up, supported by national level, the new direct cash transfer tivities, unemployment is concentrated milder inflationary pressures. program, better targeted and more gener- among the educated urban youth. Losses The current account deficit is projected to ous than the previous ones, will at least in labor income may explain the drop in widen to 2 percent of GDP as domestic partly compensate welfare losses from household confidence, at its lowest level demand recovers and cereal imports in- price rises and rising inactivity. However, since 2008. Households lament a worsen- crease. It will continue to be financed for the growth process to be more inclusive ing of living conditions due to high food by long-term official debt and FDI in- and resilient, a more intense job creation prices and the deterioration of public ser- flows, which are expected to increase as is more than ever needed, especially for vices, education in particular. the recently announced projects begin to women and youth. TABLE 2 Morocco / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2021 2022 2023e 2024f 2025f 2026f Real GDP growth, at constant market prices 8.0 1.3 2.8 2.4 3.7 3.3 Private consumption 6.9 -0.7 0.5 1.3 2.1 2.3 Government consumption 7.2 3.3 3.6 4.6 4.1 3.6 Gross fixed capital investment 7.6 -2.2 6.3 4.4 4.6 4.9 Exports, goods and services 7.9 20.4 10.8 7.6 8.3 8.1 Imports, goods and services 10.4 9.0 6.4 8.8 6.3 7.0 Real GDP growth, at constant factor prices 7.8 1.0 3.1 2.4 3.7 3.3 Agriculture 19.0 -12.7 6.7 -2.8 8.1 0.7 Industry 7.1 -1.7 -0.4 2.3 2.5 3.1 Services 5.8 5.4 4.0 3.7 3.3 4.2 Inflation (consumer price index) 1.4 6.6 6.1 2.2 2.4 2.1 Current account balance (% of GDP) -2.3 -3.5 -0.4 -2.0 -2.4 -2.1 Net foreign direct investment inflow (% of GDP) 1.1 1.2 0.1 1.0 1.1 1.2 Fiscal balance (% of GDP) -6.0 -5.4 -4.3 -4.1 -3.5 -3.0 Revenues (% of GDP) 25.3 28.7 28.6 28.3 27.4 26.8 Debt (% of GDP) 69.5 71.6 70.6 70.2 69.5 68.4 Primary balance (% of GDP) -3.7 -3.2 -2.2 -1.6 -1.0 -0.5 a,b International poverty rate ($2.15 in 2017 PPP) 0.6 0.6 0.6 0.5 0.4 0.4 a,b Lower middle-income poverty rate ($3.65 in 2017 PPP) 5.0 4.9 4.7 4.5 4.2 3.7 a,b Upper middle-income poverty rate ($6.85 in 2017 PPP) 28.7 28.5 27.6 27.0 25.4 24.2 GHG emissions growth (mtCO2e) 5.4 -0.7 0.5 1.0 2.7 2.7 Energy related GHG emissions (% of total) 74.7 74.7 74.6 74.8 75.4 75.9 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. a/ Calculations based on 2013-ENCDM. Actual data: 2013. Nowcast: 2014-2023. Forecasts are from 2024 to 2026. b/ Projection using neutral distribution (2013) with pass-through = 0.87 (Med (0.87)) based on GDP per capita in constant LCU. MPO 23 Apr 24 major role in the economy. Key risks to the outlook arise from oil prices volatility, OMAN Key conditions and which could pose significant challenges to the fiscal and external accounts and dis- challenges rupt the government’s reform program. This is in addition to geopolitical risks as- Table 1 2023 Economic activity slowed down in 2023 on sociated with a potential escalation of the Population, million 4.6 the back of OPEC+ output cuts, but a grad- conflict in the Middle East. On the upside, GDP, current US$ billion 108.2 ual recovery is underway, driven by non- higher oil production and prices, coupled GDP per capita, current US$ 23295.3 hydrocarbon sectors notably in agricul- with additional fiscal and diversification a 90.1 School enrollment, primary (% gross) ture, construction, and services. Higher en- measures, could spur growth and a 72.5 ergy prices, and prudent fiscal manage- strengthen fiscal and external positions. Life expectancy at birth, years Total GHG emissions (mtCO2e) 125.6 ment under the Medium-Term Fiscal Plan Steadfast implementation of the new social Source: WDI, Macro Poverty Outlook, and official data. (MTFP) and Vision 2040, have together protection and labor laws would promote a/ WDI for School enrollment (2022); Life expectancy boosted the fiscal and external positions. private sector-led growth and boost female (2021). The hydrocarbon windfalls were also labor force participation. wisely utilized to reduce government debt in 2023 by almost half of its peak of almost Oman’s economy continues to perform 68 percent of GDP in 2020. well, supported by favorable oil prices and The government continues to advance Recent developments governance and efficiency reforms. In Jan- a commitment to the economic diversifica- uary 2024, it has revealed plans to boost Real GDP growth is estimated to have de- tion program, in line with the country’s the economy through the launch of the celerated to 1.4 percent in 2023, down from Vision 2040. Concerted efforts are under- Oman Future Fund by Oman Investment 4.3 percent in the previous year, reflecting way to catalyze private investment, in- Authority (of OMR2 billion/US$5.2 bil- the oil output cuts to adjust to the OPEC+ cluding through Oman Investment Au- lion), with an ambition to attract foreign quotas. In the first nine months of 2023 investment and boost investments in lo- (9M-2023), real growth reached 2 percent, thority (OIA). The government’s commit- cal small and medium-sized enterprises with the non-hydrocarbon sectors growing ment to keep the fiscal position under (SMEs). Furthermore, Oman is prioritiz- by 2.7 percent and compensating for the control and use the oil revenues to lower ing investments in renewable energy and slowdown in the hydrocarbon sector (0.5 public debt signals a commitment to fiscal green hydrogen projects, in support of percent). Average headline inflation eased the country’s energy transition goals and from 2.8 percent in 2022 to 0.9 percent in discipline and has prompted a credit rat- to meet its target of deriving 20 percent 2023, contained by subsidies on basic food ing upgrade. Economic growth is expect- of the total energy generation from re- items and domestic petroleum prices. ed to improve slightly in 2024, but newable sources by 2030. Fiscal revenues declined by 17 percent in downside risks to the outlook include oil Notwithstanding the existence of sizable the first ten months of 2023 (10M-2023), market volatility, climate change risks, buffers, government revenue, export pro- due to the decline in hydrocarbon rev- ceeds, and the debt trajectory remain close- enues. In parallel, public spending de- and potential indirect spillovers from the ly tied to oil market developments, as the clined by 16 percent during the same ongoing conflict in the Middle East. hydrocarbon sector continues to play a period, reflecting a drop in public debt FIGURE 1 Oman / Real annual GDP growth FIGURE 2 Oman / General government operations Percent change Percent of GDP 10 45 Hydrocarbon GDP 40 8 35 Non-Hydrocarbon GDP Real GDP 30 6 25 20 4 15 10 2 5 0 0 -5 2021 2022 2023e 2024f 2025f 2026f -2 2021 2022 2023e 2024f 2025f 2026f Revenues Expenditures Budget balance Sources: Oman authorities, World Bank staff projections, and IMF projections. Sources: Oman authorities and World Bank staff projections. MPO 24 Apr 24 service costs as well as the removal of gas unemployment rate is projected at 1.5 Growth is expected to further accelerate purchase and transport expenses from the percent. According to the most recent over the medium term supported by glob- state’s general budget, which were trans- monthly statistical bulletin, the rate of job al demand recovery, increased investment ferred to the Integrated Gas Company. Ac- seekers among women aged 25-29 was 20 in non-hydrocarbon sectors and renewable cordingly, Oman’s overall fiscal surplus percent in December 2023 (6.7 percentage energy. Inflation is forecast to converge to declined to 2 percent of GDP during points lower relative to December 2022), 2 percent over the medium term, helped by 10M-2023, down from over 2.7 percent of while the rate of job seekers among men the stabilizing effect of the currency peg to GDP during the same period of 2022. The aged 25-29 in that same period was 2.4 the U.S. dollar. lower hydrocarbon revenues are estimated percent (0.3 percentage points higher rel- Despite relatively moderate hydrocarbon to limit the scope for larger declines in the ative to December 2022). prices during the forecast period, contin- debt-to-GDP ratio. With the repayment of ued fiscal discipline will keep Oman’s government debt, credit rating agencies overall fiscal balance in comfortable sur- Fitch and S&P upgraded Oman’s rating to plus, exceeding 4 percent of GDP in “BB+” from “BB”. Outlook 2024-26. Accordingly, public debt is ex- The trade balance surplus narrowed to pected to continue its downward trajectory US$20 billion (18.7 percent of GDP) by Oman’s economic outlook remains favor- over the medium term. end-2023, compared to over US$27 billion able, with real growth expected to reach Similarly, the current account is projected (31 percent of GDP) in 2022, as hydrocar- 1.5 percent in 2024, driven by increased to remain in surplus over the medium bon receipts contracted by almost 17 per- gas production and diversification efforts. term, as hydrocarbon and nonhydrocar- cent. Gross foreign assets remain sizable at These include efforts to further improve bon revenues rise. This will help Oman re- US$17.5 billion by end-2023. the business environment, support the role build its foreign reserves and improve the Based on the latest ILO modelled esti- of SMEs in the economy, and accelerate in- country’s resilience against oil market fluc- mates, the labor force participation rate vestments in renewable energy and green tuations and external shocks. Oil market and employment-to-population ratio are hydrogen. The newly issued tourism law volatility, tighter-than-needed global fi- projected to reach 68.7 percent and 67.7 is expected to attract FDIs to promote re- nancial conditions, climate change risks, percent respectively in 2024, slightly gional development in the country and im- and the impact of heightened geopolitical above the level projected in 2023. The prove the sector’s competitiveness. tensions are key risks to the outlook. TABLE 2 Oman / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2021 2022 2023e 2024f 2025f 2026f Real GDP growth, at constant market prices 3.1 4.3 1.4 1.5 2.8 3.2 Private consumption 6.8 4.2 1.8 2.2 2.8 2.6 Government consumption 0.9 3.1 1.1 1.8 1.7 2.4 Gross fixed capital investment -1.5 3.8 3.0 3.5 3.1 3.0 Exports, goods and services 14.2 13.0 1.2 1.9 3.5 3.4 Imports, goods and services 2.7 7.6 4.3 4.7 3.3 2.5 Real GDP growth, at constant factor prices 3.1 4.4 1.4 1.5 2.8 3.2 Agriculture 9.0 -9.7 2.7 1.3 1.5 1.4 Industry 1.1 5.1 0.2 1.8 2.1 2.3 Services 5.4 4.4 2.9 1.1 3.7 4.3 Inflation (consumer price index) 1.5 2.8 0.9 1.6 2.0 2.0 Current account balance (% of GDP) -5.4 5.0 2.8 2.9 2.6 2.4 Net foreign direct investment inflow (% of GDP) 8.6 4.0 5.6 3.4 3.6 3.8 Fiscal balance (% of GDP) -3.1 10.1 5.6 3.8 4.3 4.5 Revenues (% of GDP) 33.0 39.7 31.5 30.7 30.1 29.5 Debt (% of GDP) 61.3 39.9 37.6 35.4 33.1 31.9 Primary balance (% of GDP) 0.0 12.5 8.2 6.4 6.8 6.9 GHG emissions growth (mtCO2e) 4.1 6.6 4.9 3.5 4.4 0.0 Energy related GHG emissions (% of total) 71.5 72.6 73.3 73.7 74.5 74.5 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. MPO 25 Apr 24 PALESTINIAN Key conditions and Recent developments challenges TERRITORIES Since the onset of the conflict on October 7, activity in Gaza has come to a near-com- From 2017 to 2022, the Palestinian econo- plete stop: GDP declined by 86 percent in my barely grew, with an average annual the fourth quarter (Q4) of 2023. Simulta- Table 1 2023 real GDP growth of 0.6 percent. Economic neously, additional movement and access Population, million 5.1 potential has been principally curtailed by restrictions imposed by Israel within the GDP, current US$ billion 17.5 the restrictions stemming from the Israeli West Bank heavily dampened demand re- GDP per capita, current US$ 3401.8 occupation which, according to Israel, are sulting in an estimated 22 percent contrac- Upper middle-income poverty rate ($6.85) a 20.5 in place for security reasons. A combina- tion of the West Bank’s GDP in Q4 2023. a 33.7 tion of depressed aid inflows, COVID-19, The pre-conflict projection by the World Gini index b low private capital attraction, incomplete Bank, forecasting a 3.2 percent real GDP School enrollment, primary (% gross) 91.8 b reform efforts by the Palestinian Authority growth for the Palestinian economy in Life expectancy at birth, years 73.5 (PA), and the internal divide between the 2023, turned into a 6.4 percent contraction. Source: WDI, Macro Poverty Outlook, and official data. West Bank and Gaza, also contributed to The destruction in the economy’s produc- a/ Most recent value (2016), 2017 PPPs. b/ WDI for School enrollment (2022); Life expectancy economic stagnation. Before the onset of tive capacity has been severe and will have (2021). the ongoing conflict, the Palestinian econ- a lasting impact. In Gaza, as of January 26, omy was already slowing, especially in 2024, an estimated 82 percent of private Gaza reflecting an Israeli decision restrict- sector establishments have either been par- Since October 2023, the Palestinian ing Gazan fish sales in the West Bank, since tially damaged or destroyed. Further, 62 August 2022. In a context of weak growth percent of residential buildings in Gaza economy has experienced one of the outcomes, high unemployment, dwindling have incurred some form of damage. Infra- largest shocks recorded in recent eco- foreign aid, and no access to traditional structure is heavily impacted, with over 62 nomic history. In Gaza, the loss of life, economic policy instruments, the fiscal sit- percent of all roads damaged or destroyed. the speed and extent of fixed assets dam- uation in the Palestinian territories has Overall CPI in Gaza increased by 33 per- age, and the reduction in production steadily deteriorated over the years. cent in Q4 2023 compared to the previous Income per capita trends have been highly quarter, largely owing to supply disrup- flows are unparalleled. The knock-on ef- heterogeneous, across the territories. In tions stemming from the conflict. Food fects in the West Bank include massive 2022, the GDP per capita in Gaza was prices, specifically, increased by 39 per- job losses and a spiraling fiscal crisis for US$1,253 - approximately a quarter of the cent, quarter-on-quarter (q/q) driven by re- the Palestinian Authority, leading to West Bank's at US$4,491. Poverty has fol- duced access to food, heightened trans- lowed a similar trend as according to the lat- portation costs, and lower volumes of aid. further cuts and delays in public salary est national household survey from 2016/17, In contrast, the CPI in the West Bank in- payments. The outlook is tied to the almost half of the Gaza population lived creased marginally by 0.9 percent, q/q, conflict’s evolution and level of future below the upper-middle income poverty over the same period. restrictions imposed by Israel. line ($6.85 2017 PPP a day), compared to On the fiscal front, additional deductions less than 10 percent in the West Bank. by Israel from the revenues it collects FIGURE 1 Palestinian territories / Real GDP growth and FIGURE 2 Palestinian territories / Actual and projected contributions to real GDP growth poverty rates and real GDP per capita Percent, percentage points Poverty rate (%) Real GDP per capita (constant LCU) 30 40 4000 20 35 3500 30 3000 10 25 2500 0 20 2000 15 1500 -10 10 1000 -20 5 500 0 0 Private consumption Government consumption 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 Gross capital formation Net exports International poverty rate Lower middle-income pov. rate Statistical discrepancy GDP Upper middle-income pov. rate Real GDP pc Sources: Palestinian Central Bureau of Statistics and World Bank estimates. Source: World Bank. Notes: see Table 2. MPO 26 Apr 24 on behalf of the PA (clearance revenues) estimates indicate that approximately 74 Gaza, at least for the medium term. Work- increased from an average of NIS200m percent of employees in Gaza have been ers’ mobility within the West Bank and to NIS500-600m per month since October out of work since the start of the con- to the Israeli market will largely shape 2023. According to Israel, the additional flict. Around 170,000 workers from the growth outcomes in the West Bank. The deductions are equivalent to the amount West Bank, working in Israel and the Palestinian economy is expected to con- that the PA spends in Gaza, including settlements prior to October 7, have ei- tract further in 2024, by 6.5 percent. As- salaries to PA civil servants hired before ther lost their jobs or are no longer able suming an end to the hostilities, and re- 2007. Given the transition to a cash-based to access them. Furthermore, owing to construction efforts starting in 2025, economy as a result of the conflict, Israel the new Israeli-imposed restrictions on growth should rebound to 5.5 percent in says it is concerned the money could movement within the West Bank, ap- 2025 while GDP levels are not anticipated fall into the wrong hands. The PA dis- proximately 67,000 workers who com- to recover to the pre-conflict baseline any putes this risk and asserts that payments mute from different governorates can no time soon. Consequently, the poverty rate to Gaza have been occurring consistently longer reach their workplaces. is expected to remain high, exceeding 30 since before 2007, with no alteration in The sharp contraction of GDP per capita percent, in the outlook. the type of recipients or the mechanism. will result in a rapid increase in the On the fiscal front, an increase in clearance Due to the deductions, clearance revenue poverty rate. The national poverty rate at revenue transfers to the levels seen before transfers shrank by over 50 percent and, the international line of $6.85 a day is es- the conflict is assumed as well as a gradual as a response, the PA decided to decline timated to have stood at around 25.5 per- uptick in domestically managed taxes, re- several of the monthly transfers of the cent in 2022. The conflict pushed this up flecting rebounding economic activity. sharply reduced amount. Notably, clear- to almost 30 percent in 2023, with the ex- This will drive total revenues up, improv- ance revenues, prior to deductions, have pectation that this will increase further to ing the fiscal deficit over the medium term. shrunk drastically due to the contraction around 33.8 percent in 2024 – the high- However, these assumptions are subject to of economic activity and Palestinian est it has been in at least 20 years. This very high levels of uncertainty. trade. This, paired with decreased domes- corresponds to around 1.8 million people Downside risks remain elevated. The tic tax collection has made the 2023 fiscal living in poverty. severity of the economic contraction will deficit balloon fivefold vis-a-vis the pre- directly hinge on the evolution of the con- conflict baseline, reaching US$516 million, flict and the resolution of the clearance or 3.0 percent of GDP. revenues dispute. Absent a cessation of Even before the start of the conflict, un- Outlook the hostilities and a substantial increase employment in Gaza stood at 45.1 per- in external aid, the risks of potentially cent (September 2023), with youth un- The lagging effect of the fixed assets losses disorderly fiscal consolidation measures employment at 59.5 percent. Preliminary will keep economic activity subdued in cannot be excluded. TABLE 2 Palestinian territories / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2021 2022 2023e 2024f 2025f 2026f Real GDP growth, at constant market prices 7.0 3.9 -6.4 -6.5 5.5 4.2 Private consumption 7.5 20.5 -6.4 -7.3 9.4 9.0 Government consumption 10.3 -10.5 -11.3 0.3 2.7 2.5 Gross fixed capital investment 13.7 11.8 -3.4 -4.0 6.2 4.7 Exports, goods and services 17.3 6.2 2.9 3.0 10.7 8.4 Imports, goods and services 14.8 25.7 -2.6 -2.0 12.0 11.8 Real GDP growth, at constant factor prices 6.2 1.3 -6.4 -6.5 5.5 4.2 Agriculture -0.7 -5.7 -11.3 -5.2 3.3 2.7 Industry 4.5 3.4 -7.5 -6.0 9.0 8.6 Services 7.5 1.5 -5.6 -6.8 4.7 3.0 Inflation (consumer price index) 1.2 3.7 5.9 4.6 3.0 2.5 Current account balance (% of GDP) -9.8 -15.0 -14.7 -19.2 -16.3 -16.1 Net foreign direct investment inflow (% of GDP) 1.6 1.3 1.1 0.7 0.9 1.3 Fiscal balance (% of GDP) -5.8 -1.4 -3.0 -2.9 -2.7 -1.7 Revenues (% of GDP) 25.0 27.3 25.5 27.9 27.7 28.2 Debt (% of GDP) 56.0 53.2 58.2 64.9 64.2 63.3 Primary balance (% of GDP) -5.1 -0.7 -2.2 -2.2 -2.0 -1.1 a,b International poverty rate ($2.15 in 2017 PPP) 0.8 0.8 1.1 1.4 1.3 1.3 a,b Lower middle-income poverty rate ($3.65 in 2017 PPP) 4.5 4.5 5.9 7.1 6.5 6.2 a,b Upper middle-income poverty rate ($6.85 in 2017 PPP) 26.1 25.5 29.7 33.8 32.0 31.2 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. a/ Calculations based on 2016-PECS. Actual data: 2016. Nowcast: 2017-2023. Forecasts are from 2024 to 2026. b/ Projection using neutral distribution (2016) with pass-through = 0.87 (Med (0.87)) based on GDP per capita in constant LCU. MPO 27 Apr 24 showcasing Qatar's commitment to long- term economic growth and diversification. QATAR Key conditions and However, challenges remain. Gas produc- tion and prices continue to be key de- challenges terminants of fiscal and external accounts balances. More recently, these risks have Table 1 2023 In January 2024, Qatar launched the Third been compounded by the potential im- Population, million 3.0 National Development Strategy (NDS3) pact of the conflict in the Middle East on GDP, current US$ billion 227.5 2024-2030, the final stage toward achiev- energy price volatility, as well as its im- GDP per capita, current US$ 76699.8 ing Vision 2030. This strategy aims to ac- pact on incoming tourism and investment a 102.1 School enrollment, primary (% gross) celerate economic diversification, expand in the region. Recent Houthi attacks on a 79.3 North Field LNG production, and posi- the Red Sea shipping routes risk also af- Life expectancy at birth, years Total GHG emissions (mtCO2e) 130.7 tion Qatar as a top destination for in- fecting the European demand for Qatari Source: WDI, Macro Poverty Outlook, and official data. vestors. Qatar's diversification efforts gas in the near term, while Qatar's grow- a/ WDI for School enrollment (2020); Life expectancy have been ongoing for many years, culmi- ing dependence on China as a key trad- (2021). nating in the recent success of receiving ing partner—China was Qatar’s largest more than four million visitors in 2023, LNG buyer in 2022, accounting for 21.7 surpassing the annual visitor numbers of percent of Qatar’s exports—raises con- the previous five years. This positive mo- cerns about the country's vulnerability to Notwithstanding its large hydrocarbon mentum continues in 2024, with a record potential economic downturns in China. high of 702,800 visitors in January. The resources and associated liquefied natural positive trend in tourism has stimulated gas (LNG) revenues, Qatar is pursuing a other sectors, with strong backward link- long-term strategy focused on economic ages evident in the 15 percent growth of Recent developments diversification. Growth in tourism, new the hospitality sector in H12023, making infrastructure projects, and the launch of it the fastest-growing sector. Additionally, Following a significant 4.2 percent growth the transportation and entertainment sec- in 2022, driven primarily by hosting the the Third National Development Strategy tors experienced 9 percent and 6 percent FIFA World Cup, the economy has exhib- (NDS3) are expected to support the econ- growth respectively. Post-World Cup, the ited modest growth in year 2023, reach- omy. Nevertheless, the hydrocarbon sec- fiscal space generated from oil and gas ing 1.6 percent year-on-year (y-o-y) in tor continues to play a major role, as ex- revenues is being channeled towards in- H12023, driven mainly by hydrocarbon vestments in human capital, research and sector growth (3.2 percent) and, to a ternal and fiscal surpluses remain contin- development, and the private sector to much lesser extent, non-hydrocarbon sec- gent on LNG exports and will—in the further diversify the economy. The Qatar tors growth (0.6 percent). The latter was medium term—be aided by the North Investment Authority (QIA), ranked as the supported by new infrastructure projects Field LNG expansion. Key risks include tenth largest Sovereign Wealth Fund and a vibrant tourism sector post-World further escalation of geopolitical tensions (SWF) globally, plans to invest over US$1 Cup. The PMI – which reflects private billion in international and regional ven- sector activity – remained expansionary and fluctuating energy prices. ture capital funds in 2024, with a focus on except for December but suggests an the technology and healthcare sectors, overall modest growth in 2023. In the FIGURE 1 Qatar / Annual real GDP growth FIGURE 2 Qatar / Fiscal balance Percent, percentage points Percent of GDP 8 40 6 30 4 20 2 0 10 -2 0 Oil GDP growth Non-oil growth -4 Real GDP growth -10 -6 2020 2021 2022 2023 2024 2025 2026 2020 2021 2022 2023 2024 2025 2026 Fiscal balance Revenue Expenditure Source: World Bank. Source: World Bank. MPO 28 Apr 24 hydrocarbon sector, commitment towards continued tourist influx. International re- through the hosting of several major Asian and European countries are main- serves and foreign currency liquidity re- global events in 2024. The hydrocarbon tained through the signing by QatarEner- main strong, reaching QAR 246 billion sector is expected to decelerate to a 1.6 gy of new 10-year supply agreements, (USD 67.6 billion) in January 2024. percent growth in 2024, affected by ca- thereby providing a solid, long-term base The latest ILO estimates indicate that key pacity constraints. Yet, a major boost is for the expansion of gas exports despite labor market indicators are expected to re- anticipated for the period Q42025 to 2027, the risks of reduced European appetite for main stable through 2024. The labor force with the North Field expansion project Qatari gas in the near term triggered by re- participation rate (15+) is projected to re- coming online. Consumer price growth cent Houthi attacks on Red Sea shipping main at 88.9 percent in 2024 (equal to the is projected to decelerate to 2.1 percent, routes. Inflation remained subdued, reach- revised estimates for 2023), and the em- contained by the tight monetary policy. ing 3.1 percent in 2023 down from its 2022 ployment-to-population ratio is estimated Despite further moderation in global en- peak of 5 percent, helped by lower com- to remain at 88.8 percent for the year. The ergy prices, the fiscal and current account modity prices and a strong Qatari riyal, re- unemployment rate is projected to remain balances are projected to remain in sur- flecting the peg to the US dollar. The Qatar stable at 0.1 percent in 2024, with higher plus for the coming years. The fiscal sur- Central Bank (QCB) kept interest rates un- rates among women and among young plus is however anticipated to narrow to changed at 6 percent since July 2023, align- people. Women aged 15-24 were estimated 4.9 percent of GDP in 2024, as income ing with the US Federal Reserve. to experience the highest unemployment from oil and gas accounts for around Sizeable fiscal surpluses continued to be rate, around 1.7 percent in 2024. 80 percent of government revenue. The achieved (7.7 percent of GDP in H12023), much-delayed introduction of value- supported by the relatively elevated hy- added tax (VAT), assuming to take place drocarbon prices and a fall in public in 2025, will offset some of the declines spending after the World Cup. The cur- Outlook in hydrocarbon revenue and support rent account balance narrowed from strengthen the fiscal surplus, notwith- US$11.7 billion in Q1 to US$9.4 billion Real GDP growth is projected to standing a potential one-off impact on in Q3, primarily due to a smaller mer- strengthen marginally in 2024 but remain economic activity. chandise trade surplus and lower energy modest at 2.1 percent. Non-oil growth The current account surplus is also expect- prices, as natural gas prices fell from will continue to be robust at 2.4 percent, ed to narrow in the short-medium term, US$20/mmbtu in January 2023 to US$11/ driven by a growing tourism sector. but remains strong at 13.3 percent in 2024, mmbtu in September 2023. However, the Qatar's state-of-the-art infrastructure will supported by energy and services surplus remains ample, supported by allow the country to reap the benefits (tourism) exports. TABLE 2 Qatar / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2021 2022 2023e 2024f 2025f 2026f Real GDP growth, at constant market prices 1.6 4.2 1.8 2.1 3.2 4.7 Private consumption 3.4 5.2 2.7 3.5 3.5 3.4 Government consumption 2.8 4.1 1.2 1.5 2.4 2.3 Gross fixed capital investment 2.3 3.1 2.1 2.2 2.3 2.3 Exports, goods and services 2.4 4.7 2.4 2.7 4.2 6.5 Imports, goods and services 4.7 6.5 4.5 4.7 3.9 4.0 Real GDP growth, at constant factor prices 1.6 4.2 1.8 2.1 3.2 4.7 Agriculture 0.5 7.7 2.4 2.1 2.9 2.9 Industry 0.7 5.2 2.2 2.5 3.1 6.0 Services 3.5 2.0 0.9 1.4 3.4 1.8 Inflation (consumer price index) 2.3 5.0 3.1 2.1 1.9 1.9 Current account balance (% of GDP) 14.7 26.6 16.1 13.3 12.3 13.2 Net foreign direct investment inflow (% of GDP) -0.7 -1.0 -0.5 -0.8 -0.6 -0.6 Fiscal balance (% of GDP) 0.2 10.4 6.1 4.9 4.1 5.4 Revenues (% of GDP) 29.6 34.6 32.0 31.5 29.5 33.0 Debt (% of GDP) 58.4 42.4 41.4 39.2 38.5 36.2 Primary balance (% of GDP) 1.9 11.6 7.2 6.2 5.2 6.4 GHG emissions growth (mtCO2e) 3.9 4.3 0.9 2.2 3.3 4.3 Energy related GHG emissions (% of total) 71.9 73.0 73.1 73.6 74.3 75.3 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. MPO 29 Apr 24 and global economic activity. Delays or digressions in implementing structural re- SAUDI ARABIA Key conditions and forms in support of the diversification goals highlighted in the Vision 2030, per- challenges haps due to other global shocks or an un- comfortable fiscal position, would reduce Table 1 2023 Saudi Arabia has made significant oil pro- prospects for stronger long-term growth Population, million 32.8 duction cuts for over a year, as part of the and employment. GDP, current US$ billion 1069.0 OPEC+ alliance decisions. The most recent GDP per capita, current US$ 32593.0 voluntary cut of 1 mbpd was initiated in a 93.3 School enrollment, primary (% gross) July 2023 and extended to expire in Q2 Life expectancy at birth, years a 76.9 2024. However, these cuts did not prevent Recent developments Total GHG emissions (mtCO2e) 776.7 a decline in oil prices, as the average per Source: WDI, Macro Poverty Outlook, and official data. barrel price fell from US$100 to US$83 in Economic activity contracted in real terms a/ WDI for School enrollment (2008); Life expectancy 2022 and 2023, respectively; affected by by 3.7 percent (y/y) in Q4-2023 (prelimi- (2021). weak global demand. Assessing oil price nary data), which represents a sharp de- developments in a scenario where produc- cline in annual growth for the second con- tion cuts had not been implemented is secutive quarter. This translates to an an- challenging, yet the overall effect on the nual contraction of 0.9 percent in 2023, the fiscal and external positions is negative. worst performance in 20 years (apart from Moreover, with these cuts, Saudi Arabia the pandemic and global financial crises Subsequent OPEC+ decisions of cutting is losing market share to other oil ex- years). The decisions by OPEC+ to cut oil oil production is adversely affecting porters (e.g., the US, or Angola after it left production, initiated in Q1-2023 and fur- Saudi Arabia’s overall GDP, fiscal, and OPEC over quota disputes) and concerns ther deepened by Saudi Arabia’s volun- external balance positions. Meanwhile, remain over peak oil demand, which risks tary cut of 1 mbpd since H2-2023, have had the performance of non-oil private sector leaving oil reserves stranded. With this a detrimental impact on oil GDP, which background, limiting supply to stabilize contracted by 9.2 percent (y/y). The strong is robust and continue to reap benefits prices is becoming even more challenging performance of non-oil private activities, from reform implementation. Inflation for Saudi Arabia, which is further exacer- which grew by 4.6 percent (y/y) during remains contained supported by gener- bated by the Kingdom’s need to finance 2023, was not sufficient to fully compen- ous subsidies, tight monetary policy, its ambitious reform agenda. sate for the decline in oil activities. High- Other downside risks and uncertainties to frequency data reaffirm a strong start of and cheaper imports. An escalation in the outlook include downward revisions non-oil activities in 2024, with the Jan- regional and global armed conflicts, of China’s growth prospects, which will uary and February PMI recording 55.4 volatility in oil prices, and tighter-than- have an adverse impact on Saudi Ara- and 57.2, respectively; driven primarily needed global financial conditions are bia’s main export market. Further esca- by stronger domestic demand despite key risks to the outlook. lation of the conflict in the Middle East tight monetary conditions. and Russia’s invasion of Ukraine, in addi- Lower oil revenues, due to lower prices tion to tighter-than-needed global finan- and production levels, coupled with ex- cial conditions, all risk affecting regional pansionary fiscal policy (expenditures are FIGURE 1 Saudi Arabia / Annual real GDP growth FIGURE 2 Saudi Arabia / Central government operations Percent change Percent of GDP 20 40 15 30 10 20 5 10 0 0 -5 -10 -10 Budget Balance Revenues Expenditures 2020 2021 2022 2023e 2024f 2025f 2026f Oil GDP Non-Oil Private GDP -20 Government Activities Real GDP 2020 2021 2022 2023e 2024f 2025f 2026f Sources: GASTAT Saudi Arabia and World Bank staff estimates. Source: World Bank. MPO 30 Apr 24 up by 11 percent y/y) shifted the fiscal sur- Saudi women slightly rose in Q3-2023, halt the increase in oil production capacity plus of 2.6 percent of GDP in 2022 into a possibly driven by labor supply growth to 13 mbpd by 2027 (now at 12 mbpd), deficit of 2.1 percent of GDP in 2023. Fi- that outpaced labor demand. However, it oil output is expected to increase gradually nancing needs have been covered by the is- remains far below the level a year ago. The to exceed 10 mbpd by end 2024—from suance of a US$10 billion sovereign bond overall labor force participation rate, how- around 9 mbpd in January. With the recent while state oil firm Aramco introduced a ever, declined to 51.6 percent in Q3-2023, announcement by the Ministry of Energy performance-linked dividend, on top of its down from 52.4 percent in Q1-2023. The to extend voluntary oil production cuts annual base dividend, to shore up bud- number of Saudis working in the private until end Q2-2024, oil GDP is expected to getary funds. In January 2024, Saudi Ara- sector in Q3-2023 is estimated at 2.6 million contract in 2024 by 0.8 percent. These bia made its largest international debt is- while the non-Saudi nationals increased to trends are expected to be reversed in 2025, suance since 2017 (US$12 billion) to par- 8.1 million. The employment-to-popula- with oil output anticipated to ramp up ag- tially cover the anticipated financing gap. tion ratio decreased slightly between Q1 gressively resulting in 5.9 percent overall Balance of payments data shows the cur- and Q3-2023, with the declines primarily GDP growth. Inflation is expected to hover rent account surplus narrowing to US$36.9 driven by changes among Saudi males and around 2.2 percent in the medium term, billion during the first 9 months of 2023 among non-Saudi women. The employ- contained by generous subsidies on fuel (down from US$131 billion in the previous ment-to-population ratio among Saudis and food and cheaper imports. year) driven primarily by a 25.8 percent declined from 48 percent to 47.2 percent The fiscal deficit is expected to widen to fall in oil receipts. As a result, the estimat- over the same period. 2.4 percent of GDP in 2024, reflecting con- ed current account surplus narrowed from tinued expansionary fiscal policy and the 13.7 to 4 percent of GDP in 2022 and 2023, drop in oil receipts. Aramco’s distribution respectively. The Saudi Central Bank’s of performance-linked dividends, which (SAMA) foreign reserves reached US$436.9 Outlook started in Q3-2023, should improve the billion in December 2023, the lowest in 14 fiscal position in the medium term—sup- years, suggesting that oil revenues are be- Following the contraction witnessed in ported by recovery in oil production lev- ing channeled to PIF to finance its larger 2023, real GDP is expected to grow by 2.5 els. As budgetary financing needs grow, investment role in the local economy. percent in 2024, driven primarily by robust the debt-to-GDP ratio is expected to rise Overall, labor market outcomes are pos- non-oil private activities (forecast to grow to 27.7 percent in 2024, before moderating itive, as Saudis, both men and women, by 4.8 percent). Loose fiscal policy, lower to 25.8 percent in the medium term. find jobs particularly in manufacturing, interest rates, strong private consumption, The current account surplus should widen construction, and in the public sector. and investment, will continue to support in the medium term (averaging 7.1 percent The overall unemployment rate remained non-oil activities in the medium term. of GDP) supported by the recovery of oil at 5.1 percent, while unemployment for Meanwhile, and despite Aramco’s plan to production and non-oil exports. TABLE 2 Saudi Arabia / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2021 2022 2023e 2024f 2025f 2026f Real GDP growth, at constant market prices 4.3 8.7 -0.9 2.5 5.9 3.2 Private consumption 9.5 4.9 4.5 3.3 3.0 3.1 Government consumption 0.8 9.3 4.9 2.0 5.8 2.7 Gross fixed capital investment 10.7 21.7 3.3 3.0 2.0 3.8 Exports, goods and services 1.0 19.7 -7.9 -1.0 11.0 3.7 Imports, goods and services 8.3 12.4 8.1 4.3 5.0 4.0 Real GDP growth, at constant factor prices 3.9 9.2 -1.3 2.5 5.9 3.2 Agriculture 2.5 4.1 5.5 2.0 2.0 2.0 Industry 1.1 13.2 -4.8 -0.5 6.4 1.6 Services 7.6 4.7 2.9 6.1 5.6 5.0 Inflation (consumer price index) 3.1 2.5 2.3 2.1 2.3 2.2 Current account balance (% of GDP) 4.8 13.7 4.0 4.2 6.6 7.7 Net foreign direct investment inflow (% of GDP) -0.2 0.1 -1.2 -1.1 -1.1 -1.1 Fiscal balance (% of GDP) -2.1 2.6 -2.1 -2.4 -0.6 0.2 Revenues (% of GDP) 27.8 30.5 30.2 32.0 33.9 34.1 Debt (% of GDP) 26.9 23.8 26.2 27.7 26.1 25.5 Primary balance (% of GDP) -1.2 3.3 -1.1 -1.4 0.5 1.3 GHG emissions growth (mtCO2e) 1.8 3.5 2.8 3.1 3.5 1.9 Energy related GHG emissions (% of total) 68.3 68.5 68.3 68.1 68.0 67.3 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. MPO 31 Apr 24 decrease in the welfare of Syrian house- holds stems from the direct effects of SYRIAN ARAB Key conditions and the long-lasting conflict and recent nat- ural disasters, combined with increased challenges REPUBLIC inflation following regional shocks and monetization of fiscal deficits. In 2022, ex- Syria’s civil war is the deadliest conflict treme poverty, as measured by the share of the past three decades. Between 2011 of the population living below the interna- Table 1 2023 and 2022, the Uppsala Conflict Data Pro- tional poverty line of US$2.15 (2017 PPP) Population, million 23.2 gram (UCDP) recorded more than 407,000 per capita per day, affected almost 25 per- GDP, current US$ billion 12.0 battle-related deaths in Syria. As political cent of the Syrian population, starkly con- GDP per capita, current US$ 515.9 settlements to end the conflict remain elu- trasting with the virtually non-existent ex- International poverty rate ($2.15) a 24.8 sive and extremist groups, notably the so- treme poverty before the conflict. When a 67.0 called Islamic State, continue waging in- considering the US$3.65 (2017 PPP) inter- Lower middle-income poverty rate ($3.65) b surgencies, the Syrian civil war has be- national poverty line of low- and middle- School enrollment, primary (% gross) 74.4 b come one of the most protracted conflicts income countries, poverty affected 67 per- Life expectancy at birth, years 72.1 in recent history. To date, the conflict in cent of the population in 2022, equivalent Total GHG emissions (mtCO2e) 51.4 Syria ranks second in duration, with on- to approximately 14.5 million Syrians. Source: WDI, Macro Poverty Outlook, and official data. ly the Afghan civil wars of 1989-2001 and a/ Most recent value (2022), 2017 PPPs. b/ WDI for School enrollment (2022); Life expectancy 2006-2021 lasting longer since 1990. (2021). A decade of conflict has had devastating economic and social consequences on Recent developments Syria. Syria has further been subjected Syria’s protracted economic contraction to several external shocks, which the The Middle East conflict has spilled over war has made the country ill-equipped Syria’s borders. According to data com- persists due to a combination of shocks to deal with. These include economic piled by the Armed Conflict Location & related to conflict both within Syria and turmoil in neighboring Lebanon and Event Data Project (ACLED), Syria record- across the region. Indeed, the Middle Turkey, the knock-on effects on commod- ed 146 conflict events and 136 fatalities East conflict has spilled over into Syria ity prices due to the war in Ukraine, linked to Israeli attacks from October 2023 as airstrikes damaged critical infrastruc- earthquakes in Syria and Turkey in Feb- to January 2024. Repeated Israel airstrikes ruary 2023, and lately, attacks and trade on Syria’s main airports led to a 42 percent ture. With the economy in continued re- disruptions related to the ongoing Mid- decline in overall flights in the fourth quar- treat and increased cost of living due to dle East conflict. Gross Domestic Product ter of 2023 compared to the previous quar- currency depreciation and trade disrup- (GDP) contracted by 54 percent between ter. Military groups affiliated with the tions, ordinary Syrians continue to bear 2010 and 2021. The decline in Gross Na- Iran-backed “axis of resistance” carried tional Income per capita prompted the out at least 83 attacks on US bases in north- the brunt of the conflict, with about World Bank to reclassify Syria as a low- east Syria from October 2023 to January one-quarter of Syrians now estimated to income country in 2018. 2024 and targeted locations in the occu- live in extreme poverty. Poverty rates in Syria have increased sig- pied Golan Heights, prompting a fierce nificantly in the last two decades. This US military response in January 2024. FIGURE 1 Syrian Arab Republic / Inflation and exchange FIGURE 2 Syrian Arab Republic / Actual and projected rates poverty rates and real GDP per capita Percent, y/y growth Poverty rate (%) Real GDP per capita (constant LCU) 350 100 80000 CPI inflation 90 300 70000 CPI inflation: food 80 WFP minimum food basket price 60000 250 SYP to US$ market exchange rate 70 60 50000 200 50 40000 150 40 30000 100 30 20000 20 50 10 10000 0 0 0 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 -50 International poverty rate Lower middle-income pov. rate 2010 2012 2014 2016 2018 2020 2022 Real GDP pc Sources: Central Bureau of Statistics of Syria, WFP Market Price Watch Bulletin, Source: World Bank. Notes: see Table 2. and World Bank estimates. MPO 32 Apr 24 Macroeconomic conditions in Syria have in 2023, a 5 percent decrease from the consumption will remain subdued with further deteriorated. Economic activity, previous year. Compounded by soaring a continued erosion of purchasing power as proxied by nighttime light emissions prices and diminished access to essential amid rising prices. Private investment is (see our Syria Economic Monitor for de- goods, this has deepened welfare chal- expected to remain weak, as the security tails), declined in 2023 by 1.2 percent lenges for Syrian households. According situation is expected to remain volatile year-on-year (yoy), particularly along to the REACH Humanitarian Situation and economic and policy uncertainties to Syria’s western borders, possibly due to Overview in Syria (HSOS) surveys, access persist. Government spending, especially weakened trade activity. Nighttime gas to health services, sewage systems, and capital expenditures, will continue to be flaring data points to a decrease in oil food markets has continued to deteriorate constrained by low revenues and lack of production in 2023 of 3.5 percent yoy, in highly affected areas in northern Syria access to financing. likely due to earthquake- and conflict-re- after the earthquake. Heightened financial Risks to the growth outlook are signif- lated infrastructure damage. vulnerability increasingly prompts house- icant and tilted to the downside. In- Currency depreciation and consumer holds to borrow money, purchase goods creased intensity of conflict and height- price inflation are persistently high. In on credit, and rely on child labor as a ened geopolitical tensions stemming 2023, the market price of the Syrian coping strategy. from the recent Middle East conflict risk pound depreciated by 141 percent deepening a growth contraction. Escalat- against the US dollar. With heavy re- ing airstrikes and bombings may lead liance on imports, currency depreciation to additional infrastructure damage, po- quickly leads to higher consumer prices Outlook tentially further disrupting supply chains in Syria. Consequently, consumer price and increasing logistics costs. A broader inflation is estimated to have risen by Subject to extraordinarily high uncertain- regional conflict could elevate commodi- 93 percent in 2023. ty, real GDP is projected to contract by 1.5 ty prices, negatively affecting Syria as a After rebounding in the wake of the Feb- percent in 2024, assuming that the regional net food and fuel importer. A potential ruary 2023 earthquake, aid flows to Syria conflict will remain largely contained this redirection of aid and international as- have declined and access to humanitarian year. Inflation is anticipated to remain sistance in response to the conflict in assistance has become more challenging. high in the short term due to the pass- Gaza could exacerbate Syria’s humani- According to the UN Financial Tracking through effects of currency depreciation, tarian crisis, potentially worsening mal- Service (FTS), total funding for humanitar- along with persistent shortages and re- nutrition, further increasing poverty, and ian assistance amounted to US$2.8 billion duced rationing of food and fuel. Private the likelihood of disease outbreaks. TABLE 2 Syrian Arab Republic / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2021 2022 2023e 2024f a Real GDP growth, at constant market prices 1.3 -0.1 -1.2 -1.5 Inflation (consumer price index) 118.8 74.0 92.6 99.7 Fiscal balance (% of GDP) -9.6 -8.4 -8.2 -8.0 b,c International poverty rate ($2.15 in 2017 PPP) 23.6 24.8 39.0 46.8 b,c Lower middle-income poverty rate ($3.65 in 2017 PPP) 65.0 67.0 79.7 84.9 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Notes: e = estimate, f = forecast. a/ Projections based on nighttime light data. b/ Calculations based on 2022-HNAP and 2007, 2009 CBS. Actual data: 2022. Nowcast: 2021, 2023. Forecasts: 2024. c/ Projection and nowcast using neutral distribution (2022) with pass-through = 0.7 (Low (0.7)) based on GDP per capita in constant LCU deflated by CPI. Poverty rates in 2009 and 2022 use different sources that are not directly comparable. MPO 33 Apr 24 lay the foundation for a more sustain- able economic growth. TUNISIA Key conditions and challenges Table 1 2023 Recent developments Tunisia faces increasingly difficult eco- Population, million 12.5 nomic conditions. Since 2011 weak re- Economic recovery has been modest in GDP, current US$ billion 51.2 form implementation has left the econ- real terms since the sharp contraction in GDP per capita, current US$ 4107.7 omy inefficiently closed to investment 2020 due to COVID-19 (-8.6 percent). Af- a 16.6 National poverty rate and trade and ill-equipped to exploit ter a moderate rebound in 2021 (4.6 per- a 2.2 opportunities in the global economy. cent), the rate of growth decelerated to Lower middle-income poverty rate ($3.65) a 16.2 As growth and private job creation 2.6 percent in 2022 and to only 0.4 percent Upper middle-income poverty rate ($6.85) Gini index a 32.8 stagnated, the State stepped in as an in 2023. The latest economic slowdown School enrollment, primary (% gross) b 105.0 employer of last resort and price sta- reflects the severe drought in 2023 (with b 73.8 bilizer through subsidies. This has agriculture declining by 11 percent in real Life expectancy at birth, years caused a deterioration of the fiscal terms), the uncertain financing condi- Total GHG emissions (mtCO2e) 38.8 and the current account deficits under tions, and some fiscal consolidation. Source: WDI, Macro Poverty Outlook, and official data. the weight of a large public sector Shortages of some basic products have a/ Most recent value (2021). b/ Most recent WDI value (2021). wage bill, higher consumer subsidies persisted amidst import compression and and underperforming state-owned en- declining agricultural production. terprises. The COVID-19 pandemic, The merchandise trade deficit narrowed to Tunisia’s economic outlook remains highly Russia’s invasion on Ukraine and the 10.9 percent of GDP in 2023 down from ongoing drought have exacerbated 17.5 percent in 2022 amidst more benign uncertain. Tunisia’s already timid post- these longstanding weaknesses. global prices and robust manufacturing Covid economic recovery came almost to a Tunisia’s growth prospects continue to exports. As a result, the current account halt in 2023 amid a severe drought and hinge on decisive structural reforms to deficit (CAD) fell from 8.7 to 2.6 percent of difficult financing conditions. Authorities address economic distortions and fiscal GDP over the same period, also helped by pressures. These include: (i) eliminating robust tourism receipts. have established a Central Bank financing business entry permits and unnecessary While the decline in commodity prices and facility to finance the government debt licenses, (ii) gradually phasing out con- the energy and food subsidy bill provides service in 2024 and have used it to repay trols to capital outflows for non-offshore some respite, the pressure on public fi- a maturing Eurobond. Inflation and un- businesses and individuals; (iii) reduc- nances remains elevated as public expen- employment remain significant chal- ing consumer subsidies while compen- diture reforms continue to falter amid sating vulnerable households; (iv) im- weak growth. This contributes to the lenges for the authorities. Accelerating proving the performance of state-owned challenges in financing the public debt, the recovery and stabilizing the economy enterprises; (v) making the tax system which between 2019 and 2023 increased will require the speedy implementation of fairer. Progress in these reforms is from 67.8 to 80.1 percent of GDP (with- fiscal, SOE and structural reforms. critical to stabilize the macroeconomic out including government guarantees situation, accelerate the recovery and and SOE debts). FIGURE 1 Tunisia / Real GDP: Actual, forecast and pre- FIGURE 2 Tunisia / Actual and projected poverty rates and COVID-19 trend real GDP per capita Millions of real TND (2015 prices) Poverty rate (%) Real GDP per capita (constant LCU) 110 000 35 8200 30 8000 105 000 Pre Covid19 trend 25 7800 100 000 20 7600 SM24 95 000 15 7400 10 7200 90 000 5 7000 85 000 0 6800 2010 2012 2014 2016 2018 2020 2022 2024 2026 80 000 International poverty rate Lower middle-income pov. rate 2010 2012 2014 2016 2018 2020 2022 2024 2026 Upper middle-income pov. rate Real GDP pc Sources: World Bank estimates and National Institute of Statistics. Source: World Bank. Notes: see Table 2. MPO 34 Apr 24 With limited access to international fi- The CAD is projected to remain stable at nancing, the authorities have established 2.4 percent of GDP in 2024 with continued a Central Bank financing facility up to Outlook growth in travel exports and stable terms TND 7 billion in 2024 (4 percent of GDP of trade. With FDI projected to be relative- and a quarter of 2024 financing needs) to After the significant slowdown in 2023, ly stable and minimal portfolio invest- finance the government debt service. The the economy is expected to experience a ments, foreign lending would still have to facility – which was used to repay a Euro moderate rebound. Assuming a modera- shoulder the financing of the CAD. 850 million Eurobond maturing in Febru- tion of the ongoing drought and slight- The 2024-26 growth forecast is subject to ary 2024 - could undermine the stability ly more benign financing conditions, significant downside risks. Growth projec- of the Dinar, the Central Bank indepen- growth is forecast to reach 2.4 percent tions would be even lower should Tunisia dence, and fiscal discipline. in 2024 and 2.3 percent in 2025-26. not implement decisive fiscal and pro- Inflation continued to moderate since the With this growth rate, real GDP in 2024 competition reforms and/or should avail- peaks of February 2023, declining from would finally reach its pre-Covid 19 lev- able financing not be sufficient to cover 10.4 percent to 7.5 percent in February el, a full four years after the pandem- Tunisia’s external needs. If these condi- 2024. The decline appears to be driven by ic. This modest structural growth is due tions occur, it may be challenging to secure lower global prices and weak domestic de- to challenging conditions linked to wa- sufficient foreign currency in the economy, mand. However, inflation remains above ter scarcity, the uncertainty around debt which could lead to pressures on exchange both the 2021-2022 average (7 percent) and financing, and the weak momentum on rates and prices, exerting a negative im- food inflation is higher (10.2 percent), structural reforms. pact on economic activity and employ- which presents a particular challenge for Tunisia’s public finance and external ac- ment. In addition, should the drought con- lower-income households. count will remain precarious in the ab- ditions persist, the projections could be re- With weak economic growth, the un- sence of sufficient external financing. The vised downwards given the negative im- employment rate increased to 16.4 per- budget deficit is expected to decline pact on agriculture and the trade balance. cent in Q4 2023 from 15.2 percent a somewhat to 6.1 percent of GDP in 2024 Poverty using the Lower Middle Income year before. This is one of the highest (compared to 6.7 percent of GDP in Poverty Line (US$3.65/person/day line in rates in the region and it is associated 2023). That is mainly driven by a decline 2017 PPP term) is projected to remain with a year-on-year decrease in labor of subsidies and wage bills in real terms stable at 2.3 percent in 2022-23 and so force participation. The average rate in and a moderate increase in tax revenues. until 2026. The share of poor and vulner- 2023 (45.8) was 1.5 percentage points Gross financing needs are expected to able at the upper-middle income country below the average pre-Covid, suggest- rise further at 16.1 percent of GDP in poverty line (US$6.85/person/day in 2017 ing continued growth in the number 2024 (from 13.8 percent in 2023) due to PPP) is projected to constantly decline to of discouraged workers. significant external debt service. 14.5 percent by 2026. TABLE 2 Tunisia / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2021 2022 2023e 2024f 2025f 2026f Real GDP growth, at constant market prices 4.6 2.6 0.4 2.4 2.4 2.2 Private consumption 2.4 2.2 1.4 2.7 2.9 3.4 Government consumption 1.5 -1.2 1.9 -0.5 -1.0 -1.8 Gross fixed capital investment 3.2 1.7 -10.7 5.6 8.5 3.2 Exports, goods and services 11.9 17.3 9.8 2.1 4.0 4.1 Imports, goods and services 10.9 11.5 6.6 2.7 5.2 4.6 Real GDP growth, at constant factor prices 4.8 2.5 0.0 2.4 2.3 2.3 Agriculture -2.3 1.0 -11.0 5.9 5.0 5.0 Industry 9.8 0.9 -1.5 -0.3 -0.3 0.9 Services 4.1 3.4 2.4 2.9 2.9 2.4 Inflation (consumer price index) 5.7 8.3 9.3 7.0 6.0 5.0 Current account balance (% of GDP) -5.9 -8.7 -2.7 -2.4 -2.3 -2.4 Net foreign direct investment inflow (% of GDP) -1.1 -1.4 -1.3 -1.3 -1.2 -1.2 Fiscal balance (% of GDP) -7.6 -6.7 -6.4 -5.6 -4.6 -3.2 Revenues (% of GDP) 25.7 28.5 28.5 28.0 26.1 26.3 Debt (% of GDP) 79.9 79.9 80.0 79.7 79.1 81.5 Primary balance (% of GDP) -4.7 -3.4 -3.1 -2.2 -1.1 0.2 a,b International poverty rate ($2.15 in 2017 PPP) 0.3 0.2 0.2 0.2 0.2 0.2 a,b Lower middle-income poverty rate ($3.65 in 2017 PPP) 2.0 2.0 2.0 1.9 1.8 1.8 a,b Upper middle-income poverty rate ($6.85 in 2017 PPP) 16.2 15.7 15.7 15.3 14.8 14.4 GHG emissions growth (mtCO2e) 4.7 -0.3 0.3 1.7 2.3 2.3 Energy related GHG emissions (% of total) 70.4 70.0 70.1 70.4 70.9 71.4 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. a/ Calculations based on 2021-NSHBCSL. Actual data: 2021. Nowcast: 2022-2023. Forecasts are from 2024 to 2026. b/ Projection using neutral distribution (2021) with pass-through = 0.7 (Low (0.7)) based on GDP per capita in constant LCU. MPO 35 Apr 24 to weaker economic global activities and a decline in oil production to comply UNITED ARAB Key conditions and with OPEC+ decisions. As a result, the oil sector has witnessed a contraction challenges EMIRATES of an estimated 2.7 percent. The non-oil sector, however, remains robust and re- Hydrocarbon activity remains the prima- silient as growth accelerates to 5.4 per- ry source of government revenue, but ef- cent, driven by the financial and insur- Table 1 2023 forts are underway to accelerate the di- ance services, construction, real estate, Population, million 9.5 versification of the economy and of gov- and wholesale and retail trade sectors. GDP, current US$ billion 477.1 ernment revenues. These include the in- Relatedly, the Purchasing Managers' In- GDP per capita, current US$ 50128.3 troduction of Corporate Income Tax (CIT) dex (PMI) rose to 57.5 in February 2024, School enrollment, primary (% gross) a 115.8 in mid-2023, coupled with a phased with- indicating a stimulation in non-oil private a 78.7 drawal from the business fee structure. sector growth, driven by increases in out- Life expectancy at birth, years The outlook for the non-oil sector is ro- put, new orders, and employment. Total GHG emissions (mtCO2e) 292.3 bust, with an anticipated increase in oil Inflation pressures eased in 2023 due to Source: WDI, Macro Poverty Outlook, and official data. sector activity expected to maintain lower food prices, offsetting higher hous- a/ WDI for School enrollment (2020); Life expectancy (2021). strong external and fiscal positions. ing costs, with public wage growth re- Key risks to growth include OPEC+ deci- maining moderate throughout the year. sions on quotas, as well as the continua- Following the US Federal Reserve's tion/expansion of the conflict in the Middle stance, the Central Bank of UAE held East and its potential impact on oil prices key policy rates steady at 5.4 percent volatility and on the movement of goods since July 2023. The banking system re- The UAE maintains its status as a key and people (tourism). In particular, the mains well capitalized and liquid, with regional hub for trade, finance, and disruption of trade routes in the Red Sea the non-performing loans ratio dropping tourism, bolstered by substantial pro- have triggered an increase in shipping to 5.3 percent in Q42023 (down from costs and rerouting, including for Asia-Eu- 6.5 percent in Q42022) and private sector gresses in economic diversification and a rope trade. This could negatively impact credit continuing to grow. reduced dependence on hydrocarbon in- the transport and logistics sectors, posing The fiscal surplus more than halved in come. Economic growth is estimated to potential downside risks to economic 2023, declining to 5.6 percent (down from have significantly decelerated in 2023, growth in 2024. 10.8 percent in the previous year), reflect- primarily due to OPEC+ production re- ing the impact of cuts in oil production on oil proceeds. The decrease in government ductions, but is expected to pick up in revenue was due to diminished tax and 2024. Major risks to the outlook include Recent developments non-tax receipts, although this was part- an escalation of geopolitical conflicts, ly offset by increased social security con- large fluctuations in oil prices, and con- The UAE economy experienced a signif- tributions. Meanwhile, expenditures grew icant slowdown to 3.1 percent in GDP across all subcategories, except for spend- tinued global financing tightening. growth in 2023, down from 7.9 percent ing on goods, services grants, and capital in 2022. The deceleration was attributed spending, which has seen a minor decline. FIGURE 1 United Arab Emirates / Annual real GDP growth FIGURE 2 United Arab Emirates / Public finances Percent change Percent of GDP 15 40 10 30 5 20 0 10 -5 0 2021 2022 2023 2024 2025 2026 2021 2022 2023 2024 2025 2026 Oil GDP Non-Oil GDP GDP Balance Revenues Expenditures Sources: UAE authorities, IMF WEO, and World Bank staff estimates. Sources: UAE authorities, IMF WEO, and World Bank staff estimates. MPO 36 Apr 24 This strategic allocation supports key ini- with projected rates of 18.6 percent and to remain contained at around 2.1 per- tiatives such as the UAE Energy Strategy 5.5 percent respectively for 2023. cent during 2025-26. Yet, the positive im- 2050, the UAE Tourism Strategy 2031, the pact from falling commodity prices and UAE Digital Government Strategy 2025, lower import costs (from expanded trade and the Dubai Autonomous Transporta- agreements) may be offset by spikes in tion Strategy, underlining a focus on sus- Outlook food prices. tainable and digital growth. The fiscal surplus is expected to be sus- The current account surplus reached an es- Real GDP growth is projected to accelerate tained by strong oil revenues, together timated 9.1 percent of GDP, driven by oil re- to 3.9 percent in 2024, fueled by OPEC+'s with a robust growth of the non-oil econ- ceipts and rising non-oil exports. Free trade announced significant oil production hike omy, and is projected to further decline to agreements with key Asian and African in the second half of 2024 and a recovery 5.1 percent of GDP in 2024. The introduc- markets are anticipated to continue to fur- in global economic activity. Oil output tion of a 9 percent federal corporate tax in ther facilitate and boost non-oil exports growth is projected to reach 5.8 percent June 2023 is expected to expand the share and sustain the external balance surplus. in 2024, as OPEC+ announces extension of of non-oil revenues and broaden the tax The limited availability of UAE household additional voluntary cuts (163 tb/d), to the base. The ongoing implementation of fis- and labor market data prevents a detailed Q22024, with an expectation that global oil cal revenue reforms, along with the main- measurement and understanding of prices will remain strong. Non-oil output tenance of prudent and well-coordinated poverty, inequality, and livelihoods. Ac- will remain robust and continue to support fiscal policies tailored to individual emi- cording to the most recent available ILO economic growth in 2024, expanding at 3.2 rates, will enhance fiscal buffers and bol- estimates, the labor force participation rate percent, driven by strong performance in ster overall fiscal sustainability. was expected to reach 82.7 percent in 2023, the tourism, real estate, construction, A strong performance in the external sec- slightly above its 2019 level. Employment transportation, and manufacturing sectors. tor, bolstered by diversification initiatives, rebounded in 2022 to pre-pandemic levels However, growth prospects are tempered is anticipated to maintain a current ac- and was expected to continue to increase by substantial risks, notably, from poten- count surplus, projected at 8.4 percent of in 2023. The unemployment rate was pro- tial additional decisions by OPEC+ to de- GDP in 2024. Export performance is ex- jected to be 2.7 percent for 2023, a de- lay increases in production, and other pected to continue to be affected by volatil- crease from the height of the pandemic members decisions on production, in addi- ity in the oil sector and the reestablishment but remaining below the 2019 rates. Un- tion to the adverse impact of the conflict in of secure trade corridors. Nonetheless, di- employment rates remain substantially the Middle East on UAE’s economy. versifying into non-oil sectors and focus- higher among young adults ages 15-24 In 2024, inflation is expected to moderate ing on emerging markets in South Asia than among adults ages 25 and over. The to 2.3 percent - helped by earlier interest and East Africa are projected to improve gap is especially wide among women, rate hikes and reflecting base effects - and export proceeds. TABLE 2 United Arab Emirates / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2021 2022 2023e 2024f 2025f 2026f Real GDP growth, at constant market prices 4.4 7.9 3.1 3.9 4.1 4.0 Private consumption 5.0 9.0 5.2 4.1 4.0 4.0 Government consumption 1.4 3.5 3.0 2.7 2.6 2.4 Gross fixed capital investment 9.6 6.0 5.7 3.6 3.5 3.3 Exports, goods and services 6.8 8.4 3.5 4.8 4.6 4.5 Imports, goods and services 8.8 7.4 5.3 4.8 4.1 4.1 Real GDP growth, at constant factor prices 4.4 7.9 3.1 3.9 4.1 4.0 Agriculture 3.8 3.4 3.5 3.5 3.0 3.0 Industry 1.3 8.8 1.2 3.8 4.5 4.2 Services 7.4 7.1 4.9 4.0 3.8 3.8 Inflation (consumer price index) -0.1 4.8 3.2 2.3 2.1 2.1 Current account balance (% of GDP) 11.5 11.7 9.1 8.4 8.3 8.3 a Fiscal balance (% of GDP) 3.5 10.8 5.6 5.1 4.8 4.7 Revenues (% of GDP) 30.2 33.6 31.7 30.9 30.0 29.9 Debt (% of GDP) 35.1 31.4 29.2 27.1 25.3 23.6 Primary balance (% of GDP) 3.7 11.1 5.8 5.3 5.0 4.9 GHG emissions growth (mtCO2e) 11.4 7.0 -1.9 1.5 1.4 1.6 Energy related GHG emissions (% of total) 75.1 76.4 75.8 75.6 75.3 75.1 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. a/ Consolidated fiscal balance. MPO 37 Apr 24 impacted national growth in 2023 and ex- acerbated IRG’s fiscal and monetary chal- REPUBLIC OF Key conditions and lenges. Since October 2023, the escalation of the conflict in the Middle East and in challenges YEMEN the Red Sea, intensified by direct Houthi involvement, further compromises the al- Yemen's humanitarian crisis is deeply ready precarious economic and social con- rooted in its conflict and complex, highly ditions of the Yemeni people. Table 1 2023 fragmented political and economic land- Furthermore, Yemen continues to face Population, million 34.4 scape. Between 2015 and 2023, the coun- deep structural challenges. The key oil GDP, current US$ billion 18.4 try has experienced a staggering 54 per- sector has suffered from years of lack GDP per capita, current US$ 533.4 cent contraction in real GDP per capita, of investments, maintenance, and inabili- School enrollment, primary (% gross) a 83.9 resulting in most Yemenis living in pover- ty to retain or attract foreign investment. a 63.8 ty and 17 million facing food insecurity, The non-oil sector is severely constrained Life expectancy at birth, years as evidenced by the 2022 Integrated Food by physical barriers to domestic trade Total GHG emissions (mtCO2e) 22.2 Security Phase Classification (IPC). More- and logistics, interruptions in essential Source: WDI, Macro Poverty Outlook, and official data. over, the conflict has intensified the coun- service delivery, acute input shortages, a/ WDI for School enrollment (2016); Life expectancy (2021). try's fragmentation into two distinct eco- pervasive double taxation, and uncoordi- nomic zones, each governed by its unique nated policies. Additionally, Yemenis re- set of institutions (including two central main vulnerable to volatility in remit- Amid the blockade of the IRG’s oil ex- banks with their respective currencies) tances and aid flows, a key lifeline, as and policies, resulting in increasing dis- well as climate change impacts on agri- ports by the Houthis and conflict in the parities. The Northern areas, under culture and water resources. Middle East, Yemen navigates between Houthi control, are home to some 70 per- Living conditions are dire for most Yemeni glimpses of hope and a grim reality. The cent of the population while the Southern people due to inadequate food security, national economic rebound in 2022 was areas, governed by the Internationally limited dietary diversity, and access to Recognized Government (IRG), hold the health and education, as well as basic ser- short-lived, with 2023 witnessing a country’s oil and gas resources. vices. While some households, especially sharp 24 percent decline in GDP per The economy has further deteriorated the better-off, can sell assets or tap into capita. Consequently, widespread pover- since the expiration of the truce in late remaining savings to navigate shortages, ty and food insecurity are estimated to 2022. During 2022, the economy showed due to widespread poverty and food inse- have intensified. The outlook remains signs of improvement, supported by a curity, many households have exhausted UN-brokered truce that brought a glim- these typical coping mechanisms. Conse- uncertain, due to stalled peace negotia- mer of hope, albeit without the parties quently, they turn to last-resort strategies, tions and regional conflict. While the reaching a permanent political settlement. including child labor or engaging in high- IRG faces mounting external financing The truce expired in October 2022, and risk work, with enduring destructive ef- needs, hopes for the future hinge on although an informal truce remained in fects on safety, physical and mental health, place, the situation worsened due to a and family and social fabric. Children are conflict resolution, timely support from Houthi-imposed blockade on IRG’s oil ex- most vulnerable and disproportionately partners, and government’s reforms. ports. This ongoing blockade dramatically affected by these challenges, suffering FIGURE 1 Republic of Yemen / Real GDP per capita FIGURE 2 Republic of Yemen / Exchange rate trend: Sana’a and Aden Base 100 in 2014 YER per US$1 100 1800 Aden 1600 90 Sana'a 1400 80 1200 70 1000 60 800 50 600 40 400 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Jan-20 Jul-20 Jan-21 Jul-21 Jan-22 Jul-22 Jan-23 Jul-23 Jan-24 Sources: World Bank and IMF staff calculations. Sources: Telegram Exchange Market Group and World Bank staff calculations. MPO 38 Apr 24 from some of the highest levels of stunting (YER). In 2023, the country's current ac- and remittances. These developments are and being underweight. count deficit widened to 19 percent of expected to significantly impact the eco- GDP, mainly due to the halt in IRG’s nomic situation in Yemen, with another oil exports. This resulted in pressures on projected contraction of 1.0 percent in real liquid international foreign exchange re- GDP in 2024 and further fiscal and mone- Recent developments serves, as reported by CBY-Aden, and a tary pressures on the IRG. Any disruptions notable depreciation of the YER in the to humanitarian aid, essential imports, re- The Houthi blockade on IRG’s oil exports Aden market to YER 1,620 per US dollar mittances, and sources of livelihood will and heightened tensions significantly im- by the end of January 2024 (from 1,114 exacerbate Yemen's economic and social pacted Yemen’s economy in 2023. Overall, in 2022), reflecting levels last observed conditions, particularly in a society national GDP is estimated to have con- at the end of 2021. However, despite the plagued by widespread poverty, depriva- tracted by 2.0 percent in real terms in currency depreciation in the Aden market, tion, and food shortages. The risks regard- 2023, following a rebound of 1.5 percent with the deeply depressed national econ- ing food insecurity are alarming, exacer- in 2022 but the dollar GDP per capita de- omy, consumer prices in Yemen declined bated by the suspension of aid and food cline was much deeper, as noted above. on average by 1.5 percent during 2023, also distribution by the World Food Program The Houthi blockade on IRG’s oil exports due to a drop in global commodity prices. (WFP) in Houthi-controlled areas. The resulted in a notable decrease in oil pro- conflict has already inflicted profound and duction, from an estimated 51.4 thousand far-reaching economic, social, and human- barrels a day in 2022 to 17.0 thousand in itarian consequences on Yemen. 2023. Additionally, heightened uncertain- Outlook Although risks continue to lean towards ties, hostile actions, and protests further the downside, Yemen holds a significant stifled activity in the non-oil sector. The macroeconomic outlook for Yemen is opportunity for peace dividends if the The fiscal situation of the IRG has deterio- clouded by the regional conflict and es- conflict is resolved. The country stands at rated. According to the Ministry of Finance calating tensions in the Red Sea. As a re- a pivotal moment in its development tra- in Aden, IRG’s fiscal revenues declined by sult, the resumption of IRG's oil exports jectory. While heightened domestic and over 30 percent in 2023, primarily oil and in 2024 is now unlikely due to the slow- regional tensions pose significant risks to customs revenues. The pledged budgetary down in peace negotiations amid the con- its economic, social, and humanitarian sit- support from Saudi Arabia, totaling flict, resulting in a downward revision of uation, the attainment of a lasting truce US$1.2 billion, with an initial disburse- growth projections. Also, maritime traffic or peace agreement holds the promise of ment of US$250 million in August 2023 along the Red Sea route has decreased by rapid economic recovery. With strong ex- (followed by a second disbursement in 30 percent since mid-December, disrupt- ternal financial assistance and reconstruc- early 2024), helped alleviate some of the ing broader trade flows. While Yemen's tion efforts supported by Yemen's devel- financial pressures, particularly in fund- imports and prices have so far shown rela- opment partners, along with post-conflict ing public sector wages. However, despite tive stability, with continued conflict, there reform, the country could achieve acceler- measures such as reducing subsidies and are increasing risks of supply shortages ated growth within a short timeframe. In expenditures on goods and services, the and rising import costs due to reduced and such a favorable scenario, growth would IRG’s fiscal deficit is estimated to have more costly imports, increased shipping be expected to be driven by a swift re- widened from 2.7 percent in 2022 to expenses, including due to rising war pre- bound in domestic transportation, trade, around 4.0 percent of GDP in 2023. miums and insurance costs. Furthermore, financial inflows, and reconstruction. Additionally, the complete halt in IRG’s the sanctions imposed on the Houthis by Such efforts are essential for overcoming oil exports has intensified external pres- the US administration in February 2024 the current crisis and laying the founda- sures and led to the further depreciation could have extensive repercussions across tions for a unified and prosperous future of the Yemeni Rial in the Aden market various sectors, including the banking, aid, for all Yemenis. TABLE 2 Republic of Yemen / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2021 2022 2023e 2024f 2025f Real GDP growth, at constant market prices -1.0 1.5 -2.0 -1.0 1.5 a Inflation (consumer price index) 31.5 29.5 -1.5 14.2 17.3 Current account balance (% of GDP) -13.8 -17.8 -19.3 -24.5 -22.9 Net foreign direct investment inflow (% of GDP) 3.2 0.9 -0.4 0.4 0.2 Fiscal balance (% of GDP) -0.9 -2.7 -3.9 -3.4 -3.5 Revenues (% of GDP) 7.3 9.5 6.9 7.0 7.3 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Notes: e = estimate, f = forecast. a/ Inflation rates refer to end-of-period figures. MPO 39 Apr 24 Macro Poverty Outlook 04 / 2024