MENA Economic Update
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This report is produced two times per year, reporting on the recent economic developments and short term outlook of the Middle East and North Africa region. It is produced by the Chief Economist's office of the region (MNACE). These reports highlight a particular theme (such as fuel subsidies, service delivery, oil prices). This series was formerly known as MENA Economic Monitor, and before that, Middle East and North Africa Regional Economic Update, and combines with the series Middle East and North Africa Quarterly Economic Brief.
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Publication
A New State of Mind: Greater Transparency and Accountability in the Middle East and North Africa
(Washington, DC : World Bank, 2022-10-05)The MENA region is facing important vulnerabilities, which the current crises—first the pandemic, then the war in Ukraine—have exacerbated. Prices of food and energy are higher, hurting the most vulnerable, and rising interest rates from the global tightening of monetary policy are making debt service more burdensome. Part I explores some of the resulting vulnerabilities for MENA. MENA countries are facing diverging paths for future growth. Oil Exporters have seen windfall increases in state revenues from the rise in hydrocarbon prices, while oil importers face heightened stress and risk—from higher import bills, especially for food and energy, and the depreciation of local currencies in some countries. Part II of this report argues that poor governance, and, in particular, the lack of government transparency and accountability, is at the root of the region’s development failings—including low growth, exclusion of the most disadvantaged and women, and overuse of such precious natural resources as land and water. -
Publication
Middle East and North Africa Economic Update, October 2019: Reaching New Heights - Promoting Fair Competition in the Middle East and North Africa
(Washington, DC: World Bank, 2019-10-09)Part I of this report discusses the short- and medium-term growth prospects for countries in the Middle East and North Africa (MENA). The region is expected to grow at a subdued rate of 0.6 percent in 2019, rising to 2.6 percent in 2020 and 2.9 percent in 2021. The growth forecast for 2019 is revised down by 0.8 percentage points from the April 2019 projection. MENA’s economic outlook is subject to substantial downside risks—most notably, intensified global economic headwinds and rising geopolitical tensions. Part II argues that promoting fair competition is key for MENA countries to complete the transition from an administered to a market economy. Part II first examines current competition policies in MENA countries and to promote fair competition calls for strengthening competition law and enforcement agencies. It also calls for corporatizing state-owned enterprises, promoting the private sector and creating a level-playing field between them. Any moves to reform MENA economies would be aided by professional management of public assets, which could tap into a new source of national wealth. -
Publication
Middle East and North Africa Economic Monitor, October 2018: A New Economy for Middle East and North Africa
(Washington, DC: World Bank, 2018-10)Growth in the Middle East and North Africa (MENA) region is projected to rebound to an average of 2% in 2018, up from an average 1.4% in 2017. The modest rebound in growth is driven mostly by the recent rise in oil prices, which has benefitted the region’s oil exporters while putting pressure on the budgets of oil importers. The rebound also reflects the impact of modest reforms and stabilization efforts undertaken in some countries in the region. The report forecasts that regional growth will continue to improve modestly, to an average of 2.8% by the end of 2020 while there is the ongoing risk that instability in the region could worsen and dampen growth. Despite recovery, the slow pace of growth will not generate enough jobs for the region’s large youth population. New drivers of growth are needed to reach the level of job creation required. The report offers a roadmap for unlocking the enormous potential of the region’s large and well-educated youth population by embracing the new digital economy. Broader and bolder reforms will be needed to achieve this goal, along with critical investments in digital infrastructure. It will require the reorientation of education systems toward science and technology, the creation of modern telecommunications and payments systems, and a private-sector driven economy governed by regulations that encourage rather than stifle innovation. -
Publication
Middle East and North Africa Economic Monitor, April 2018: Economic Transformation
(Washington, DC: World Bank, 2018-04-16)After a sharp fall in 2017, economic growth in MENA is projected to rebound to 3.1 percent in 2018, thanks to the positive global outlook, oil prices stabilizing at relatively higher levels, stabilization policies and reforms, and recovery and reconstruction as conflicts recede. The outlook for MENA remains positive, and the growth rebound is expected to gain momentum over the next two years, exceeding 3 percent in 2020. While stabilization policies have helped economies adjust in recent years, .a second phase of reforms is needed should be transformative if the region is to reach its potential and create jobs for hundred million young people who will enter the labor market in coming decades. In this report, we explore the role that public-private partnerships can play. not only in providing an alternative source of financing but in helping change the role of the state from the main provider of employment to an enabler of private sector activity. Studies have shown that the gap between MENA economies and fast-growing ones is the performance of the services sector. The disruptive technology offers new opportunities for boosting private-sector-led growth through enhancement of high-tech jobs in the services sector. The report argues that combining the region's fast-growing pool of university graduates and a heavy penetration of social media and smartphone, could serve as the foundation for a digital sector that could create much-needed private sector jobs for the youth over the next decade. -
Publication
Middle East and North Africa Economic Monitor, October 2017: Refugee Crisis in MENA, Meeting the Development Challenges
(Washington, D.C.: World Bank, 2017-10-11)The pickup in economic activity in the Middle East and North Africa (MENA) region is expected to continue in 2018 and 2019. MENA's oil exporters and oil importers both are benefitting from improved global growth; increased trade with trading partners in Europe and Asia; more stabilized commodity markets, especially oil; and some reforms undertaken in the region. The World Bank estimates that growth will accelerate to above 3 percent in 2019. Growth, however, remains below potential as crises and conflicts continue to damage output and reduce employment. While MENA has experienced more frequent conflicts than any other part of the world, by its magnitude, the refugee crisis represents something new. The protracted stay of refugees in hosting communities, now in its sixth year, not only has increased the risk to MENA's economic outlook but also has brought refugees' long-term development challenges to the forefront. Meeting these enormous challenges requires collective efforts. -
Publication
Middle East and North Africa Economic Monitor, April 2017: The Economics of Post-Conflict Reconstruction in MENA
(Washington, DC: World Bank, 2017-04-17)Plagued by war, violence and low oil prices, economic activity in the Middle East and North Africa (MENA) region remained subdued between 2013 and 2015, but the situation is expected to improve and growth to surge above 3 percent over the forecast period. Though still below potential, the improvement in growth offers hope. We see signs of "green shoots" in some countries in the region, therefore we have upgraded our short-term prospects for MENA from "cautiously pessimistic" to "cautiously optimistic" over the forecast period. The prospects of peace in Syria, Yemen and Libya are one of the keys to resuming growth over the next decade. But realizing that potential depends crucially on how the post-conflict reconstruction is conducted. On the one hand, a well-managed process could help these war-tom countries rebuild their shattered economies and re-integrate their people so that the region as a whole, and possibly the rest of the world, benefits. On the other hand, a badly managed process can risk a recurrence of conflict, continued stagnation and suffering, and perpetual fragility. The economics of postconflict reconstruction, therefore, is critical to the future of MENA's economies. -
Publication
Middle East and North Africa Economic Monitor, October 2016: Economic and Social Inclusion to Prevent Violent Extremism
(Washington, DC: World Bank, 2016-10-05)The year 2016 appears to be one of the toughest for the Middle East and North Africa (MENA) region as their governments face serious policy challenges. The biggest challenge for oil exporters is managing their finances and diversification strategies with oil below $45 a barrel. Fiscal consolidation in a difficult sociopolitical environment and spillovers from conflicts are creating challenges for oil importers as well. Real GOP growth in MENA for 2016 is projected to fall to its lowest level since 2013 -- 2.3 percent -- lower than last year's growth by half a percentage point and about one percentage point lower than predicted in April 2016. It is clear that the disappointing performance of the MENA economies, and possibly the global economy, is partly due to the rise of terrorist attacks and spread of violent extremism. In this report, we attempt to shed light on the underlying causes of this phenomenon by applying an economic perspective to the demand for and supply of violent extremists. Looking at a dataset on foreign fighters joining Daesh, we find that the factors most strongly associated with foreign individuals' joining Daesh have to do with a lack of inclusion -- economic, social and religious -- in their country of origin. Promoting greater inclusion, therefore, could not only bring down the level of violent extremism, but it could improve economic performance in the MENA region. -
Publication
MENA Quarterly Economic Brief, July 2016: Whither Oil Prices?
(Washington, DC: World Bank, 2016-07-28)This issue of the World Bank MENA Quarterly Economic Brief seeks to understand the factors behind the new normal of the oil market to discern the evolution of world oil prices in the future, and their implications for the economies of the Middle East and North Africa (MENA). Our findings show that the oil price crash of 2014 was preceded by a significant increase in the size and frequency of volatility of oil prices. This volatility in turn contributed to the accumulation of oil inventories, attributing to the decline in oil prices. Noting that, historically, oil price slumps have lasted longer than spikes, we suggest that the current situation in the oil market may persist because of the changing behavior of market players, and the fact that overall oil demand is weak and not expected to rebound anytime soon. We expect the world oil market to work through its current oversupply and rebalance in early 2020 at market-clearing prices that are close to the marginal cost of the last producer (US shale oil producers). Oil prices are likely to be in the range of $53 - $60 a barrel and stay there for several years. The new normal for oil prices will prove difficult for MENA oil producers and could end up overhauling the existing social contract. -
Publication
Middle East and North Africa Economic Monitor, April 2016: Syria, Reconstruction for Peace
(Washington, DC: World Bank, 2016-04-11)The short term economic outlook for the Middle East and North Africa (MENA) region remains “cautiously pessimistic”. A combination of civil wars and refugee inflows, terrorist attacks, cheap oil, and subdued global economic recovery is expected to keep average growth in the MENA region around 3 percent in 2016, for the fourth year in a row. Furthermore, the humanitarian and economic situation in the war torn countries keep deteriorating. In this report we will explore ways in which a strategy of reconstruction of Syria—the most war-ravaged country in the region—could help foster a sustainable peace. This report argues that the impact of the civil war on the Syrian society will be persistent, and the challenges facing the country need to be addressed now. The report calls for the international community to be the guarantor of an inclusive reconstruction strategy that not only makes peace sustainable tomorrow, but makes it happen today: peace and reconstruction are two sides of the same coin. -
Publication
MENA Quarterly Economic Brief, January 2016: The Economic Effects of War and Peace
(Washington, DC: World Bank, 2016-02-03)This report estimates economic growth in the Middle East and North Africa (MENA) to fall short of expectations, at 2.6 percent in 2015, below the 2.8 percent predicted in October. Being constrained by war, terrorism and to some extent cheap oil, short term growth prospects in MENA remain “cautiously pessimistic.” Not only have the civil wars caused untold damage to human and physical capital, in Yemen the number of poor people has almost doubled after the war, but they have created one of the biggest forced displacement crises since World War II. The report examines the different ways in which civil wars are affecting the economies of the region, including the important channel of forced displacement. We also explore how economic fortunes will turn around if there is peace. A peace settlement in the war-torn Syria, Iraq, Libya and Yemen could lead to a swift rebound in oil output and exports, allowing them to increase fiscal space, improve current account balances and boost economic growth in the medium term with positive spillovers to the neighboring countries.