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
Reality Check: Forecasting Growth in the Middle East and North Africa in Times of Uncertainty
(Washington, DC: World Bank, 2022-04-11)The Middle East and North Africa economies face an uncertain recovery. The war in Ukraine presents significant challenges to the global economy and the MENA region. Inflationary pressures brought about by the pandemic are likely to be further exacerbated by the conflict. The potential for rising food prices is even higher, which is likely to hurt the wallets of the poor and vulnerable in the region. The COVID-19 pandemic continues to cast a shadow. As the latest variant sweeps over the region, countries grapple with a host of problems depending on initial conditions and policy priorities. The region, like the rest of the world, is not out of the woods yet. Vaccinations remain the effective path out of the pandemic, leading to lower hospitalizations and death rates. Testing helps curb the spread. During times of uncertainty, it is important to not be overconfident about the region’s growth prospects. Growth forecasts serve as a significant signpost for policymakers to chart a path forward. Over the last decade, growth forecasts in the MENA region have often been inaccurate and overly optimistic, which can lead to economic contractions down the road due to ebullient borrowing. There is considerable room for the region to improve its forecasts that are largely hindered by opaque data systems, growth volatility and conflict. The MENA region lags considerably in the timely production of credible statistics. A key finding of the report is that the best way to improve forecasters is to provide forecasters with as much good quality information as possible. -
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Trading Together: Reviving Middle East and North Africa Regional Integration in the Post-COVID Era
(Washington, DC: World Bank, 2020-10-19)The MENA Economic Update is a product of the World Bank's Office of the Chief Economist for the Middle East and North Africa. This presents the short-term, macroeconomic outlook and economic challenges facing countries in the region. -
Publication
Middle East and North Africa Economic Update, April 2020: How Transparency Can Help the Middle East and North Africa
(Washington, DC: World Bank, 2020-04-09)Due to the dual shocks of the spread of the virus and lower oil prices, World Bank economists expect output of MENA to decline in 2020. This is in sharp contrast to the growth forecast of 2.6 percent published in October 2019. The growth downgrade of 3.7 percentage points is arguably a measure for the costs associated with the dual shocks of Covid-19 and the oil price collapse. These numbers are tentative. The true impact depends on future developments of the dual shocks, policy and society’s response, which depends on the transparent use of health and economic data. We recommend a two-step approach: It might be desirable to focus first on responding to the health emergency and the associated economic contraction. Fiscal consolidation and structural reforms associated with the persistent drop in oil prices and pre-existing challenges are also very important, but with proper external support, can wait until the health emergency subsides. Nevertheless, the MENA region has challenges that predate the crisis – it has been growing far slower than its peers. Had MENA’s growth of output per capita been the same as that of a typical peer economy over the past two decades, the region’s real output per capita would be at least 20% higher than what it is today. A large part of MENA’s low growth is arguably due to a lack of transparency. MENA is the only region that dropped in data transparency and capacity since 2005. We estimate that this has cost MENA 7-14 percent in GDP per capita losses since 2005. Lack of transparency hinders credible analyses of many important issues, two of which are highlighted in the report. First, lack of data transparency hampers credible analyses on the region’s debt sustainability – an important issue to examine after the crisis. MENA countries vary greatly in their debt reporting standards. World Bank economists and other external analysts do not have access to vital information about many types of public debt. Second, the unemployment and informality numbers in the region are debatable since MENA countries rely on varying definitions of employment with little harmonization across the region or with respect to international standards. This affects analyses of unemployment and informality. -
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. -
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Middle East and North Africa Economic Update, April 2019: Reforms and External Imbalances - The Labor-Productivity Connection in the Middle East and North Africa
(Washington, DC: World Bank, 2019-04)World Bank economists expect economic growth in the Middle East and North Africa (MENA) to continue at a modest pace of about 1.5 to 3.5 percent during 2019-2021, with some laggards and a few emerging growth stars. In late 2018, The World Bank called on the leaders of the Middle East and North Africa (MENA) to aim high. We called for a set of aspirational, but attainable, goals in the digital-economy space (Arezki and Belhaj 2018). If the economies of MENA achieve those goals, they will not only have leapfrogged many advanced economies in terms of coverage and quality of cellular and broadband services, they will register notable advancements in digital payments. This installment of the Middle East Economic Update series, published every six months by the MENA Office of the Chief Economist, makes a more subtle point about a slow moving emerging challenge for the region’s economies: reducing macroeconomic vulnerabilities in some economies is inextricably linked to an all-out effort to create an advanced digital economy (the so-called Digital Moonshot) and other structural reforms. The link, surprisingly, is aggregate labor productivity. -
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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
MENA Quarterly Economic Brief, January 2015 : Plunging Oil Prices
(Washington, DC: World Bank, 2015-01)This issue of the MENA Quarterly Economic Brief focuses on the implications of low oil prices for eight developing countries, or the MENA-8 (oil importers: Egypt, Tunisia, Lebanon and Jordan and oil exporters: Iran, Iraq, Yemen and Libya) and the economies of the GCC (Gulf Cooperation Council), who play a major role in providing funds in the form of aid, investment, tourism revenues and remittances to the rest of the countries of the region. We make the following assumptions about the future price of oil: (i) The price will average $65 Brent p/b in 2015; (ii) a higher price $78 Brent p/b will be used for comparison analysis. As with other economic variables, there is uncertainty associated with the future price of oil, which adds to the error involved in projections. The data for 2015 2017 in the figures and tables are projections. These projections are based on statistical information available through early January 2015. -
Publication
Middle East and North Africa Economic Developments and Prospects, October 2012 : Looking Ahead After a Year in Transition
(Washington, DC, 2012-10-01)The Arab Republic of Egypt, Tunisia, Libya and the Republic of Yemen are recovering after a period of economic growth decelerations accompanying the Arab Spring uprisings of 2011. Economic recovery was relatively quick, with industrial production recovering in a matter of months and, in the cases of Egypt and Tunisia, the growth dips of 2011 were smaller than the average growth declines observed around the year of transition during past transitions to democracy. Importantly, the growth decelerations and recovery have taken place in a weak global environment, with events in the Euro zone posing particular challenges to Tunisia, and to a lesser extent, Egypt. The report focuses on the economic developments and short-term outlook for four Middle East and North Africa (MENA) Economies, Tunisia, Egypt, the Republic of Yemen and Libya. These four countries are given special attention because each of them experienced a revolution and a major political change in 2011 and is undergoing a process of political transition toward democracy. The sudden change had important economic consequences. While other countries in the Middle East and North Africa are undergoing political change, the economic ramifications were muted as compared with the changes observed in the four MENA post-revolutionary economies. -
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Middle East and North Africa Regional Economic Update, April 2012: Enabling Employment Miracles
(Washington, DC, 2012-04)Political uncertainties in the Middle East and North Africa (MENA) continue to affect the short term economic prospects in the region, while major developments in the global economy over the past six months have put the region on a two-track growth path for 2012. These developments include a significant rise in crude oil prices on fears of oil supply disruptions and weak economic activity in the Eurozone. Economic growth of MENA's oil exporting countries will be strong as it rebounds from the average of 3.4 percent in 2011 to 5.4 percent in 2012. Overall growth in the region is expected to be 4.8 percent in 2012, surpassing the 3 percent growth achieved in 2011. Improvement in the growth prospects of oil exporters is due to strength in oil markets. The fiscal situation is expected to remain tenuous for oil importing countries, especially those going through transitions. Overall, inflation is expected to remain subdued in 2012, with the notable exceptions of Iran and Egypt. Subsidies are currently dampening currently dampening the effects of increased global food and energy prices in many MENA countries. -
Publication
Sustaining the Recovery in Times of Uncertainty: A Regional Economic Outlook
(World Bank, Washington, DC, 2010-10)This edition of the Middle East and North Africa (MENA) regional economic update shows that recovery in the region is below historical trends. Its economic prospects depend on global developments and continued strengths in emerging-market demand and oil price trends. Growth in the region is expected to average 4% in 2010, an increase of slightly less than 2 percentage points (pp) over growth in 2009 and weak compared to increases of 5.6pp in advanced economies and 4.5pp in developing nations. Only by 2011 and 2012 is MENA s growth expected to return to the average rates achieved prior to the economic and financial crisis. Recovery has been driven by the global economic rebound and, to varying degrees, by domestic stimulus. Industrial production, which in MENA is dominated by oil, has nearly reached its pre-crisis peak, largely due to the strong recovery in emerging markets, especially Asia. However, the upturn has weakened in recent months because the global slowdown has arrived sooner and is occurring faster than previously anticipated, and there are serious concerns about the sustainability of the global recovery. In response, MENA governments have continued to stimulate their economies in 2010, and even those that did not use any type of fiscal stimulus in 2009 have started implementing fiscal measures in 2010. The economic recovery in MENA has been much less vigorous than the recovery in countries that suffered sharp output contractions. The sustainability of the recovery in Gulf Cooperation Council (GCC) economies depends on developments in the rest of the world, and on the extent to which they affect oil markets. The outlook for the global economy and oil markets in the second half of 2010 remains uncertain, and a decline in oil prices cannot be ruled out.