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- Growth perspectives are positive, but uncertain, for the MENA region, survey reveals
DUBAI: Almost half (48 percent) of chief economists globally expect moderate growth in 2024 and 2025 in the Middle East and North Africa region, according to the latest Chief Economists Outlook by the World Economic Forum.
Growth in the MENA region is expected to rise from 2.2 percent in 2024 to 4 percent in 2025, according to the International Monetary Fund’s projections.
Only 17 percent expect strong growth for the region this year and next, while 31 percent expect weak growth in 2024, and 34 percent expect weak growth in 2025.
South Asia has the most growth potential, as seven out of 10 chief economists expect strong or very strong growth in 2024 and 2025. The US also has a positive outlook, with nearly 90 percent expecting strong or moderate growth this year.
Europe, on the other hand, lags, with almost 69 percent of respondents expecting weak growth this year.
The report, released this week, is based on a survey of leading chief economists. It found that “easing inflation and strong global commerce” are the key drivers of “cautious optimism” for global recovery.
However, elevated debt levels are a growing concern for both advanced (53 percent) and developing (64 percent) countries.
Geopolitical tensions are another potential source of macroeconomic shocks, with 91 percent of respondents saying they would undermine global collaboration efforts.
The various conflicts in the world, from Europe to the Middle East, have taken a humanitarian and financial toll on national economies. Although countries have managed to adapt to numerous geopolitical disruptions, it is not a cost-free process, the report said.
For example, shipping costs between East Asia and North Europe more than doubled between April and July 2024 following an increase in attacks on ships in the Red Sea.
And the latest World Investment Report cites worsening geopolitical tensions as one of the key drivers of a 10 percent slump in global foreign direct investment last year.
Global inflation continues to drop, with IMF projections showing full-year global inflation falling from 6.8 percent in 2023 to 5.9 percent in 2024.
Although the projections vary vastly between advanced economies (2.7 percent) and developing economies (8.2 percent), they remain above pre-pandemic levels.
The majority of chief economists (63 percent) expect moderate inflation this year in the MENA region, with this number growing to 68 percent next year. Roughly 20 percent expect low inflation in both years with only 11 and 15 percent expecting high inflation in the region in 2024 and 2025, respectively.
On the other hand, the proportion of respondents expecting high inflation in the US dropped from 21 percent in 2024 to just 6 percent in 2025.
Similarly, in Europe, expectations of high inflation dropped from 21 percent this year to 3 percent next year.
The survey points to a loosening of monetary policy over the next year, particularly in the US (91 percent), Europe (91 percent), and China (84 percent).
In the MENA region, 62 percent expect a loosening of monetary policy, while 35 percent expect it to remain unchanged.