Middle East economic outlook caught between low growth, high debt convergence

Al-Monitor Pro Members

Dr. Karen E. Young 

Senior Research Scholar, Columbia University, Center on Global Energy Policy 

May 30, 2024

The World Bank recently released its 2024 spring regional economic report for the Middle East and North Africa. The report forecasts that GDP in the Middle East and North Africa (MENA) region will grow at a rate of 2.7% in 2024, up from 1.9% in 2023. Interestingly, oil importers and oil exporters are expected to continue to grow at similar rates in 2024. The difference between forecast growth in the Gulf Cooperation Council (GCC) economies and developing oil importers (excluding Egypt) in 2024 is about one percentage point. However, in 2022, the GCC grew 5.6 percentage points faster than the rest of the region. The "Tale of Two MENAs" has been the overriding narrative of regional growth in the post-pandemic period, as higher energy prices, also spurred by the Russian invasion of Ukraine, have jolted growth across the Gulf's oil and gas exporters. Traditionally, when oil and gas prices are high, the exporters of the region grow at a faster pace, but also buoy the growth rates of the region's energy importers. Now, the World Bank sees sluggish growth across the board in the MENA region, for both hydrocarbon importers and exporters. The economic effects of the conflict in Gaza are also more evident, though difficult to predict how they will spread to further impact energy prices, insurance and shipping costs due to transit risk, and the possible widening of conflict between Israel and Hamas.