MENA Economic Outlook Brightens Amidst Political Uncertainties
The global economic outlook for 2024 is brightening, according to the latest Chief Economists Outlook from World Economic Forum. The report reveals a growing sense of cautious optimism among chief economists, with 82 percent expecting the global economy to either strengthen or remain stable this year. This is a significant increase from late 2023, when only half as many held this view.
In the Middle East and North Africa (MENA) region, growth expectations are more varied. Economists predict moderate growth across most of the region, driven by advancements in technology, artificial intelligence, and a push towards green energy transitions. However, the economic landscape remains complex, influenced by both regional and global factors.
MENA Regional Variations
While the overall outlook is positive, the MENA region faces specific challenges. In the Gulf Cooperation Council (GCC) countries, such as the UAE and Saudi Arabia, the economic prospects are buoyed by substantial investments in technology and infrastructure, alongside efforts to diversify economies away from oil dependency. The Chief Economists Outlook notes that these efforts are expected to yield moderate to strong growth in the region.
Conversely, North African economies, including Egypt and Tunisia, face a more mixed outlook. Although there are signs of growth driven by technological adoption and renewable energy projects, political instability and economic reforms continue to pose significant challenges.
Political Risks and Economic Volatility
The report highlights that geopolitical and domestic political tensions are significant concerns for the MENA region. A staggering 97 percent of respondents anticipate that geopolitics will contribute to global economic volatility this year. This sentiment is echoed within the MENA region, where political dynamics, including ongoing conflicts and diplomatic tensions, could impact economic stability.
In addition to geopolitical concerns, domestic political issues are expected to play a major role in economic performance. The region’s political landscape, marked by governance challenges and social unrest, could lead to economic volatility. With many MENA countries undergoing political transitions and facing internal pressures, the interplay between politics and economics will be critical in shaping the region’s economic trajectory.
Long-term Prospects and Priorities
Looking ahead, chief economists are generally optimistic about the MENA region’s potential for sustained growth. Nearly 70 percent expect a return to 4 percent global growth in the next five years, with technological transformation, artificial intelligence, and the green transition identified as key drivers. In the MENA region, these factors are seen as pivotal in fostering economic resilience and diversification.
However, there is also a recognition of the challenges that lie ahead. Geopolitical tensions, domestic political instability, debt levels, and climate change are expected to be significant drags on growth. To mitigate these risks, policy interventions focused on innovation, infrastructure development, monetary policy, and education and skills are deemed crucial. For the MENA region, improving institutions, enhancing social services, and ensuring access to finance are highlighted as vital for sustainable growth.
The MENA region stands at a crossroads, with a cautiously optimistic economic outlook tempered by significant political risks. As technological and green transitions offer pathways to growth, navigating the complex political landscape will be essential for achieving long-term stability and prosperity.
