World Bank Again Lowers MENA Growth Forecasts

Rescue workers at a site damaged by an Israeli airstrike in Qana, south Lebanon (Reuters)
Rescue workers at a site damaged by an Israeli airstrike in Qana, south Lebanon (Reuters)
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World Bank Again Lowers MENA Growth Forecasts

Rescue workers at a site damaged by an Israeli airstrike in Qana, south Lebanon (Reuters)
Rescue workers at a site damaged by an Israeli airstrike in Qana, south Lebanon (Reuters)

The World Bank has lowered its growth forecast in the Middle East and North Africa (MENA) to 2.2% this year from 2.4% in its June forecast because of uncertainties heightened by the conflict in the region.

In its latest semi-annual MENA Economic Update, entitled Growth in the Middle East and North Africa, the Bank said that growth in the Gulf Cooperation Council (GCC) countries is forecast to rise to 1.9% in 2024 from 0.5% in 2023.

Growth in the MENA region reached 1.8% in 2023.

For GCC economies, the current account surplus is projected to decrease from 8.1% of GDP in 2023 to 6.6% 2024.

Although all GCC countries have consistently maintained current account surpluses in both years, the report said most are expected to have a decline in 2024.

In Saudi Arabia, the report also projects the economy to grow by 1.6% in 2024 and 4.9% in 2025.

In Qatar, the economy is expected to grow by 2% in 2024 and 2.7% in 2025 while in the UAE, it will grow by 3.3% in 2024 and 4.1% in 2025 and in Bahrain, 3.5% in 2024 and 3.3% in 2025.

Fiscal surpluses among GCC countries are expected to narrow, reaching 0.2% of GDP in 2024, down from 0.5% in 2023, and 6.3% in 2022.

Also, growth is expected to decelerate in the whole of developing MENA, the Bank report noted.

In developing oil importers, it will decelerate from 3.2% in 2023 to 2.1% in 2024, as the repercussions of the ongoing conflict spill over directly onto some countries and exacerbate pre-existing vulnerabilities in others.

Real GDP growth in developing oil exporters will decline from 3.2% in 2023 to 2.7% in 2024.

Effects of Ongoing Conflict

The report said the ongoing conflict in the Middle East has already inflicted a heavy human and economic toll.

The Palestinian territories are nearing economic collapse, with their largest economic contraction on record.

Gaza’s economy shrank by 86% in the first half of 2024 and the West Bank is facing an unprecedented fiscal and private sector crisis.

In conflict-affected Lebanon, the outlook remains highly uncertain and will be shaped by the trajectory of the conflict.

Meanwhile, other neighboring countries like Jordan and Egypt have been affected by declines in tourism receipts and fiscal revenues.

“Peace and stability are the foundation of sustainable development,” said Ousmane Dione, World Bank Vice President for the Middle East and North Africa.

“The World Bank Group is committed to remaining engaged in the conflict-affected areas of the Middle East and North Africa, and to building a future worthy of all people of the region,” he added.

Opportunities of Accelerating Inclusive Growth

The report also looks at key windows of opportunity where countries can rapidly advance inclusive growth by accelerating reforms.

This includes rebalancing the footprint of the public and the private sectors, better allocating talent in the labor market, closing the gender gap, and promoting innovation.

Despite the significant gains in levels of education over the last 50 years, the rate of female labor force participation in the Middle East and North Africa stands at 19 percent – the lowest in the world.

Closing gender employment gaps would result in a remarkable 51 percent increase in per capita income in the typical MENA country. For economies to thrive, women must be included, the report said.

Roberta Gatti, World Bank Chief Economist for the Middle East and North Africa said: “Transforming the role of the state would lead to substantial gains in productivity.”

“For example, the region has the largest share of public sector employees in the world, particularly women. But unfortunately, in MENA, a larger public sector does not necessarily correspond to better public goods and services. Mobilizing talent toward the private sector would improve the allocation of resources, with aggregate productivity gains up to 45%,” she added.

The report said that tapping into the frontier of global knowledge and technology will also boost growth in MENA.

More international trade, leveraging the region’s strategic geographic location, can facilitate this process of infusion and innovation.

Also, improving data quality and transparency – which are lagging behind by international standards – is another key lever to facilitate the diffusion of ideas.



Oil Prices Flat as Investors Await US Inventory Data

A pumpjack brings oil to the surface in the Monterey Shale, California, US April 29, 2013. REUTERS/Lucy Nicholson/File Photo
A pumpjack brings oil to the surface in the Monterey Shale, California, US April 29, 2013. REUTERS/Lucy Nicholson/File Photo
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Oil Prices Flat as Investors Await US Inventory Data

A pumpjack brings oil to the surface in the Monterey Shale, California, US April 29, 2013. REUTERS/Lucy Nicholson/File Photo
A pumpjack brings oil to the surface in the Monterey Shale, California, US April 29, 2013. REUTERS/Lucy Nicholson/File Photo

Oil prices traded flat on Thursday as investors eye developments in the Middle East and more details on China's stimulus plans, and await the release of official US oil inventory data.
Brent crude futures were down 4 cents to $74.18 a barrel by 0648 GMT, while US West Texas Intermediate crude futures were at $70.37 a barrel, down 2 cents.
Both benchmarks settled down on Wednesday, closing at their lowest levels since Oct. 2 for a second day in a row, said Reuters.
The benchmarks are down 6-7% so far this week after the Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency cut demand forecasts for 2024 and 2025.
Prices have also fallen as risk premiums have cooled with fears having eased that a retaliatory attack by Israel on Iran could disrupt oil supplies, though uncertainty remains over conflict in the Middle East.
"We are now playing a waiting game for two things. Firstly, the China NPC (National People's Congress) standing committee to flesh out the details and the size of the fiscal stimulus package which I believe is coming," Tony Sycamore, IG market analyst in Sydney, said.
Investors are waiting for further details from Beijing on its broad plans announced on Oct. 12 to revive its ailing economy.
China said on Thursday it would expand a "white list" of housing projects eligible for financing and increase bank lending for such developments to 4 trillion yuan ($562 billion) as it aims to shore up its ailing property market.
Sycamore said Israel's response to Iran's recent attack was the second major focus for the market.
"It's coming, we know that but we don't know when," he said, adding that both factors created upside risks for crude oil prices.
In Iran, the authorities are working to control an oil spill off Kharg Island, the country's IRNA news agency reported on Wednesday.
"It appears to be unrelated to the Israel-Hamas war, but it drew attention to Iran's oil export facilities," ANZ analysts said in a note.
In the US, crude oil and fuel stocks fell last week, market sources said, citing American Petroleum Institute figures on Wednesday, against expectations of a build-up in crude stockpiles.
Crude stocks fell by 1.58 million barrels in the week ended Oct. 11, the sources said on condition of anonymity. Gasoline inventories fell by 5.93 million barrels, and distillate stocks fell by 2.67 million barrels, they said.
Ten analysts polled by Reuters had estimated on average that crude inventories rose by about 1.8 million barrels in the week to Oct. 11.
"Any signs of weak demand in EIA's weekly inventory report could put further downward pressure on oil prices," ANZ analysts said.
The Energy Information Administration, the statistical arm of the US Department of Energy, will release its data at 11 a.m. EDT (1500 GMT) on Thursday.
Also supporting oil prices, the European Central Bank is likely to lower interest rates again on Thursday, the first back-to-back rate cut in 13 years, as it shifts focus from cooling inflation in the euro zone to protecting economic growth.