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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)
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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.

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Business

UK Inflation Slows to 2.8% in April

Britain's Chancellor of the Exchequer Rachel Reeves arrives at Downing Street in London , Britain, 13 May 2026. EPA/NEIL HALL
Britain's Chancellor of the Exchequer Rachel Reeves arrives at Downing Street in London , Britain, 13 May 2026. EPA/NEIL HALL
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UK Inflation Slows to 2.8% in April

Britain's Chancellor of the Exchequer Rachel Reeves arrives at Downing Street in London , Britain, 13 May 2026. EPA/NEIL HALL
Britain's Chancellor of the Exchequer Rachel Reeves arrives at Downing Street in London , Britain, 13 May 2026. EPA/NEIL HALL

British consumer price inflation slowed to 2.8% in April from 3.3% in March, according to official figures published on Wednesday.

Economists polled by Reuters had mostly expected inflation to soften to 3.0%, in large part due to the big increases in utility and other regulated prices in April last year falling out of the annual comparison.

Before the US-Israeli war on Iran began on February 28, the Bank of England said inflation in Britain - the highest among the Group of Seven economies for much of the last four years - was likely to be close ⁠to its 2% ⁠target in April.

But the energy price shock from the war prompted the BoE to increase sharply its inflation forecasts which, it says, could hit 6.2% early next year under its most inflationary scenario.

British finance minister Rachel Reeves is expected to announce on Thursday more measures to help ⁠reduce the cost of living, including a possible cancellation of a fuel duty increase which is due to come into effect in September.

The finance ministry is also pressing supermarket chains to introduce voluntary price caps on key food products in return for easing some regulations, two people with knowledge of the situation said on Tuesday.

The key question for the BoE's interest rate-setters is whether the expected rise in headline inflation creates longer-term price pressures in the economy.

Several have said the ⁠weak ⁠jobs market could make it harder for workers to demand higher pay and for businesses to pass on higher costs.

Preliminary data from the tax office published on Tuesday showed a sharp fall in people in payrolled employment and weaker pay growth. Wage settlement figures published earlier on Wednesday pointed to a slowdown in pay growth too.

Financial markets on Tuesday were betting on two quarter-point interest rate rises by the BoE this year, with a chance of a third. A Reuters poll of economists published last week showed most expected no change in rates in 2026.

Business

Union Calls Strike at South Korea Chip Giant Samsung Electronics

Union Calls Strike at South Korea Chip Giant Samsung Electronics
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Union Calls Strike at South Korea Chip Giant Samsung Electronics

Union Calls Strike at South Korea Chip Giant Samsung Electronics

A planned strike at South Korean chip giant Samsung Electronics will go ahead from Thursday, its union said, after talks on bonus payouts collapsed, raising concerns over a disruption to the country's key semiconductor industry.

The walkout, set to begin Thursday, is expected to dwarf a 2024 strike that drew about 6,000 workers at the world's top memory chipmaker.

The dispute centers on profit-sharing at a key player in the global semiconductor supply chain, with its chips widely used in artificial intelligence systems and consumer electronics.

The tech giant's shares have surged nearly 400 percent over the past year on the back of an AI boom, and saw its market capitalization top $1 trillion for the first time in May.

The union had called for the scrapping of a bonus cap set at 50 percent of annual salaries and for 15 percent of operating profit to be allocated to bonuses.

"Around 10:00 pm on May 19, the labor union agreed to the mediation proposal put forward by the National Labor Relations Commission; however, management expressed its refusal," it said in a statement on Wednesday.

"The labor union will lawfully commence a general strike tomorrow as scheduled."

According to the union's lawyer, around 50,500 workers are set to walk off production lines for 18 days from Thursday following the breakdown of negotiations with management.

Samsung's management said the talks failed because "acceding to the labor union's excessive demands would risk undermining the fundamental principles of the company's management".

"Under no circumstances should a strike take place," it said.

Concerns are growing within the South Korean government that a prolonged union strike could hurt the export-driven economy, with chips making up about 35 percent of exports.

South Korea's presidential office voiced "deep regret" over the collapse of the talks, urging both sides to keep working toward an agreement given the strike's "potential repercussions for the Korean economy".

Some experts say even a partial halt in Samsung's operations could prove damaging -- though the union argues that production stoppages have already occurred in the past for reasons related to maintenance and equipment inspections.

The government could invoke emergency mediation powers -- a measure that could halt strikes or other industrial action and trigger mediation if they are deemed a threat to the national economy.

But Tom Hsu, an analyst at Taipei-based research firm TrendForce, said the strike's potential impact may be limited.

"Due to the high level of automation in front-end facilities, TrendForce expects Samsung's DRAM and NAND Flash production to remain at full capacity," he told AFP.

"Any potential impact from the strike is likely to be confined to non-memory business segments."

A Suwon court this week granted Samsung Electronics an injunction requiring staffing and operations to be maintained at normal levels during any walkout.

Kim Sung-hee, director of Workers' Institute for the Industrial and Labor Policy, said that while the strike could cause losses, "they are unlikely to be irreversible".

The strike does not mean it would "automatically trigger an economic crisis," he told AFP.

Samsung is a major producer of chips used in everything from artificial intelligence to consumer electronics, raising the prospect that the planned strike could cause severe disruption and losses.

The company said this year it had begun mass production of next-generation high-bandwidth memory chips, HBM4, seen as a key component for scaling up the vast data centers needed for AI development.

The dispute unfolds against the backdrop of an AI boom that is benefiting South Korean tech groups, boosting national growth and the stock market.

Both Samsung and its domestic rival SK hynix posted record profits in the first quarter, driven by global demand for AI chips.

Long staunchly anti-union, late founder Lee Byung-chul once vowed never to allow unions "until I have dirt over my eyes".

Samsung Electronics' first labor union was formed in the late 2010s.

Business

Boeing Dreamliner to Fly Riyadh Air's First Passengers in July

A Riyadh Air aircraft flies over the Saudi capital, Riyadh (Public Investment Fund)
A Riyadh Air aircraft flies over the Saudi capital, Riyadh (Public Investment Fund)
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Boeing Dreamliner to Fly Riyadh Air's First Passengers in July

A Riyadh Air aircraft flies over the Saudi capital, Riyadh (Public Investment Fund)
A Riyadh Air aircraft flies over the Saudi capital, Riyadh (Public Investment Fund)

Riyadh Air, Saudi Arabia’s new national carrier wholly owned by the Public Investment Fund, is moving onto the global aviation stage through London, with an ambition that goes beyond conventional air travel.

The carrier, which reflects the Kingdom’s view of aviation as a strategic industry and economic driver, said it would open tickets to the public for direct flights between King Khalid International Airport and Heathrow Airport on its new Boeing 787-9 Dreamliner fleet from July 1, 2026.

The move is part of plans to connect Saudi Arabia to more than 100 destinations by 2030.

It follows the airline’s launch last year of its first daily flights to Heathrow, when tickets were initially available to selected groups of passengers and Riyadh Air employees under an operational program designed to ensure full readiness before the carrier receives its first aircraft from Boeing.

The program also allowed the airline to use its newly allocated operating slots at Heathrow.

Riyadh Air said bookings would open from Tuesday through its website, official app and approved travel service providers.

Travel classes

Chief Executive Tony Douglas said the launch of flights on the new aircraft marked a “milestone” for Riyadh Air and reflected its vision to redefine air travel and connect Riyadh to the world through comfort, innovation and Saudi hospitality.

The airline said its Boeing 787-9 Dreamliner aircraft would feature four travel classes, Business Elite, Business, Premium Economy and Economy. The two business cabins will include seats that convert into fully flat beds.

Passengers will also have access to advanced entertainment systems through Panasonic Avionics’ Astrova platform, with 4K screens, Bluetooth connectivity and a library of more than 500 films and 600 television series.

Riyadh Air said its hospitality offering would include products from Kayanee, children’s kits in cooperation with Disney, varied menus and bedding from John Horsfall.

The airline also announced the launch of Sfeer, its loyalty program, offering benefits including a “best offer guarantee,” no expiry of points, free in-flight internet and exclusive privileges for founding members.

Aviation specialists said opening ticket sales to passengers marks a new phase for Saudi Arabia’s aviation sector.

The government has set a national strategy to turn the Kingdom into a global aviation logistics hub by doubling capacity to 330 million passengers, linking it to 250 international destinations and raising air cargo capacity to 4.5 million tons by 2030.

Tourism and business traffic

Tourism media expert Mohammed al-Abdulkarim told Asharq Al-Awsat that Riyadh Air’s announcement of the start date for its first commercial flights, along with the official launch of ticket sales from July, was a pivotal step in the transformation of Saudi aviation.

He said it reflected faster implementation of the national aviation strategy under Vision 2030.

Abdulkarim said choosing July 1 for the entry into service of the carrier’s first new B787-9 aircraft showed Riyadh Air was ready to move from building and preparation into actual operations.

The start of ticket sales through the airline’s official platforms, he said, reflected operational confidence and early readiness to enter the international aviation market.

He said launching the first route between Riyadh and London carried major strategic and economic significance. London is one of the world’s biggest centers for business, tourism and air transit, he said, and the route shows Saudi Arabia’s early focus on a high-yield international network directly linked to major global markets.

Raising capacity

Abdulkarim said Riyadh Air’s ownership of four B787-9 aircraft now in the final stages of operational certification showed a push to build a modern fleet focused on efficiency, passenger experience and advanced technology.

That, he said, is essential for competing in the global aviation market, especially after the rapid changes the sector has seen since the pandemic.

He said the entry of a new national carrier of this scale would strengthen Saudi Arabia’s capacity, raise the competitiveness of its air transport sector regionally and internationally, and support tourism, investment, logistics and supply chains.

“The Kingdom is not only targeting higher passenger numbers, but is working to reshape its position as a global aviation hub linking three continents,” he said.

“With new airport projects, expanded air connectivity and the launch of modern carriers, Saudi Arabia is moving toward becoming one of the region’s most important transport and travel hubs in the coming years.”

Competing with major airlines

Aviation expert Al Motaz Al-Mirah said the launch of Riyadh Air’s first tickets showed Saudi Arabia’s strong confidence in the future of aviation.

He said the project is starting with a global vision and modern services aimed at competing with major international airlines, while choosing London as the first destination gives the new carrier a strong presence on one of the world’s most important international travel routes.

Speaking to Asharq Al-Awsat, Al-Mirah said the move was a practical step toward achieving Saudi Arabia’s aviation strategy.

It was not only about adding destinations and flights, he said, but about building an integrated travel experience that strengthens Riyadh’s position as a global air transport hub.

He said the move was expected to support tourism and investment and raise the kingdom’s competitiveness in aviation in the coming years.