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World Bank Slashes Growth Forecasts for MENA Region amid Global Uncertainty

World Bank President Ajay Banga speaks during the Spring Meetings in Washington (AFP).
World Bank President Ajay Banga speaks during the Spring Meetings in Washington (AFP).
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World Bank Slashes Growth Forecasts for MENA Region amid Global Uncertainty

World Bank President Ajay Banga speaks during the Spring Meetings in Washington (AFP).
World Bank President Ajay Banga speaks during the Spring Meetings in Washington (AFP).

The World Bank has sharply downgraded its growth projections for the Middle East and North Africa (MENA) region, cutting its forecasts for 2025 and 2026 to 2.6% and 3.7%, respectively.

It marked the second revision this year, down from January’s estimates of 3.4% and 4.1%, and significantly below the 3.8% growth previously expected for 2024, as published last October.

The revised outlook reflects the anticipated impact of a slowing global economy, driven by ongoing US tariff measures and retaliatory responses.

The International Monetary Fund (IMF) also echoed similar concerns earlier this week, projecting growth in the region at 2.6% for 2024 and 3.4% for 2025 - both reduced by nearly one percentage point from earlier forecasts.

In its latest MENA Economic Update, titled, “Shifting Gears: The Private Sector as an Engine of Growth in the Middle East and North Africa”, released during the World Bank and IMF Spring Meetings in Washington, the Bank highlighted that ongoing conflict, climate shocks, oil price volatility, and shifting geopolitical dynamics are compounding the region’s economic uncertainty. These risks are further amplified by indirect effects from global interest rate fluctuations and inflation trends.

The report noted that the MENA region expanded by a modest 1.9% in 2024 - slightly below earlier projections - while recovery in oil-importing countries is expected to be driven by increased consumption, aided by easing inflation. However, uncertainty remains high for agricultural recovery due to climate-related volatility.

Inflation Pressures

The World Bank observed that inflationary pressures in MENA moderated throughout 2024, in line with global trends. However, it cautioned that uncertainties around trade policy could rekindle inflation. Inflation is estimated at 2.2% in 2024, with a slight uptick to 2.4% in 2025, before easing again to 2.3% in 2026.

GCC Countries Show Resilience

For the Gulf Cooperation Council (GCC) countries - Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE - the World Bank projects real GDP growth to rise to 3.2% in 2025 and 4.5% in 2026. This follows a downward revision for 2024 from 4.1%, although 2025’s forecast was slightly raised from 4.4%.

Growth is expected to be buoyed by a gradual rebound in oil production and continued economic diversification efforts, especially in Saudi Arabia, the UAE, Oman, and Qatar. The easing of oil output cuts by OPEC+ is also likely to support economic activity in these oil-exporting nations.

Inflation across GCC states is forecast to reach 2.4% in 2025, up from 2% in previous projections, before dipping to 2.3% in 2026. However, risks persist, particularly due to oil price volatility, potential trade disruptions, and broader global economic uncertainties. The report stresses the need for ongoing investment in human capital and infrastructure to enhance economic resilience.

Role of Private Sector

The report emphasizes the vital role of the private sector in driving sustainable growth across MENA. It argues that vibrant private enterprises are essential for job creation and innovation, yet productivity growth across the region has stagnated.

The Bank highlights that few firms invest in innovation or compete at a global level, while a large informal economy and limited female participation hamper broader progress.

Osman Dione, the World Bank’s Vice President for MENA, noted that the region continues to suffer from underutilized human capital and the exclusion of women from the labor market.

Governments are urged to play a facilitative role by enhancing market competition, improving business environments, and investing in infrastructure and data systems to support enterprise development. Roberta Gatti, the Bank’s Chief Economist for MENA, said: “A dynamic private sector is crucial for unlocking sustainable growth and prosperity in the region.”

The report concludes that a brighter future for MENA’s private sector is within reach if governments rethink their role, tap into untapped talent, and encourage firms to build internal capabilities and adopt stronger management practices. Unlocking this potential could substantially accelerate the region’s economic trajectory.

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Business

China's Finance Ministry: Fiscal Policies Will be More 'Proactive' in 2026

A man walks on a street in Beijing, China, 24 December 2025. EPA/WU HAO
A man walks on a street in Beijing, China, 24 December 2025. EPA/WU HAO
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China's Finance Ministry: Fiscal Policies Will be More 'Proactive' in 2026

A man walks on a street in Beijing, China, 24 December 2025. EPA/WU HAO
A man walks on a street in Beijing, China, 24 December 2025. EPA/WU HAO

China's finance ministry on Sunday said fiscal policies will be more proactive next year, reiterating its focus on domestic demand, technological innovation and a social safety net.

The statement comes as trading partners urge the world's second-biggest economy to reduce its reliance on exports, underscoring the urgency to revive confidence at home where a prolonged property crisis has rippled ⁠through the economy, weighing on sentiment.

China will boost consumption and actively expand investment in new productive forces and people's overall development, the ministry said in a statement after a two-day meeting at which it set ⁠2026 goals.

In addition, Reuters quoted the ministry as saying that it will support innovation to foster new growth engines, and improve the social security system by providing better healthcare and education services.

Other tasks for next year include promoting integration between urban and rural areas, and propelling China's transformation into a greener society.

China is likely to stick to ⁠its annual economic growth target of around 5% in 2026, government advisers and analysts told Reuters, a goal that would require authorities to keep fiscal and monetary spigots open as they seek to snap a deflationary spell.

Leaders this month promised to maintain a "proactive" fiscal policy next year that would stimulate both consumption and investment to maintain high economic growth.

Business

Bulgaria Adopts Euro Amid Fear and Uncertainty

Customers shop in a grocery store in the village of Chuprene, northwestern Bulgaria on December 7, 2025. (Photo by Nikolay DOYCHINOV / AFP)
Customers shop in a grocery store in the village of Chuprene, northwestern Bulgaria on December 7, 2025. (Photo by Nikolay DOYCHINOV / AFP)
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Bulgaria Adopts Euro Amid Fear and Uncertainty

Customers shop in a grocery store in the village of Chuprene, northwestern Bulgaria on December 7, 2025. (Photo by Nikolay DOYCHINOV / AFP)
Customers shop in a grocery store in the village of Chuprene, northwestern Bulgaria on December 7, 2025. (Photo by Nikolay DOYCHINOV / AFP)

Bulgaria will become the 21st country to adopt the euro on Thursday, but some believe the move could bring higher prices and add to instability in the European Union's poorest country.

A protest campaign emerged this year to "keep the Bulgarian lev", playing on public fears of price rises and a generally negative view of the euro among much of the population.

But successive governments have pushed to join the eurozone and supporters insist it will boost the economy, reinforce ties to the West and protect against Russia's influence.

The single currency first rolled out in 12 countries on January 1, 2002, and has since regularly extended its influence, with Croatia the last country to join in 2023.

But Bulgaria faces unique challenges, including anti-corruption protests that recently swept a conservative-led government from office, leaving the country on the verge of its eighth election in five years.

Boryana Dimitrova of the Alpha Research polling institute, which has tracked public opinion on the euro for a year, told AFP any problems with euro adoption would be seized on by anti-EU politicians.

Any issues will become "part of the political campaign, which creates a basis for rhetoric directed against the EU", she said.

While far-right and pro-Russia parties have been behind several anti-euro protests, many people, especially in poor rural areas, worry about the new currency.

"Prices will go up. That's what friends of mine who live in Western Europe told me," Bilyana Nikolova, 53, who runs a grocery store in the village of Chuprene in northwestern Bulgaria, told AFP.

The latest survey by the EU's polling agency Eurobarometer suggested 49 percent of Bulgarians were against the single currency.

After hyperinflation in the 1990s, Bulgaria pegged its currency to the German mark and then to the euro, making the country dependent on the European Central Bank (ECB).

"It will now finally be able to take part in decision making within this monetary union," Georgi Angelov, senior economist at the Open Society Institute in Sofia, told AFP.

An EU member since 2007, Bulgaria joined the so-called "waiting room" to the single currency in 2020, at the same time as Croatia.

The gains of joining the euro are "substantial", ECB president Christine Lagarde said last month in Sofia, citing "smoother trade, lower financing costs and more stable prices".

Small and medium-sized enterprises stand to save an equivalent of some 500 million euros ($580 million) in exchange fees, she added.

One sector expected to benefit in the Black Sea nation is tourism, which this year generated around eight percent of the country's GDP.

Lagarde predicted the impact on consumer prices would be "modest and short-lived", saying in earlier euro changeovers, the impact was between 0.2 and 0.4 percentage points.

But consumers -- already struggling with inflation -- fear they will not be able to make ends meet, according to Dimitrova.

Food prices in November were up five percent year-on-year, according to the National Statistical Institute, more than double the eurozone average.

Parliament this year adopted empowered oversight bodies to investigate sharp price hikes and curb "unjustified" surges linked to the euro changeover.

But analysts fear wider political uncertainty risks delaying much needed anti-corruption reforms, which could have a knock-on effect on the wider economy.

"The challenge will be to have a stable government for at least one to two years, so we can fully reap the benefits of joining the euro area," Angelov said.

Business

Syria Prepares to Launch New Currency Amid Major Challenges

Syrian Central Bank Governor Abdulkader Husrieh (X)
Syrian Central Bank Governor Abdulkader Husrieh (X)
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Syria Prepares to Launch New Currency Amid Major Challenges

Syrian Central Bank Governor Abdulkader Husrieh (X)
Syrian Central Bank Governor Abdulkader Husrieh (X)

Syria’s central bank governor, Abdulkader Husrieh, said the new Syrian pound is not merely a means of exchange but a symbol of the success of the Syrian revolution, national belonging, and confidence in the country’s ability to recover.

In a Facebook post, Husrieh said that with the launch of the new currency, Syrians were not just celebrating a banknote, but also celebrating their sovereignty and national identity, noting that many international experiences show that national currencies become strong when people rally around them, according to the Syrian Arab News Agency.

He pointed to Germany’s experience, where the introduction of the mark after the war marked the starting point of economic recovery, and to France, where the new French franc became the financial symbol of the new republic, known as the Fifth Republic.

Husrieh said the central bank would carry out its role with a clear understanding of the challenges and opportunities, while committing to responsibility, transparency, and the protection of the national currency. He added that the cornerstone remains public solidarity and trust, because a strong currency begins with the people's belief in it.

He called for turning the launch into a dignified national occasion through which Syrians express awareness, confidence, and adherence to the pound as a symbol of sovereignty and a national choice.

Husrieh added that supporting the pound is supporting the nation, and taking pride in it is a matter of pride in the future for Syrians and their children. He described the move as an opportunity for a new success following the success of the revolution in liberation and the lifting of economic sanctions that had shackled Syria’s economy for nearly fifty years.

Husrieh had recently announced that Jan. 1, 2026, would mark the launch of the new Syrian currency and the start of the exchange process for the old notes, with the exchange to be carried out through 66 companies and 1,000 designated outlets.

Restoring confidence

Political and economic researcher Bassel Kouwefi said the exchange plans, if well implemented, could serve as an entry point for rebuilding confidence in the national economy, encouraging domestic investment, and paving the way for broader reforms in the financial sector. However, he warned against failing to address the root causes of inflation and economic collapse during the previous regime's rule.

Speaking to Asharq Al-Awsat, Kouwefi described currency exchange and the removal of zeros as complex economic measures.

He said their main benefits include simplifying daily transactions, reducing the volume of banknotes in circulation, boosting confidence in stability, lowering printing and transportation costs, simplifying accounting records and financial software, and reducing currency speculation driven by corruption networks seeking to undermine stability in Syria.

Kouwefi said the exchange plans, if well-executed, could help restore confidence in the macroeconomy, but stressed the challenges posed by failing to tackle the fundamental causes of past inflation and collapse, including fiscal deficits, instability, and weak production. He said a comprehensive economic and financial program was therefore essential.

He added that the process also requires strong banking infrastructure, an organized transition period, and sufficient liquidity in the new denominations.

He said these remain major challenges under current Syrian conditions, alongside the need to mitigate social impacts that could lead to public confusion, market exploitation, and difficulties for less informed segments of society.