Plagued by war, violence, and low oil prices, economies in the Middle East and North Africa (MENA) region will see growth of 2.6% in 2017, down from 3.5% in 2016. But after 2017, driven by ongoing reforms, the situation is expected to improve slightly and growth could exceed 3% in 2018 and 2019.
Regional growth is expected to slow down to an average of 2.3% this year, half a percentage point lower than last year. Over the next two years, growth in MENA is expected to improve slightly to 3.1 and 3.5%, as governments across the region are taking the oil price decline as largely permanent and are undertaking reforms to diversify their economies away from oil. The disappointing performance of the MENA economies, and possibly the global economy, is partly due to the rise of terrorist attacks and spread of violent extremism.
This new issue of the report predicts that regional GDP growth will average 3% for 2016. Due to a combination of civil wars and refugee inflows, terrorist attacks, cheap oil, and a subdued global economic recovery, prospects for faster growth are slim.
Against this backdrop of a slowing global economy, the MENA region is stagnating. Continued low oil prices, the escalation of conflicts, and civil wars make the short-term prospects for a growth recovery slim. The World Bank estimates regional GDP growth to stay at around 2.8 percent in 2015, lower than predicted in April.
Despite a slight uptick in the global economy, the World Bank's MENA Economic Monitor expects GDP growth in the region to remain flat at between 3.1% and 3.3% for 2015 and 2016. For the first time in four years, the region faces a fiscal deficit due to the prolonged conflict and political instability in some countries, low oil prices, and the slow pace of reforms. These factors are also contributing to low investment and high unemployment.
The report projects regional growth to average 4.2 percent in 2015, slightly more favorable than the 2013-2014 figures. Economic growth could reach 5.2 percent depending on domestic consumption, easing political tensions crowding-in investments in Egypt and Tunisia, and full resumption of oil production in Libya.