Middle East and North Africa Economic Update — April 2025

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The Middle East and North Africa (MENA) region is expected to grow moderately at 2.6 percent in 2025 — a forecast that is shrouded in uncertainty given the rapidly changing global environment as well as ongoing conflicts and extreme weather shocks. This is amidst a long history of sluggish economic growth in MENA, much of it stemming from the poor performance of the private sector. The April 2025 edition of the semi-annual MENA Economic Update, titled Shifting Gears: The Private Sector as an Engine of Growth in the Middle East and North Africa, explores the critical role of the private sector in driving growth, creating jobs, and spurring innovation.

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Chapters

Macroeconomic Outlook

In Part I of the report, World Bank economists estimate that the Middle East and North Africa (MENA) region grew at a modest 1.9 percent in 2024. Economic growth is forecast to rise moderately to 2.6 percent in 2025. For oil exporters, the growth uptick is linked to the planned rollback of oil production cuts. Among oil importers, growth is expected to pick up due to strong private consumption as inflation eases and a rebound in the agricultural sector in some economies. Despite these positive projections, the region’s outlook remains highly uncertain. Conflict has dialed back development across the region, and the effects will remain for a long while after, compounding a history of chronic low growth. Part I examines the situation of fragile and conflict-affected countries, where prospects for peace and recovery remain precarious.

 

The Private Sector as an Engine of Growth

Part II delves into the crucial role of the private sector in driving regional growth. The report underscores that MENA’s growth potential has been stymied by an underperforming private sector. 

Key findings reveal that few firms in MENA invest in physical capital, workforce development, or innovation. Market entry and exit remain challenging. The private sector is segmented between formal enterprises and a substantial informal sector. Additionally, the region fails to fully leverage its talent pool, notably with women largely left out of the labor market. The private sector’s struggles with low growth and productivity leave it vulnerable to frequent and severe shocks, such as conflicts and extreme weather events. 

To transform the private sector into an engine of growth, governments must reconsider their roles, and firms need to invest and effectively harness talent. This shift could foster job creation, enhance livelihoods, and accelerate innovation in the region.