Middle East and North Africa Economic Update



Part I | Macroeconomic Developments and Outlook

World Bank economists forecast that the Middle East and North Africa (MENA) region will grow by 5.5% in 2022 (the fastest rate since 2016) and by 3.5% in 2023. Growth, however, will be uneven across country groups. Devastating shocks have pushed the global economy out of the low-inflation, low-interest-rate equilibrium that prevailed before 2020 into a new environment of higher inflation and rising interest rates. For a few countries, including oil exporters in MENA, the new global environment is one of opportunity — because elevated oil and gas prices are a major source of export earnings and fiscal revenues for Gulf Cooperation Council (GCC) countries and developing oil exporters. For developing oil importers, however, the new global environment is one of heightened stress and risk. The combined direct and indirect effects of the crisis (Gatti et al. 2022) have led to higher import bills, especially for food and energy, as well as a depreciation of local currencies in some countries — both of which further fuel inflation.


Part II | The Learning State

Heightened uncertainty, today, puts heavy demands on the state: to inform and coordinate individual action during a pandemic; to sustain economic production through unprecedented cyclical swings; to protect the most vulnerable from poverty; to dial back the rapid losses in schooling and ramp up the capacity of health systems. As never before, authorities must learn from the past, identify the state’s strengths and weaknesses, and be ready to change the direction of public policy towards increased effectiveness. In Part II of this report we are keen to re-open the conversation about governance, particularly about two of its core dimensions — transparency and accountability. Good measurement and transparent information can shape an understanding of challenges shared across different stakeholders, within and outside the state. Accountability aligns incentives for action. Together, transparency and accountability are essential for a “learning state,” one that is well equipped to measure, experiment, and adjust policy action towards a common goal of inclusive and sustainable development — with reforms that require political will but that are not necessarily costly fiscally.


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