In the October 2024 issue of the IMF Middle East and Central Asia Regional Report, the report discussed navigating the evolving geo-economic landscape in the region. In this spotlight, we will focus on the main constraints hindering the medium-term growth prospects for MENA region and the ways to improve it.
Growth prospects are following a declining trend worldwide due to slowdown in the growth of “Total Factor Productivity” (TFP, defined below). Over the past two decades, medium-term growth expectations worsened with GCC countries unveiled more volatility resulting from the fluctuations in oil prices.
In line with global trends, economies in MENA and in the Caucasus and Central Asia (CCA) experienced growth till the beginning of the global financial crisis. Since then, medium-term growth forecasts were pessimistic and actual economic growth has dropped below expectations. Moreover, income per capita in MENA and CCA regions lagged that of advanced and emerging markets economies in which the gap between advanced economies and MENA region (excluding GCC) widened whereas the gap with CCA remained stagnant. In terms of the growth of income per capita, that of MENA and CCA region did not keep the pace with that of emerging markets. It is worth mentioning also that income per capita for GCC economies has been progressively falling over time and is now near that of advanced economies.
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