According to the latest IMF report, economic growth in the MENA region is expected to rise to 3.3 percent in 2025 (up from 2.1 percent in 2024) and to 3.7 percent in 2026. The upward revision is driven by a faster rollback of oil production cuts, fewer disruptions in oil output and maritime trade — partly due to the easing of regional conflicts, such as in Gaza — and strong growth in the non-oil sector of the Gulf Cooperation Council (GCC) countries.

As a result, the region is considered an outperformer in the global comparison. The IMF emphasized last week that, despite an upward revision of its forecast, global economic growth is still projected to decline: from 3.3 percent in 2024 to 3.2 percent in 2025, and further to 3.1 percent in 2026. The slowdown is attributed to «policy shifts and complex forces.» The economic «shock» from recent U.S. tariff hikes has so far been less severe than feared.

Return of a Troubled Economy

The IMF is also optimistic about several oil-importing countries. Most notably, Egypt, the region’s most populous country with around 116 million people, is showing promising signs of recovery.

«The Egyptian economy has shown improvement. We have seen a decline in inflation, and we hope it will reach 11.8 percent next year — a drop compared to previous years. For the fiscal year 2024/2025, growth is expected to reach 4.3 percent, and in the following year, 2025/2026, it is projected at 4.5 percent,» said Jihad Azour, IMF Director for the Middle East and Central Asia, at a press conference held Tuesday at the Dubai International Financial Centre (DIFC).

The IMF highlighted that Egypt — once considered the intellectual and economic center of the Arab world — has made gains particularly in manufacturing, tourism, and exports. Thanks to IMF loans and financial support from Gulf states, Cairo was able to reduce its debt-to-GDP ratio by nearly 10 percentage points in just two years, bringing it down to 85 percent. By 2028, the country aims to reach a target of 75 percent.

The GCC as Growth Engine

The Gulf states are also performing strongly, according to the IMF. Growth in the region is expected to reach 4.8 percent this year and 5.0 percent in 2026. Saudi Arabia is forecast to grow by 4.0 percent in both 2025 and 2026.

While the direct impact of U.S. tariffs on the region remains limited, the IMF warned of indirect effects via commodity prices, particularly in light of weak global demand. The IMF — headquartered in Washington — reiterated its core mission of safeguarding global economic and financial stability. Both the Arab OPEC members and the resource-poor MENA countries, the report adds, should seize the moment to promote emerging technologies and create growth and employment in this rapidly evolving field.

Dr. Azour concluded: «The current global environment — particularly through investments in artificial intelligence (AI) and other fast-growing sectors — presents an opportunity for countries in the region to accelerate their economic diversification and leverage some of these large-scale investments to advance their economic transformation.»