中东和中亚经济展望-REGIONAL ECONOMIC OUTLOOK -MIDDLE EAST AND CENTRAL ASIA Building Resilience and Fostering Sustainable Growth 202310

INTERNATIONALMONETARYFUND

REGIONAL

ECONOMIC

OUTLOOK

MIDDLEEASTAND

CENTRALASIA

BuildingResilienceand

FosteringSustainableGrowth

2023

OCT

INTERNATIONALMONETARYFUND

REGIONAL

ECONOMIC

OUTLOOK

MIDDLEEASTAND

CENTRALASIA

BuildingResilienceand

FosteringSustainableGrowth

2023

OCT

NAr

ARY

iiREGIONALECONOMICOUTLOOK—MiddleEastandCentralAsia

Copyright©2023InternationalMonetaryFund

Cataloging-in-PublicationData

IMFLibrary

Names:InternationalMonetaryFund,publisher.

Title:Regionaleconomicoutlook.MiddleEastandCentralAsia:buildingresilienceandfosteringsustain-ablegrowth.

Othertitles:MiddleEastandCentralAsia:buildingresilienceandfosteringsustainablegrowth.|MiddleEastandCentralAsia.|Buildingresilienceandfosteringsustainablegrowth.|Worldeconomicandfinancial

surveys.|Regionaleconomicoutlook:MiddleEastandCentralAsia.

Description:Washington,DC:InternationalMonetaryFund,2023.|Worldeconomicandfinancialsurveys.|Oct.2023.|Includesbibliographicalreferences.

Identifiers:ISBN:

9798400254222

9798400254307

9798400254260

(paper)

(ePub)

(WebPDF)

Subjects:LCSH:Economicforecasting—MiddleEast.|Economicforecasting–Asia,Central.|Economicdevel-opment—MiddleEast.|Economicdevelopment—Asia,Central.|MiddleEast—Economicconditions.|Asia,Central—Economicconditions.

Classification:LCCHC415.15.A1R442023

TheRegionalEconomicOutlook:MiddleEastandCentralAsiaispublishedtwiceayear,inthespringandfall,toreviewdevelopmentsintheMiddleEastandCentralAsia.Bothprojectionsandpolicyconsider-ationsarethoseoftheIMFstaffanddonotnecessarilyrepresenttheviewsoftheIMF,itsExecutiveBoard,orIMFManagement.

Publicationordersmaybeplacedonlineorthroughthemail:

InternationalMonetaryFund,PublicationServices

P.O.Box92780,Washington,DC20090,U.S.A.

T.+(1)202.623.7430

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publications@IMF.org

IMF

elibrary.IMF.org

INTERNATIONALMONETARYFUND•October2023

ivREGIONALECONOMICOUTLOOK—MiddleEastandCentralAsia

Figure1.7.GCC:ContributionstoGDPGrowth

6

Figure1.8.MENARegionEM&MIsandPakistan:OverallandPrimaryFiscalBalances

7

Figure1.9.MENAEM&MIandPakistan:PublicGrossFinancingNeeds

8

Figure1.10.CCA:RealGDPGrowth

9

Figure1.11.InflationChangesandCurrencyAppreciationsinceJune2022

9

Figure1.12.CCA:Inflation

9

Figure1.13.HousePrices

10

Figure1.14.RealGDPGrowth

11

BoxFigure1.1.1.RefugeeResponse:FinancialRequirementsandFundedAmounts

16

BoxFigure1.2.1.CCAExportstotheRestoftheWorld

17

BoxFigure1.2.2.CCAExportsbyTradingPartner

17

Figure2.1.PolicySpaceIndexinME&CACountries,2005–22

19

Figure2.2.EvolutionofStructuralReforms

20

Figure2.3.RealGDPperCapitaandAverageLaborProductivity

21

Figure2.4.ComparingOutcomes:ME&CAversusOtherEMDEs

22

Figure2.5.AverageEffectsofReformsundertheBaseline

23

Figure2.6.OutputGainsfromClosingtheGovernanceGap

24

Figure2.7.AverageEffectsofIndividualGovernanceReformsundertheBaseline

25

Figure2.8.AverageEffectsofReforms:LowGrowthScenarioversustheBaseline

26

Figure2.9.AverageEffectsofReformsunderaLimitedPolicySpaceScenarioversusundertheBaseline27Figure2.10.AverageEffectsofReformsunderHighFirst-GenerationReformIndexversustheBaseline28

Figure2.11.OutputEffectsofFirst-GenerationReformPackage

28

Figure3.1.MajorAdvancedEconomiesCentralBankPolicyRatesExpectations

34

Figure3.2.BankingSectorFunding,SovereignNexus,andBuffers

36

Figure3.3.CorporateStress

37

Figure3.4.CapitalLossesunderStressScenarios

39

Figure3.5.BankUndercapitalizationandImpactonCapitalRatios

40

Figure3.6.ImpactonCreditandOutput

41

Figure3.7.MacroprudentialFrameworks

42

BoxFigure3.1.1.LossesandCapitalRatiosintheCaucasusandCentralAsia

47

TABLES

ME&CA:SelectedEconomicIndicators,2000–24

48

MENA:SelectedEconomicIndicators,2000–24

49

CCA:SelectedEconomicIndicators,2000–24

51

INTERNATIONALMONETARYFUND•October2023

Acknowledgmentsv

Acknowledgments

TheMiddleEastandCentralAsiaRegionalEconomicOutlookispreparedeachspringandfallbytheIMF’sMiddleEastandCentralAsiaDepartment(MCD).Thereport’sanalysisandprojectionsformintegralelementsofthedepartment’ssurveillanceofeconomicdevelopmentsandpoliciesinmembercountries.ItdrawsprimarilyoninformationgatheredbyMCDstaffthroughconsultationswithmembercountries.

TheanalysisinthisRegionalEconomicOutlookwascoordinatedunderthegeneralsupervisionofJihadAzour(MCDDirector).TheprojectwasdirectedbyTalineKoranchelian(DeputyDirector,MCD),LoneChristiansen(Chief,MCDRegionalAnalyticsandStrategyDivision),CesarSerra(DeputyChief,MCDRegionalAnalyticsandStrategyDivision),andforChaptertwoalsoYasserAbdih(Advisor,MCD).

TheprimarycontributorstothisreportwereAzhinAbdulkarim,NadiaAli,AdrianAlter,AnjaBaum,VizhdanBoranova,HasanDudu,RodrigoGarcia-Verdu,FilippoGori,BasharHlayhel,ThomasKroen,TroyMatheson,KarmenNaidoo,ThomasPiontek,GustavoRamirez,RoyRanden,SahraSakha,SubiVelkumar,andWeiningXin.

VizhdanBoranovacompiledthestatisticalappendixandmanagedthedatabase.ResearchassistancewasprovidedbyStevenDangandQiruiZhang.

BronwenBrowneditedthereport.CherylToksozledCOM’seditorialteamandmanagedreportproduction.JoannaZaffaroniandAdetoroOlatidoyeprovidedproductionsupport.KadyKeita,ThomasKroen,GhadeerNoufal,andNiaSharashidzereviewedthetranslationsandcollaboratedonthecontentwithHebaKhalil,NohaElshalkany,andBayaKourdali(Arabic);BenjaminCorbel,Jean-YvesLestienne,andMonicaNepote-Cit(French);andMikhailSurin,AlexandraAkchurin,SvetlanaAndryunina,andDenisPshenichnikov(Russian),withcoordi-nationsupportfromTineLevine(TranslationCoordinationCenter)—allfromLanguageServices,CorporateServicesandFacilitiesDepartment.

October2023•INTERNATIONALMONETARYFUND

viREGIONALECONOMICOUTLOOK—MiddleEastandCentralAsia

CountryGroupings

TheOctober2023RegionalEconomicOutlook(REO):MiddleEastandCentralAsiacoverscountriesandterri-toriesintheMiddleEastandCentralAsiaDepartment(MCD)oftheInternationalMonetaryFund(IMF)referredtoasME&CAcountriesandterritories.Itprovidesabroadoverviewofrecenteconomicdevelopmentsandprospectsandpolicyissuesforthemediumterm.Tofacilitatetheanalysis,the32ME&CAcountriesandterrito-riescoveredinthisreportaredividedintothree(nonoverlapping)groupsbasedonexportearningsandlevelofdevelopment:(1)OilExporters(OE),(2)EmergingMarketandMiddle-IncomeCountries(EM&MI);and(3)Low-IncomeDevelopingCountries(LIC).Additionalanalyticalandregionalgroupsprovideamoregranularbreakdownforanalysisandcontinuity.Thecountryandanalyticalgroupacronymsandabbreviationsusedinsometablesandfiguresareincludedinparentheses.

ME&CAOE:Algeria(ALG),Azerbaijan(AZE),Bahrain(BHR),IslamicRepublicofIran(IRN),Iraq(IRQ),Kazakhstan(KAZ),Kuwait(KWT),Libya(LBY),Oman(OMN),Qatar(QAT),SaudiArabia(SAU),Turkmenistan(TKM),UnitedArabEmirates(UAE).

ME&CAEM&MI:Armenia(ARM),Egypt(EGY),Georgia(GEO),Jordan(JOR),Lebanon(LBN),Morocco(MAR),Pakistan(PAK),SyrianArabRepublic(SYR),Tunisia(TUN),WestBankandGaza(WBG).

ME&CALIC:Afghanistan(AFG),Djibouti(DJI),KyrgyzRepublic(KGZ),Mauritania(MRT),Somalia(SOM),Sudan(SDN),Tajikistan(TJK),Uzbekistan(UZB),Yemen(YEM).

CaucasusandCentralAsia(CCA):Armenia,Azerbaijan,Georgia,Kazakhstan,KyrgyzRepublic,Tajikistan,Turkmenistan,Uzbekistan.

CCAOE:Azerbaijan,Kazakhstan,Turkmenistan.

CCAOI:Armenia,Georgia,KyrgyzRepublic,Tajikistan,Uzbekistan.

CCAEM&MI:Armenia,Georgia.

CCALIC:KyrgyzRepublic,Tajikistan,Uzbekistan.

MiddleEastandNorthAfrica(MENA):Algeria,Bahrain,Djibouti,Egypt,IslamicRepublicofIran,Iraq,Jordan,Kuwait,Lebanon,Libya,Mauritania,Morocco,Oman,Qatar,SaudiArabia,Somalia,Sudan,SyrianArabRepublic,Tunisia,theUnitedArabEmirates,WestBankandGaza,Yemen.

MENAOE:Algeria,Bahrain,IslamicRepublicofIran,Iraq,Kuwait,Libya,Oman,Qatar,SaudiArabia,UnitedArabEmirates.

MENAOI:Djibouti,Egypt,Jordan,Lebanon,Mauritania,Morocco,Somalia,Sudan,SyrianArabRepublic,Tunisia,WestBankandGaza,Yemen.

MENAEM&MI:Egypt,Jordan,Lebanon,Morocco,SyrianArabRepublic,Tunisia,WestBankandGaza.

MENALIC:Djibouti,Mauritania,Somalia,Sudan,Yemen.

MENAP:MENA,Afghanistan,Pakistan.

MENAPOI:MENAOI,Afghanistan,Pakistan.

INTERNATIONALMONETARYFUND•October2023

CountryGroupingsvii

ArabWorld:Algeria,Bahrain,Djibouti,Egypt,Iraq,Jordan,Kuwait,Lebanon,Libya,Mauritania,Morocco,Oman,Qatar,SaudiArabia,Somalia,Sudan,SyrianArabRepublic,Tunisia,UnitedArabEmirates,WestBankandGaza,Yemen.

ArabWorldOE:Algeria,Bahrain,Iraq,Kuwait,Libya,Oman,Qatar,SaudiArabia,UnitedArabEmirates.

TheGulfCooperationCouncil(GCC):Bahrain,Kuwait,Oman,Qatar,SaudiArabia,UnitedArabEmirates.

Non-GCCoil-exportingcountries:Algeria,IslamicRepublicofIran,Iraq,Libya.

NorthAfrica:Algeria,Djibouti,Egypt,Libya,Mauritania,Morocco,Sudan,Tunisia.

Fragileandconflict-affectedstates(FCS):Afghanistan,Iraq,Lebanon,Libya,Somalia,Sudan,SyrianArabRepublic,WestBankandGaza,Yemen.

Conflict-affectedstates:Afghanistan,Iraq,Somalia,Sudan,SyrianArabRepublic,WestBankandGaza,Yemen.

October2023•INTERNATIONALMONETARYFUND

viiiREGIONALECONOMICOUTLOOK—MiddleEastandCentralAsia

AssumptionsandConventions

AnumberofassumptionshavebeenadoptedfortheprojectionspresentedintheOctober2023RegionalEconomicOutlook:MiddleEastandCentralAsia.Itisassumedthattheestablishedpoliciesofnationalauthor-itieswillbemaintained,thepriceofoil1willaverageUS$80.49abarrelin2023andUS$79.92abarrelin2024,andthethree-monthnominalyieldonUSTreasurybillswillaverage5.3percentin2023and5.4percentin2024.Theseareworkinghypothesesratherthanforecasts,andtheuncertaintiessurroundingthemaddtothemarginoferrorthatwould,inanyevent,beinvolvedintheprojections.The2023and2024datainthefiguresandtablesareprojections.Unlessotherwisenoted,theseprojectionsarebasedonstatisticalinformationavailablethroughlateSeptember2023.

Thefollowingconventionsareusedinthispublication:

.Intables,ellipsispoints(...)indicate“notavailable,”and0or0.0indicates“zero”or“negligible.”

.Minordiscrepanciesbetweensumsofconstituentfiguresandtotalsareduetorounding.

.Anendash(–)betweenyearsormonths(forexample,2019–20orJanuary–June)indicatestheyearsormonthscovered,includingthebeginningandendingyearsormonths;aslashorvirgule(/)betweenyearsormonths(forexample,2019/20)indicatesafiscalorfinancialyear,asdoestheabbreviationFY(forexample,FY2020).

.“Billion”meansathousandmillion;“trillion”meansathousandbillion.

.“Basispoints(bps)”refertohundredthsof1percentagepoint(forexample,25basispointsareequivalentto¼of1percentagepoint).

Asusedinthispublication,theterm“country”doesnotinallcasesrefertoaterritorialentitythatisastateasunderstoodbyinternationallawandpractice.Asusedhere,thetermalsocoverssometerritorialentitiesthatarenotstatesbutforwhichstatisticaldataaremaintainedonaseparateandindependentbasis.

Theboundaries,colors,denominations,andanyotherinformationshownonthemapsdonotimply,onthepartoftheInternationalMonetaryFund,anyjudgmentonthelegalstatusofanyterritoryoranyendorsementoracceptanceofsuchboundaries.

1SimpleaverageofpricesofUKBrent,DubaiFateh,andWestTexasIntermediatecrudeoil.

INTERNATIONALMONETARYFUND•October2023

ExecutiveSummaryix

ExecutiveSummary

GrowthintheMiddleEastandCentralAsia(ME&CA)isslowing,withgrowthfortheregionprojectedat2.0percentin2023(downfrom5.6percentlastyear)beforeincreasingto3.4percentin2024.TheMiddleEastandNorthAfrica(MENA)regionismainlydrivingthisyear’sslowdown,reflectingoilproductioncuts,tightmacroeconomicpolicies,andcountry-specificfactors.Inflationisdeclining,butitremainshighinsomecountries.Theneedtoaddressrecurrentshockshasreducedpolicyspacetosupporteconomicactivityinmanyeconomies,andslowprogressincomprehensivereformimplementationisholdingbackinvestment,jobcreation,andinclusionwhileunderminingresiliencetoshocks.Risingclimatechallengesareaddingtotheurgencyofaction.

IntheMENAregion,economicgrowthisprojectedtoslowmarkedlythisyear(to2.0percentfrom5.6percentlastyear)amidloweroilproductioninoilexporters,tightpolicysettingsinemergingmarketandmiddle-incomeeconomies(EM&MIs),andcountry-specificheadwinds.Moreover,theconflictinSudanisaffectinglivesandliveli-hoods,causingdisplacementofpeopleandsevereeconomicdisruption.Economicconditionsaresettoimprovein2024,withgrowthreaching3.4percent,asthecontractioninSudansubsidesandothergrowth-dampeningfactors,includingtemporaryoilproductioncuts,dissipate.However,publicsectordebtremainselevatedinseveralcountries,andmedium-termgrowthisforecasttoremainsubdued.Althoughinflationisbroadlyeasing,itremainselevatedinsomeeconomies,withhighfoodpricesexacerbatingfoodinsecurity.

GrowthintheCaucasusandCentralAsia(CCA)isprojectedtoremainrobustthisyear(4.6percent)andnext(4.2percent),despitesomemoderationasmigration,trade,andfinancialflowsfromRussiagraduallynormalize.However,CCAcountriesfaceheighteneduncertaintybecauseofRussia’swarinUkraineandrisinggeoeco-nomicfragmentation,whichisreshapingtrade,financial,andmigrationpatterns.Inthiscontext,medium-termgrowthissettoslowtobelowthehistoricalaverage,heldbackbypersistentstructuralchallenges,includingpoormarket-basedresourceallocationandsubparproductivity.Inflationisdivergingacrosscountriesbutisprojectedtoeaseonlygradually,alsoreflectingstrongdomesticdemandandcontinuedwagepressuresinsomecountries.

AdverseriskstotheoutlookhaverecededsinceApril,butthebalanceofrisksremainstothedownside.Ontheupside,afaster-than-anticipatedglobaldeclineininflationwouldreducepressureoncentralbankstoraiseinterestratesfurther,andstronger-than-projectedglobaldemandcouldboostgrowthinME&CA.Onthedownside,alarger-than-expectedslowdowninChinaormajoradvancedeconomiescoulddepressexternaldemandandworseneconomicprospects.AnescalationofRussia’swarinUkrainecouldreigniteinflationarypressuresandworsenfoodinsecurity.Climate-relatedshockscouldresultinworseningdroughtconditionsandfloods,affectinginfrastructure,agriculturaloutput,andfoodprices.Otherdownsideriskscouldalsomaterialize,suchasdebtdistressrelatedtotighter-for-longerglobalfinancialconditions.

Amidthesechallenges,policymakershaveapressingyetcomplextaskofmaintainingtightpoliciestosafeguardmacroeconomicstabilityanddebtsustainability,whilebolsteringgrowthprospects.Thiscanbeaccomplishedthroughwide-rangingstructuralreformstosupportjobcreationforthemorethan100millionpeoplewhoaresettoenterworkingageoverthenextdecade.AsdiscussedinChapter2,structuralreformscouldhelpspurnear-termeconomicactivity—thuseasingcurrentpolicytrade-offs—whilealsoliftinglonger-termpotentialgrowth.Reformsingovernance,labormarkets,andbusinessregulationswouldbeparticularlybeneficial,helpingtostrengthenresilienceandensureeconomicstability.Thestrategicsequencingandpackagingofreformscanmagnifydividends.Inaddition,persistentinflationarypressuresanddepletedfiscalandexternalbuffersinseveralME&CAcountriescallforcontinuedtightmacroeconomicpoliciestore-establishpricestabilityandensurefiscalandexternalsustainability.AsexploredinChapter3,addressingvulnerabilitiesfromthesovereign-banknexusandestablishingemergencyliquiditytoolswouldhelpreducepotentialriskstoME&CAfinancialsystemsfromaprolongedperiodofhigherinterestrates.

October2023•INTERNATIONALMONETARYFUND

Contentsiii

Contents

Acknowledgments v

CountryGroupings vi

AssumptionsandConventions viii

ExecutiveSummary ix

1.RegionalDevelopmentsandEconomicOutlook:BuildingResilienceandFosteringSustainableGrowth

1

1.1.AGlobalSlowdownamidHigher-for-LongerInterestRates

1

1.2.MENARegionandPakistan:AComplexRoadAhead

2

1.3.CaucasusandCentralAsia:GrowthMomentumRemains

8

1.4.RiskstotheME&CAOutlook

11

1.5.Policies:BuildingResiliencewhileSafeguardingMacroStability

12

References

15

2.FromSetbackstoComebacks:ReformstoBuildResilienceandProsperity

18

2.1.NarrowingPolicySpaceAmplifiestheUrgencyofImplementingReforms

18

2.2.ImplementingStructuralReformsCanLiftGrowthSignificantly

22

2.3.AttentiontoSequencingandPackagingReformsIsValuable

27

2.4.WhereMacroPoliciesNeedtoTighten,ReformsProvideGrowth-EnhancingOptions

28

References

30

3.HigherforLonger:WhatAretheMacrofinancialRisks?

34

3.1.HigherGlobalInterestRatesCouldExposeFaultLinesamongBanks

34

3.2.CertainFactorsCouldExacerbateFinancialStabilityRisks

35

3.3.Higher-for-LongerCouldHoldBackGrowthinanAdverseScenario

36

References

44

BOXES

1.1.TheConflictinSudan:MigrationConsequencesforNorthAfrica

16

1.2.ChangingTradePatternsintheCaucasusandCentralAsia

17

2.1.TransformativeTales:StructuralReformsinGeorgia,Morocco,andSaudiArabia

32

3.1.BankingSectorStressTestfortheCaucasusandCentralAsia

46

FIGURES

Figure1.1.MENARegion:RealGDPGrowth

2

Figure1.2.MENARegionEM&MIsandPakistan:HeadlineInflation

3

Figure1.3.InternationalBondIssuancein2023

4

Figure1.4.MENARegionEM&MIsandPakistan:ShareofBankCreditbySector

4

Figure1.5.MENARegionEM&MIsandPakistan:NetCumulativePortfolioInflows

5

Figure1.6.GrowthProjections

6

October2023•INTERNATIONALMONETARYFUND

1.RegionalDevelopmentsandEconomicOutlook:BuildingResilienceandFosteringSustainableGrowth

1

1.RegionalDevelopmentsandEconomic

Outlook:BuildingResilienceand

FosteringSustainableGrowth1

AcrosstheMiddleEastandCentralAsia(ME&CA),thecombinedeffectsofglobalheadwinds,domesticchallenges,andgeopoliticalrisksweighoneconomicmomentum,andtheoutlookishighlyuncertain.GrowthissettoslowthisyearintheMiddleEastandNorthAfrica(MENA)region,drivenbyloweroilproduction,tightpolicysettingsinemergingmarketandmiddle-incomeeconomies(EM&MIs),theconflictinSudan,andothercountry-specificfactors.IntheCaucasusandCentralAsia(CCA),althoughmigration,trade,andfinancialinflowsfollowingRussia’swarinUkrainecontinuetosupporteconomicactivity,growthissettomoderateslightlythisyear.Lookingahead,economicactivityintheMENAregionisexpectedtoimprovein2024and2025assomefactorsweighingongrowththisyeargraduallydissipate,includingthetemporaryoilproductioncuts.Butgrowthisexpectedtoremainsubduedovertheforecasthorizonamidpersistentstructuralhurdles.IntheCCA,economicgrowthisprojectedtoslownextyearandoverthemediumtermastheboosttoactivityfromrealandfinancialinflowsfromRussiagraduallyfadesanddeep-seatedstruc-turalchallengesremainunsolved.Inflationisbroadlyeasing,inlinewithgloballydecliningpricepressures,althoughcountry-specificfactors—includingbuoyantwagegrowthinsomeCCAcountries—andclimate-re-latedeventscontinuetomaketheirmark.DespitesomeimprovementsinceApril,thebalanceofriskstotheoutlookremainsonthedownside.Inthiscontext,expeditingstructuralreformsiscrucialtoboostgrowthandstrengthenresilience,whiletightmonetaryandfiscalpoliciesremainessentialinseveraleconomiestodurablybringdowninflationandensurepublicdebtsustainability.

1.1.AGlobalSlowdownamidHigher-for-LongerInterestRates

Aglobalslowdownissettingin,followingresilienteconomicactivityinthefirstquarterofthisyeardrivenbythereopeningofChina’seconomy,strongconsumptionintheUnitedStates,androbustservicesectoractivity.High-frequencyindicatorsforthesecondquarterpointtoadditionalweakeninginmanufacturing,softeningservicesactivity,anddecliningglobaltradegrowth.However,China’spost-pandemicreboundisfadingamidcontinuedweaknessintherealestatesectorandexports.Eventhoughfinancialstabilityconcernshaverecededinadvancedeconomies,lendingstandardshavetightened,curtailingthesupplyofcredit.Inthiscontext,theOctober2023WorldEconomicOutlookprojectsglobalgrowthtofallfrom3.5percentin2022to3.0percentin2023and2.9percentin2024,drivenprimarilybyamarkedslowdowninadvancedeconomiesastightmonetarypolicycontinuestobite.

Globalheadlineinflationisreceding,reflectingamoderationinfuelandnon-fuelcommodityprices.Still,coreinflationisdecliningmoregraduallyandremainsabovemostcentralbanktargets.Inresponse,majorcentralbanksareexpectedtokeepmonetarypolicytighterforlonger.GlobalinterestrateassumptionshavethusbeenrevisedupwardfromtheApril2023WorldEconomicOutlook,withthefederalfundsrateprojectedtopeakat5.4percentbytheendof2023andstayatthatleveluntillate2024(about100basispointshigherthanexpectedinApril),thuskeepingpressureonglobalfinancingconditionsforlongerthanpreviouslyanticipated.Averagepetroleumspotpricesareexpectedtomoderatesteadily(at$80.5and$79.9perbarrelin2023and2024,respectively),thoughtheyhavebeenrevisedup(from$73.1and$68.9inApril)asslowingglobaldemandhasonlypartiallyoffsetOPEC+productioncutsandadditionalvoluntarycuts,primarilybySaudiArabia.The

1PreparedbyAzhinAbdulkarim,VizhdanBoranova,HasanDudu,FilippoGori(lead),andGustavoRamirez.

October2023•INTERNATIONALMONETARYFUND

2REGIONALECONOMICOUTLOOK—MiddleEastandCentralAsia

GCC:non-oilGDPgrowthMENAEM&MI:GDPgrowth

ongoingmoderationinfoodcommodityprices—projectedtodeclineby6.8percentin2023and1.9percentin2024—shouldhelpalleviatepressuresonfoodpricesworldwide(althoughinternationalfoodpricesremainabout40percentaboveprepandemiclevels).

1.2.MENARegionandPakistan:AComplexRoadAhead

Despiteresilientdomesticdemandandstrongtourism,severalfactorsweighongrowth,includingloweroilproductioninoilexporters,tightpolicysettingsinEM&MIs,andthecombinationoflingeringfragilitiesandnewshocksinlow-incomecountries(LICs)—suchastheconflictinSudan.Lookingahead,growthintheMENAregionisexpectedtoimprovein2024assomeofthefactorsweighingoncurrenteconomicactivityfade,butmedium-termgrowthisprojectedatbelowitshistoricalaverageamidpersistentstructuralchallenges.Headlineinflationhasstartedtocomedowninlinewithglobaltrends,butcountry-specificfactors—forexamplecurrencydeprecia-tions,importrestrictions,andrecurringdroughts—continuetofuelinflationarypressuresinsomecountries,liftingaverageinflationacrosstheregion.

GrowthIsEasingamidGlobalHeadwinds

Oilproductioncutsandcountry-specificfactorshavestartedtoweighonoilexporters.OilGDPgrowthisslowingafterthreeroundsofdeepOPEC+oilproductioncuts(October2022,April2023,June2023)andadditionaltemporarycutsbySaudiArabia.ForGulfCooperationCouncil(GCC)countries,crudeoilproductionwascutconsiderably,drivingadecelerationinoilGDPgrowth(Figure1.1).Crucially,theslowdownofoilGDPhasbeen

Figure1.1.MENARegion:RealGDPGrowth

(Percentchange,year-over-year;four-quartermovingsimpleaverages)

10

GCC:overallGDPgrowth

8

6

GCC:oilGDPgrowth

4

2

0

–2

–4

29:Q420:Q321:Q222:Q122:Q4

Sources:HaverAnalytics;andIMFstaffcalculations.

Note:Kuwaitisexcludedbecauseoflackofrecentdata.EM&MI=

emergingmarketandmiddle-incomeeconomy;GCC=Gulf

CooperationCouncil;andMENA=MiddleEastandNorthAfrica.

partiallyoffsetbycontinuedstrongnon-oilGDPgrowth,drivenbyrobustmanufacturingactivity(Oman,Qatar,SaudiArabia,UnitedArabEmirates)andsurgingservices(Bahrain,Oman,SaudiArabia,UnitedArabEmirates).InIraq,restrictionsonforeigncurrencysalesareconstraininggrowth.

IntheMENAregion’sEM&MIsandPakistan,averagegrowthisbelowthatofoilexporters,heldbackbynecessarytighterpolicysettingsandseveralcountry-specificchallenges.Notably,averagerealGDPgrowthremainedlacklusterat3.1percentinthefirstquarterof2023(belowahistoricalaverageof4percent).Wheregrowthstrengthenedinthefirstquarter,theuptickwassupportedbystrongtourismflows(Morocco,Tunisia)androbustremittances(Morocco).Inothercountries,slowinggrowthreflectsworseningmacroeconomicconditionscausedbytheimpactofforeigncurrencyrationing(Egypt)andimportrestrictions(EgyptandPakistan).

Meanwhile,economicconditionsintheMENAregion’sfragileLICshavedeterioratedasconflictsandclimate-relatedshocksamplifyunderlyingfragilities.