The World Bank released a report titled “Global Economic Prospects” that debunks the recent Middle East conflict and how it has increased geopolitical and policy uncertainty in the Middle East and North Africa (MNA) region, as well as dampened tourism-related activity, particularly in neighboring countries.
MNA faces several challenges, including reduced oil production, rising prices, and sluggish private sector activity in oil-importing economies.
The recent report, going over the situation of many countries in the region, evoked recent data on Morocco. In its GDP and market prices assessment, the same document showed that Morocco’s numbers declined from 2021 to 2022 and slightly surged up in 2023.
Oil importer growth in the region slowed last year, reflecting weak private-sector activity. Food inflation has remained stubbornly high, while significant currency depreciations have contributed to increased headline inflation.
Egypt’s GDP is expected to decline in FY2022/23 (July 2022 to June 2023) due to import restrictions, diminishing consumer purchasing power, and sluggish corporate activity.
In contrast, despite the September earthquake, growth is expected to have picked up in Morocco, according to the research, as the agriculture sector rebounded.
Growth in oil importers is estimated to reach 3.2% this year and 3.7% in 2025. Growth will increase in several countries, like Morocco, Djibouti, and Tunisia, while countries closer to the conflict will suffer more.
In Egypt, the violence is likely to aggravate inflation, impede private sector activity, and exacerbate external account pressures through reduced tourism receipts and remittances. Jordan’s tourism industry, on the other hand, will suffer as a result of the conflict.
The World Bank research discussed the West Bank and Gaza’s economic prospects, which remain highly uncertain, with growth forecast to fall by 6% in 2024, following a 3.7% contraction in 2023. Massive destruction of fixed assets in Gaza will significantly reduce economic activity.
The prolonged fighting will exacerbate the West Bank’s already dismal economic conditions, predicts the World Bank.
According to the same source, if the conflict situation de-escalates, reconstruction efforts will lead to a rebound in growth to 5.4% in 2025.
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