The World Bank's Middle East and North Africa unit (MEU) anticipates a significant decline in the growth of MENA economies, from 6% in 2022 to a mere 1.9% in 2023. This forecast was unveiled at the joint World Bank-International Monetary Fund meeting held in Marrakesh, Morocco on Thursday.
The MEU attributes this downturn to a combination of factors, including reduced oil production, depressed oil prices, stringent global financial conditions, and high inflation. Gulf Cooperation Council (GCC) oil exporters are expected to bear the brunt of these impacts.
Ferid Belhaj, the World Bank's Vice President for the MENA region, expressed concerns about the future job prospects for the region's youth amidst this slow growth. He emphasized the need for structural economic and labor market reforms to address these challenges.
The MEU report also predicts declining growth for developing oil exporters and MENA oil net importers. The recent earthquake in Morocco and floods in Libya are noted as potential sources of short-lived macroeconomic effects.
In a worrying revelation, the report suggests that only eight out of 15 MENA economies are projected to return to pre-COVID-19 pandemic real GDP per capita levels by the end of 2023. This points towards enduring structural challenges within MENA's labor markets.
In 2022, the surge in oil prices following Russia's invasion of Ukraine benefited GCC economies. However, Saudi Arabia's economy is anticipated to contract by 0.9% this year due to voluntary reductions in oil production. Consequently, the IMF has downgraded Saudi Arabia's growth forecast for 2023.
This comprehensive analysis by the World Bank underscores the urgency for structural reforms within the MENA region's economies, particularly in light of the anticipated slowdown and ongoing global financial pressures.
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