According to a recent report by the World Bank, economic growth in the Middle East and North Africa is projected to accelerate modestly, reaching a growth rate of 2.6 percent in 2025, up from 1.9 percent in 2024. This outlook comes amidst several uncertainties in the region, influenced by global economic changes.
The economic update, titled "Shifting Gears: The Private Sector as an Engine of Growth in the Middle East and North Africa," attributes the growth among oil-exporting countries to plans for reducing cuts in oil production. Additionally, oil-importing countries are anticipated to benefit from eased inflation and a rebound in certain agricultural sectors. However, persistent challenges such as conflict, extreme weather, and shifting global economic policies pose risks to these growth forecasts.
The report emphasizes the importance of the private sector in fostering economic expansion, job creation, and innovation in the region. It notes that the Middle East and North Africa (MENA) region suffers from a lack of dynamism in the private sector, with declining labor market productivity and minimal firm innovation and investment. Furthermore, the disparity between formal and informal sectors remains significant, hindering productivity.
Ousmane Dione, World Bank Vice President for the Middle East and North Africa, highlighted the underutilization of human capital, particularly the low participation of women in the labor market. "The region has long underused human capital. Women are largely left out of the labor market. Businesses can find more talent by attracting women leaders, who in turn will hire more women," Dione stated. He suggested that bridging the gender employment gap could potentially increase income per capita by approximately 50 percent in a typical MENA country.
The report underscores the complementary roles of governments and businesses in promoting a robust private sector. It advocates for government measures to enhance competition, improve business environments, and invest in data collection. Roberta Gatti, World Bank Chief Economist for the Middle East and North Africa, noted, "A dynamic private sector is essential to unlocking sustainable growth and prosperity in the region. To realize this potential, governments across the region must embrace their role as stewards of competitive markets."
Additionally, businesses are encouraged to strengthen their capabilities through better management practices and leverage the potential of women entrepreneurs and workers. The report suggests that with effective investment and talent utilization, a promising future for the MENA private sector is attainable.