The report projections are compared to the WB expectations published in October 2024.
Projections-driven factors
According to the report, the country’s economic activity will be driven by private consumption amid abating inflation and remittances inflows, as well as investment on the backdrop of financing provided by the UAE.
MENA real GDP growth to recover
On a regional level, the report expected the real GDP growth of the Middle East and North Africa (MENA) to rise to 3.4 percent in 2025 and 4.1 percent in 2026.
The 2025 forecast has been revised downward since June, primarily due to several major oil-exporting nations prolonging their voluntary oil production cuts.

According to the report, the regional outlook is highly uncertain due to ongoing armed conflicts and elevated tensions in several countries.
For the Gulf Cooperation Council (GCC) nations, the report expected their growth to reach 3.3 percent in 2025. This represents a downgrade of 1.4 percentage points from the June forecast, influenced by the continuation of voluntary adjustments in oil production. In non-GCC oil-exporting countries, economic activity is anticipated to remain subdued due to these adjustments.
Among oil-importing nations, average growth is forecast to increase to 3.9 percent in 2025-2026, driven mainly by a rebound in domestic demand as inflationary pressures subside.
Nevertheless, the report highlighted that the MENA growth outlook remains particularly precarious for Lebanon, Syria, Palestine, and Yemen. Ongoing security concerns and high geopolitical tensions will likely hinder growth and increase uncertainty in these regions.
Risks to MENA outlook
The report underscored significant risks to the outlook, including the potential escalation of armed conflicts in the region and increased policy uncertainty, mainly due to unexpected shifts in global policies.
According to the report, diminished global demand and falling oil prices could prolong the current production adjustments for oil-exporting countries, negatively impacting overall regional growth.
Challenges for oil importers
In oil-importing nations, rising protectionist measures from trade partners may hinder exports, while persistent global inflation and tighter monetary policies could adversely affect the costs of foreign financing.
The report also noted that additional risks involve spikes in social unrest and increased extreme weather events and other natural disasters.
On a positive note, the report said that more accommodative global monetary policies than anticipated could improve financing conditions. Furthermore, stronger-than-expected growth in major economies could enhance regional activity through increased global demand.
Developing economies
For developing economies, which fuel 60 percent of global growth, the report predicted these economies to finish the first quarter of the 21st century with the weakest long-term growth outlook since 2000.
“Even as the global economy stabilizes in the next two years, developing economies are expected to make slower progress in catching up with the income levels of advanced economies,” read the report.
Global economy to expand
On a global level, the report expected the world economy to expand by 2.7 percent in 2025 and 2026, a similar rate to 2024, powered by the incremental decline of inflation and interest rates.
“Growth in developing economies is also expected to hold steady at about four percent over the next two years. This, however, would be a weaker performance than before the pandemic and insufficient to foster the progress necessary to alleviate poverty and achieve wider development goals,” the report explained.
The WB’s analysis is its first systematic assessment of the developing economies’ performance in the first quarter of the 21st century.
The assessment showed that developing economies have grown the fastest since the 1970s. Yet progress ebbed after the Global Financial Crisis of 2008-2009.
“Global economic integration faltered: as a share of GDP, foreign direct investment (FDI) inflows into developing economies are at about half the level of the early 2000s. New global trade restrictions in 2024 were five times the 2010-2019 average. As a result, overall economic growth dropped from 5.9 percent in the 2000s to 5.1 percent in the 2010s to 3.5 percent in the 2020s,” the report explained.
“The next 25 years are to be a tougher slog for developing economies than the last 25. Most of the forces that once aided their rise have dissipated. In their place have come daunting headwinds: high debt burdens, weak investment and productivity growth, and the rising costs of climate change,” said Indermit Gill, the WB Group’s chief economist and senior vice president for development economics.
“In the coming years, developing economies will need a new playbook that emphasizes domestic reforms to quicken private investment, deepen trade relations, and promote more efficient use of capital, talent, and energy,” he added.
Ayhan Kose, the WB’s deputy chief economist and director of the Prospects Group, explained that policy uncertainty and trade tensions require bold and far-reaching policies in developing economies to seize untapped opportunities for cross-border cooperation.
“A good start would be to pursue strategic trade and investment partnerships with the rapidly expanding markets of other developing nations. Modernizing transportation infrastructure and standardizing customs processes are critical to cutting unnecessary expenses and fostering greater trade efficiency,” Kose said,
“Sound macroeconomic policies at home will fortify their capacity to navigate the uncertainties of the global outlook,” he added.
Serious headwinds in developing economies
According to the report, the developing economies are expected to suffer serious headwinds, as high global policy uncertainty could undercut investor confidence and hinder financing flows.
Additionally, rising trade tensions could reduce global growth, and persistent inflation could delay expected cuts in interest rates.
“Yet the global economy could also do better than expected — especially if its largest engines, the United States and China, manage to gain steam. In China, additional stimulus measures could boost demand. In the United States, robust household spending could result in stronger-than-expected growth, with beneficial effects for developing economies,” read the report.
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