Economic disruptions, conflict, inflationary pressures, and tightening fiscal conditions are becoming structural realities for the Middle East and North Africa (MENA) region, and governments must adapt to rethink reform and resilience.
That was a central message emerging from discussions during the 32nd Economic Research Forum (ERF) annual conference in Cairo last week titled “After the Shock: Reform, Resilience, and Economic Transformation in MENA.”
Experts at the conference argued that the region must stop considering crises as temporary interruptions and instead redesign policy around uncertainty, adaptation, and long-term resilience.
Director of the Middle East and Central Asia Department at the International Monetary Fund (IMF) Jihad Azour described the effect of regional tensions as “a severe shock” with global repercussions in a video intervention, given that the region contributes 30 per cent of global natural gas, 20 per cent of oil, and a substantial share of fertiliser production.
Azour noted that over the past five years regional economies have absorbed repeated shocks. Trade and tourism have emerged among the sectors most exposed, particularly in economies heavily dependent on services, he added, saying that countries already facing economic constraints or hosting displaced populations are experiencing intensified inflationary pressures and tighter financial conditions.
Looking ahead, Azour said he expects persistent effects from such shocks. Growth trajectories will remain weaker than previously projected, and recovery will likely be gradual.
“Countries directly exposed to conflict face the greatest pressure, but indirect effects extend across the region,” he said.
Azour said policymakers now face difficult decisions, particularly around fiscal management, subsidy reform, and balancing monetary and fiscal responses.
On a similar note, Rania Al-Mashat, executive secretary of the UN Economic and Social Commission for Western Asia, said that “if there is one thing that defines the new normal, it is that we now live in a world of uncertainty and non-linearity.”
This should change how governments design public policy, she stressed.
Al-Mashat pointed to estimates showing that around 82 million people across the region now require humanitarian assistance, up from 59 million in 2019. The region also hosts more than one-quarter of the world’s displaced population and one in five refugees globally.
“These are disrupted lives and public systems pushed beyond their limits,” she said.
Before the latest crises, spending on health, education and social protection was already insufficient across much of the region, she said.
She emphasised that resilience should not be confused with returning to previous conditions. “The previous situation was already fragile,” she said. “Resilience means maintaining the capacity to function even while exposure to shocks continues.”
According to Al-Mashat, improving efficiency across the region could unlock around $100 billion annually that could be redirected toward health, education, and social protection.
Regional integration, she argued, also represents a solution. “There is a major opportunity for regional cooperation to reduce permanent scarring and mitigate the long-term loss of development potential resulting from consecutive crises in our region,” she said.
Mahmoud Mohieldin, UN special envoy on financing the 2030 Sustainable Development Agenda, said an environment of permanent crises weakens traditional coping mechanisms and exposes the limitations of traditional assumptions about who is vulnerable.
Middle-income groups increasingly need protection as well, Mohieldin said via video conference. However, the middle classes will not be happy with limited handouts, he added, and will need to be helped to go back to where they were.
To support vulnerable groups, Mohieldin said social protection arrangements should be placed at the centre of national policymaking. He stressed that safety nets should extend beyond providing support during or immediately after a shock and instead focus on strengthening the overall resilience of economic and social systems.
He added that improving action was also needed at the local and sub-national levels to mobilise resources to finance communities.
Investments in preparedness, resilient infrastructure, and social protection should be viewed not as expenditure but as economic investments that generate returns through losses that can be avoided, Mohieldin said.
Economic reform is not only a technical challenge, Nur Arafeh, a fellow at the Malcolm H. Kerr Carnegie Middle East Centre, said.
Improving regulations, reducing subsidies, attracting investment, and shifting resources to productive sectors may be economically rational, she said, but the question “is not simply whether a reform package is economically rational; it is whether a political and social bargain exists that is capable of carrying it out.”
She noted that building a productive, diversified economy can challenge the vested interests that benefit from existing arrangements.
There was a need for a new growth bargain where there is a shared understanding between the state, citizens, and the private sector about what reform is for, who will benefit, who will lose, and how those dynamics will be governed, she said.
She noted that citizens and investors must believe that reform is not simply a new way to redistribute opportunities to connected insiders, she added. They need to see clear rules, accountability, and strict limits on political discretion.
Meanwhile, governments must create mechanisms to protect those bearing the immediate costs of transition through robust social protection, active labour-market policies, targeted support, and a shared sense of equity, she said.
Moreover, reform cannot simply be imposed from above and expect broad legitimacy. It needs domestic constituencies such as workers, entrepreneurs, parts of the middle class, and youth who genuinely believe they have a stake in the new economy.
“Without a coalition of this sort, reform remains highly vulnerable to resistance from entrenched elites,” Arafeh said.
* A version of this article appears in print in the 25 June, 2026 edition of Al-Ahram Weekly.
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