IMF says risks to Middle East outlook tilted to downside on global uncertainty

The International Monetary Fund, which raised its 2025 growth outlook for the Middle East and North Africa last week, has said that risks for the region are still tilted to the downside, despite a recent improvement in geopolitical tensions.

The IMF has lifted its 2025 GDP growth forecast for the MENA region to 3.3%, from 2.6% it projected in May.

"The outlook this year reflected a resilience, despite the fact that we live in elevated global uncertainty and a situation where trade tariffs affected most of the world and the geopolitical tensions are still there," Jihad Azour, director of the IMF's Middle East and Central Asia department, told Reuters.

Regional oil exporters are benefiting from higher oil production as well as increased public investment and implementation of structural reforms as part of economic diversification efforts.

Lower commodity prices, a rebound in tourism and stronger remittances have helped improve growth among oil importing states, with improved access to financial markets and moderating inflation providing support.

"Of course, those developments come in a context where uncertainty is still high and the risks are tilted to the downside," Azour said in Dubai, ahead of the launch of the IMF's Regional Economic Outlook report.

These included a further softening in oil prices if global demand declines, increased global trade tensions - although the region had so far been less affected than others - and higher global inflation.

"Geopolitical tensions in the last couple of weeks have shown signs of improvement but one has to remain vigilant."

TOURISM, REMITTANCES BOOST EGYPT GDP FORECAST

Growth in Egypt was revised up to 4.3% for 2025, up from 3.8% projected in May, supported by an increase in tourism revenue and strong remittances from Egyptians abroad. Inflation has also plunged from almost 40% in 2023 to 11.7% in September, helped by the IMF's $8 billion bailout programme in March 2024.

"We encourage the authorities to accelerate the implementation of two important milestones - divestment and increase the level of clarity under some of the state-owned enterprises," Azour said.

He said that IMF discussions with Egypt on the combined fifth and sixth review of its loan programme were ongoing, and expected to be completed during the fourth quarter.

Since 2020, the IMF has approved $55.7 billion in financing for countries in the region, with $21.4 billion approved since early 2024 for programmes in Egypt, Jordan, Morocco and Pakistan.