The International Monetary Fund (IMF) has released its May 2023 Regional Economic Outlook for the Middle East and North Africa (MENA) region and finds a resilient economy in the regions.
According to a news release, the report highlighted, that despite a series of global shocks, growth in the region stayed surprisingly resilient and was even on the upside last year.
Jihad Azour, director of the Middle East and Central Asia Department at the IMF, said growth is projected to slow to 3.1% in 2023, before picking up slightly to 3.4% in 2024. In addition, the report said low-income countries will continue to lag behind the region with a growth of 1.3% this year, as they struggle with heightened instability, food insecurity, persistently high inflation and country-specific fragilities.
Azour emphasized that the IMF's commitment to supporting MENA countries is unwavering, saying that in addition to tailored policy advice, the IMF continues to assist its member countries through ongoing lending arrangements and technical assistance. The report noted that all countries will benefit from strengthening monetary policy frameworks and fostering financial development. Activating additional monetary policy transmission channels will enhance central bankers' ability to fight inflation, he said.
"Fiscal policy should preserve debt sustainability, build buffers and be supportive of monetary policy while providing targeted and temporary support to protect the most vulnerable," Azour said at the Economic Outlook for the Middle East and Central Asia news conference.
Azour also highlighted three key risks to the region's economy, namely further financial sector instability in advanced economies, tighter-for-longer global financial conditions and the escalation of the war in Ukraine.
To help mitigate these risks, Azour said, striking the right policy balance will be critical. Monetary policy should focus on maintaining or regaining price stability, while bank supervisors should ensure that banks have governance and risk management commensurate with their risk profile, he said.