Middle East at defining moment to boost growth and jobs, IMF official says

International Monetary Fund projects region will expand at 2.1% in 2024 and 4% in 2025

The National's Editor-In-Chief Mina Al-Oraibi moderates an event on the sidelines of the IMF and World Bank Annual Meetings in Washington. Ahmed Issawy / The National

Against a backdrop of conflicts and global fragmentation, the Middle East faces a period to deliver on medium-term growth, a senior International Monetary Fund official said on Friday, as he pressed countries in the region to follow through with structural reforms.

“I think we are now at one of those defining moments in the region. Challenges are extremely immense, uncertainty is at its peak,” Jihad Azour, IMF regional director for the Middle East and North Africa, said during a panel on the sidelines of the annual meetings in Washington.

“We need to think how, collectively, we need to put all these pieces together and how to do it genuinely, how to align our discourse with our actions."

The panel, titled Creating Jobs and Boosting Growth: Delivering on the Marrakesh Call for Action, follows Managing Director Kristalina Georgieva's call during last year's annual meetings to foster inclusive growth in the Middle East and North Africa.

Friday's panel, moderated by The National's Editor-In-Chief Mina Al-Oraibi, comes one year after the annual meetings in the Moroccan city, where the IMF called on countries in the Middle East to adopt five actions to spur inclusive growth.

The actions included fostering a strong private sector, overhauling social protection systems, providing opportunities for the region's youth, making it easier for women to participate in the economy, and prioritising the green economy as a means of creating jobs and growth.

Since then, the region's growth prospects have been impeded by the Israel-Gaza war and Opec production cuts. The IMF this week lowered its outlook for the Middle East by 0.6 per cent since its April release to 2.1 per cent, though growth is projected to rise to 4.5 per cent in 2025.

“Looking at the short term is not enough to understand why the region is not performing as much as it should, given the human capital it has, given the resources, and also given the ample size of capital,” said Mr Azour.

Like many other economies, the region's medium-term growth prospects have faded. The world economy is projected to grow by a “lacklustre” 3.1 per cent over the medium-term, the IMF said in its World Economic Outlook this week.

While the region has ample resources, human capital and a strategic position, one of the main issues for the region not performing as well as it should is a failure of structural reforms to help achieve people's aspirations.

Mr Azour listed numerous reforms – growth in the private sector among them – that regions must accomplish to improve their medium-term growth prospects. He added that the GCC is excelling in enabling the construction of technology infrastructure and attracting talent, and that other regional countries could do better.

Among the reforms he listed was allowing growth to be led by the private sector. While many states are “still considering” they can operate better than the private sector, he said every analysis shows this is not the case.

Paola Subacchi, a professor at the University of Bologna, said the region has to also harness its younger population and bring more people into the labour market, including women.

“Otherwise, the risk is then the demographic becomes a draft on growth,” she said. “We don't want to have a generation this is left behind.”

The IMF will release its full Regional Economic Outlook on the Middle East from Dubai next week.