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Capital Economics: MENA's Economy to Grow 2.2% in 2024

Mon 01 Apr 2024 | 12:04 AM
Taarek Refaat

Capital Economics expected the Middle East and North Africa (MENA) economy to grow by 2.2% in 2024 before accelerating to 4% in 2025.

The London-based research institution said in a report seen by the Arab World News Agency (AWP) that growth in the region will continue to rise to reach 4.2% in 2026.

According to the organization’s estimates, the average annual inflation in the region is expected to decline to 9.7% in 2024 from 11% in 2023, then decline to 3.9% and then 2.1% in 2025 and 2026, respectively.

Capital classifies the countries of Saudi Arabia, Egypt, the Emirates, Algeria, Morocco, Qatar, Kuwait, Oman, Tunisia, Jordan and Bahrain within the region, and its forecasts exclude Lebanon.

The corporation added that the decline in oil production in the Gulf region will affect the growth of the region’s gross domestic product in the first half of this year, but with the expected reduction of those cuts, growth will recover and more than most expectations.

It said that although the OPEC+ bloc recently agreed to extend the ongoing production cuts into the second quarter, it believes that the group will gradually raise production starting from the middle of the year.

It added that for the Gulf region, this will mean that the oil sector will continue to constitute a burden on GDP growth in the first half of this year, but it will support growth starting from the third quarter of 2024 and in 2025.

As oil prices rose near the $85 per barrel range, Capital Economics expected the rise in global supplies to put pressure on prices and for Brent crude to fall to $75 per barrel by the end of the year.

This puts crude prices below the level of parity between revenues and expenditures in budgets and the current account balance in some economies.