The International Monetary Fund (IMF) has released its 2025 growth forecast for the Middle East, North Africa, Afghanistan, and Pakistan (MENAP) region, projecting moderate but uneven economic expansion across member countries. The new figures highlight diverging trends among oil exporters, reform-oriented economies, and conflict-affected states, reflecting a complex landscape shaped by fluctuating energy prices, geopolitical tensions, and domestic reform agendas.
According to the IMF, the overall regional outlook shows cautious optimism, with several economies expected to rebound from subdued growth in 2024. The United Arab Emirates, Morocco, and Saudi Arabia are among the top performers, while nations such as Yemen and Iraq face continued structural and political headwinds that constrain output.
(IMF.org)
Mixed Performance Across MENAP Economies
The IMF’s updated World Economic Outlook projects growth rates for 2025 as follows:
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Algeria: 3.4%
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Egypt: 4.3%
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Iran: 0.6%
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Iraq: 0.5%
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Jordan: 2.7%
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Kuwait: 2.6%
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Morocco: 4.4%
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Pakistan: 2.7%
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Qatar: 2.9%
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Saudi Arabia: 4.0%
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Somalia: 3.0%
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Sudan: 3.2%
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United Arab Emirates: 4.8%
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Yemen: -1.5%
The figures indicate that while the region’s average growth remains positive, the disparity between energy-rich economies and those grappling with inflation or political instability continues to widen.
Gulf Economies Lead Regional Recovery
The IMF report underscores that the Gulf Cooperation Council (GCC) economies will remain the primary growth engines of MENAP in 2025. The United Arab Emirates, projected to grow by 4.8%, is expected to lead the region thanks to ongoing diversification initiatives, robust non-oil activity, and strong tourism and real estate performance.
Saudi Arabia follows closely with an estimated 4.0% expansion, reflecting a gradual recovery in oil production and sustained non-oil growth under Vision 2030 reforms. The IMF notes that Riyadh’s continued investment in infrastructure, digital transformation, and logistics hubs is underpinning a more balanced economic structure.
Qatar, with a 2.9% forecast, is also set to maintain steady growth supported by the expansion of its liquefied natural gas (LNG) sector and strong fiscal buffers. Kuwait (2.6%) and Oman (not listed in this dataset but expected around the same range) are likewise benefiting from fiscal prudence and moderate oil prices that remain above pre-pandemic averages.
North African Outlook: Morocco and Egypt Shine
In North Africa, Morocco and Egypt are projected to outperform their regional peers. Morocco’s economy is expected to grow by 4.4% in 2025, driven by a strong agricultural season, recovering exports, and increased foreign investment in renewable energy and automotive manufacturing. The IMF credits Rabat’s structural reforms and diversified economy as key factors contributing to its resilience.
Egypt’s growth projection of 4.3% reflects gradual stabilization following a challenging year marked by currency depreciation and inflationary pressure. The IMF anticipates that reforms in fiscal policy, improved foreign exchange flexibility, and support from international partners will restore confidence in Egypt’s economy.
Algeria, another major North African economy, is forecast to grow by 3.4% slightly below Morocco but still robust. The expansion is supported by hydrocarbon exports and state-led infrastructure investments. However, the IMF warns that overreliance on energy revenues and limited private sector diversification could pose medium-term risks.
South and East of the Region: Uneven Recovery
Pakistan is expected to post modest growth of 2.7% in 2025, as macroeconomic stabilization measures begin to take effect following years of fiscal imbalances and currency pressures. The IMF emphasizes the importance of structural reforms and energy sector modernization to sustain growth momentum.
Jordan, with a forecast of 2.7%, remains on a steady but fragile recovery path. The IMF report points to continued dependence on remittances and external aid, while also highlighting improvements in tourism and foreign investment.
Sudan and Somalia, both facing internal instability, are expected to register growth rates of 3.2% and 3.0% respectively. These figures reflect limited recovery from conflict and drought conditions but remain below the regional average.
Yemen, however, remains the region’s weakest performer with a projected contraction of 1.5%, largely due to protracted conflict and a collapsing infrastructure base that continues to constrain economic activity.
Iran and Iraq Struggle Amid External Pressures
Iran’s growth forecast of just 0.6% reflects persistent sanctions, low investment inflows, and weak consumer confidence. The IMF also notes that inflationary pressures and currency depreciation are undermining household purchasing power. Without significant reforms or easing of external constraints, Tehran’s growth potential will likely remain limited.
Iraq, projected at 0.5%, continues to face difficulties balancing its oil-dependent economy with ongoing political uncertainty and public sector challenges. Oil output constraints, coupled with limited private sector diversification, are expected to cap economic gains in the short term.
Structural and Policy Factors
Across the MENAP region, the IMF underscores the importance of economic diversification and fiscal sustainability. Oil-exporting countries are being urged to channel energy revenues into productive investments such as technology, manufacturing, and green energy to mitigate the long-term risks of fluctuating oil prices.
Meanwhile, non-oil economies like Egypt, Jordan, and Pakistan are advised to focus on fiscal consolidation, monetary stability, and private-sector development to build resilience against external shocks. The report also highlights that inflation remains a concern in several countries, particularly those dependent on food and fuel imports.
Global Context
The IMF’s projections are released at a time of global economic uncertainty marked by slower trade, tightening financial conditions, and geopolitical volatility. For MENAP countries, these headwinds are compounded by regional challenges such as water scarcity, youth unemployment, and uneven access to capital.
Nonetheless, the IMF remains cautiously optimistic that structural reform momentum in countries like Saudi Arabia, the UAE, and Morocco will sustain medium-term growth. Continued foreign investment, especially in renewable energy and digital transformation, is seen as key to regional stability.
Conclusion
The 2025 IMF forecast for the MENAP region paints a picture of cautious recovery one marked by stark differences between countries moving toward modernization and those still grappling with instability. While the Gulf states continue to lead with strong fiscal buffers and reform-driven growth, nations such as Yemen, Iraq, and Iran face significant economic headwinds.
Ultimately, the IMF emphasizes that sustained growth in MENAP will depend on three factors: political stability, economic diversification, and effective policy execution. As the global economy adapts to post-pandemic realities and energy transitions, the region’s ability to innovate and integrate will determine its long-term trajectory.
