IMF Slashes MENA’s Growth Rate for Next Two Years

The International Monetary Fund (IMF) has lowered the growth for the Middle East and North Africa (MENA) region by 90 bps for 2025 and 50 bps for 2026 to an expected growth of 2.6% and 3.4%, respectively, mainly led by a downward revision of growth forecast for oil exporters.

In its latest World Economic Outlook for April 2025, the IMF has slashed the Saudi Arabia’s growth by 30 bps for 2025 to 3% and for 2026, the expected growth was revised down by 40 bps to 3.7%. Real GDP growth for Kuwait and Oman in 2025 were also revised downward by 140 bps to 1.9% and 80 bps to 2.3%, respectively.

For the UAE, the GDP growth was to fall by 110 bps to 4% in 2025, while the forecast for Bahrain is expected to reach 2.8 % (-40 bps).  On the other hand, Qatar is expected to grow by 50 bps to 2.4%, the IMF said.

For the year 2026, Qatar is expected to be the fastest growing economy in the GCC with a growth of 5.6% after a downward revision of 20 bps followed by the UAE with a growth of 5.0% (-10 bps). Growth in Saudi Arabia is expected to reach 3.7% (-70 bps) followed by Oman with a growth of 3.6% (-80 bps).

Kuwait and Bahrain were the only GCC countries to see an upward revision of 60 bps and 10 bps with growth expected to come in at 3.1% and 3%, respectively.

The broader Middle East and Central Asia region are projected to emerge from several years of subdued growth, with the rate accelerating from an estimated 2.4% in 2024 to 3% in 2025 and to 3.5% in 2026.

Compared to January-2025 WEO update, the projection is revised downward, reflecting a more gradual resumption of oil production, persistent spill-overs from conflicts, and slower-than-expected progress on structural reforms.

Based on futures market data, the anticipated average price of oil is expected to be $66.94/b for 2025 and USD 62.38/b for 2026.

Global Forecast

The IMF also forecasted that the global real GDP would be 2.8% for 2025 and 3% for 2026. The forecast for 2025 and 2026 is revised downward by 50 bps and 30 bps, respectively from the January-2025 forecast.

The downgrades are broad-based across various countries and primarily reflect the direct impacts of the recent trade policies, along with their indirect consequences through trade linkages, increased uncertainty, and declining consumer sentiment.

The IMF said that as per the forecast prior to April 2, global growth was projected to be 3.2% for both 2025 and 2026, reflecting a decrease of 10 bps in each year compared with the January 2025 WEO Update.

This forecast diverges from the global assumptions previously outlined regarding trade policy announcements, the degree of uncertainty, and commodity prices.

It was based on elevated oil prices and on the trade policies declared between February 1 and March 12, which include tariffs imposed on Canada and Mexico, the initial set of tariffs on China, the corresponding reactions from Canada and China, as well as sector-specific tariffs on steel and aluminum.

The reductions in growth projections are most significant for the countries directly affected. However, growth in other economies is also lowered due to heightened uncertainty compared to January-2025 and the repercussions of tariffs.