Economic burdens in Middle East due to tariffs and uncertainties
The MENA Region's Economic Trials 📰 Angela Barnes 🔗 AP 🔗 Twitter 🔗 Flipboard 🔗 Send 🔗 Reddit 🔗 LinkedIn 🔗 Messenger 🔗 Telegram 🔗 VK 🔗 Bluesky 🔗 Threads 🔗 Whatsapp
The Middle East and North Africa (MENA) countries are stumbling upon a series of economic trials. According to the International Monetary Fund (IMF), the region is grappling with economic uncertainties due to tariff measures, plummeting oil prices, and cutbacks in financial aid[1].
Brent crude oil prices, which plummeted from highs of over $120 a barrel in 2022, are projected to remain between $65–$69 per barrel in 2025 and 2026[1]. This makes energy-exporting economies highly susceptible to market fluctuations.
Moreover, mounting tariff plans by the United States and other nations, coupled with geopolitical tensions, have created a wave of economic unease globally, placing a substantial dampener on the region's growth[1]. This uncertainty could lead to negative economic impacts ranging from 2% to 4.5%[1].
"Countries should be proactive and devise policies to shield their economies," stated Jihad Azour, director for Middle East and Central Asia at the IMF, during an interview in Dubai[1].
Reductions in foreign aid also add to the region's economic woes[1]. With U.S. President Donald Trump pulling the country back from its position as the world's largest aid donor, regional budgets are feeling the strain.
"The slump in international assistance, especially for countries in fragility, heralds new risks for the region," Azour noted[1].
The MENA region's growth is predicted to be 2.6% this year, compared to 1.8% last year[1], but the regional outlook could be impacted by the global economic uncertainties.
Economies within the Persian Gulf continue to attract substantial foreign direct investment, with inflows rising by nearly 2% of GDP since the pandemic[1]. However, other MENA countries struggle due to slower foreign investment.
The IMF is prepared to collaborate with struggling nations, including the new government in Syria, and reportedly is holding discussions with Lebanese officials[1]. Rebuilding Syria's economy, as Azour puts it, would be a prolonged process requiring regional and international support, building institutions and reforms, and addressing critical issues like infrastructure, refugees, and rebuilding social bonds[1].
Despite the global economic uncertainty, MENA countries can spur growth by implementing structural reforms and diversifying economic ties[1].
Additional Insights
- Despite becoming the world's largest donor in the 1960s, the United States drastically reduced aid between 2000 and 2019 due to various policy changes and falling public support[2].
- Many MENA countries have been grappling with economic and political instability, with the Arab Spring protests in 2010 and the ongoing conflict in Yemen being notable examples[3].
- Some experts argue that climate change and natural disasters have exacerbated economic and political challenges throughout the MENA region[3].
Sources: [1], [2], [3], [4], [5]
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- In the context of the MENA region's economic trials, Brent crude oil prices, which dropped significantly in 2022, are projected to fluctuate between $65–$69 per barrel in 2025 and 2026, potentially affecting the financial and energy sectors of oil-exporting economies.
- The IMF is willing to provide assistance to struggling MENA countries, such as Syria and Lebanon, recognizing that rebuilding their economies will require regional and international support, institutional building, and reforms, as well as addressing critical issues like infrastructure, refugees, and rebuilding social bonds.
- As the MENA region grapples with economic uncertainties, including tariff measures, plummeting oil prices, cutbacks in financial aid, and geopolitical tensions, countries like Syria are predicted to require ongoing support from donors like the United States.
- Despite the global economic uncertainty, experts suggest that MENA countries can foster growth by implementing structural reforms and diversifying economic ties, thus reducing their reliance on oil exports and mitigating the impact of market fluctuations.
