World Bank revises 2025 Middle East growth forecast upwards to 2.8% amid Gulf recovery and oil sector gains.
DUBAI: The World Bank has revised its 2025 growth outlook for the Middle East, North Africa, Afghanistan, and Pakistan (MENAAP) region, raising its forecast to 2.8% from the previous 2.6%, citing improved performance in Gulf economies and stronger non-oil sector momentum.
According to the latest regional update reported by Reuters, the upward revision reflects faster-than-expected easing of oil production cuts by Gulf countries and increased economic activity in non-oil sectors. These improvements have helped lift the region’s prospects despite a complex global economic environment and ongoing political uncertainties.
The World Bank noted that while oil-rich Gulf states are recovering steadily, developing oil-exporting countries in the region face significant headwinds, particularly from regional conflicts and revised oil output targets. This dual-speed recovery highlights ongoing economic disparities within the region.
The report downgraded growth forecasts for 2026, with Iran’s economy now expected to shrink by 2.8% next year, reversing its previous projection of 0.7% expansion. Iran is forecasted to contract by 1.7% in 2025 as well, underlining the lingering impact of sanctions, inflation, and limited external trade.
The Washington-based lender pointed out that political instability, inflationary pressures, and the slowing global economy could weigh on the region’s medium-term outlook. However, continued diversification efforts by Gulf nations, especially in non-oil sectors such as tourism, logistics, and manufacturing, are expected to support resilience and job creation across the region.
The report reinforces the need for broader structural reforms and regional cooperation to cushion against external shocks and support inclusive and sustainable growth in the MENAAP economies.
