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Moody’s: MENA region set to drive global growth in 2025

Moody’s: MENA region set to drive global growth in 2025
Moody’s: MENA region set to drive global growth in 2025

2025-01-17 13:10:25 - From: Shafaq News


Shafaq News/ The Middle East and North Africa (MENA) regionis poised to lead global economic growth in 2025, driven by recovering oilproduction and accelerated investment initiatives.

Moody’s Ratings estimates regional economic growth toaccelerate to 2.9% in 2025, up from 2.1% in 2024, fueled by stronger growth inoil-exporting countries. This rebound is attributed to a partial easing of oilproduction cuts under the OPEC+ agreement and non-oil investments aimed ateconomic diversification.

Real GDP growth among oil-exporting nations is projected torise to 3.5% in 2025, compared to 1.9% in 2024, with increased oil productionexpected to boost overall growth by 0.5%.

Despite robust reform and investment momentum, oil-importingnations in the region are forecast to grow at 2.3% in 2025, the same as in2024. This remains significantly below the 2015–2019 average of 3.9%, largelydue to policy adjustments in Türkiye and Egypt and economic disruptionsstemming from the conflict in Israel and Lebanon.

While oil production cuts reduced growth in oil-exportingnations by over 3% during 2023 and 2024, challenges to increasing output remaindue to slowing demand from key importers like China and rising oil productionoutside OPEC+, particularly in the US.

In December 2024, OPEC+ delayed a planned productionincrease to April 2025. However, Moody’s expects non-oil economic activity inthe MENA region to remain strong, driven by structural reforms and large-scaleinvestment projects, including government-led diversification initiatives.

Iraq is poised for higher non-oil growth if securityconditions stabilize, thanks to infrastructure projects such as the $17 billionDevelopment Road initiative, equivalent to 6.5% of GDP. This project includesrailways, highways, and ports connecting Asia and Europe.

Saudi Arabia is expected to see substantial gains fromVision 2030-linked government and sovereign wealth fund investments, withstrong growth anticipated in construction, real estate, and non-oil mining.Retail and hospitality will also benefit from tourism-related investments.

Qatar’s growth will be supported by the development of itspetrochemical sector and construction activities tied to LNG capacityexpansion, set to come online between 2026 and 2030.

In Kuwait, non-oil growth will be driven by major projectslike a new port and airport terminal, while the UAE’s non-oil growth isforecast to moderate slightly as some infrastructure projects near completionbut remain robust at approximately 5% in 2025.

Turkiye, the region's largest economy, is expected toexperience further economic slowdown in 2025, as authorities focus on reducinginflation. High interest rates and fiscal tightening are projected to rebalancethe economy, curbing unsustainable domestic demand and inflationary pressures.

Tunisia’s growth is anticipated to improve modestly after aprolonged post-pandemic recovery, although challenging financial conditions andweak investment will continue to weigh on economic activity.