WASHINGTON, April 23, 2025 — According to the World Bank’s latest Middle East and North Africa Economic Update, entitled Shifting Gears: The Private Sector as an Engine of Growth in the Middle East and North Africa, the region is estimated to have grown at a modest 1.9 percent in 2024 and growth is forecast to moderately rise to 2.6 percent in 2025. These forecasts are shadowed by uncertainty, given the rapidly changing global environment.
The uptick among oil exporters is linked to plans to roll back cuts in oil production. The rebound in oil importing countries is expected to be driven by an increase in consumption as inflation eases and a recovery in the agricultural sector in some economies. The forecasts are clouded by high uncertainty, due to factors such as conflict, extreme weather shocks, developments in oil markets and a changing global policy environment. This uncertainty is further exacerbated by the potential impacts of volatile trade dynamics on global growth and inflation. The report further highlights that conflict can reverse decades of economic progress with long-lasting detrimental effects.
Shifting Gears explores the critical role of the private sector in driving growth, creating jobs and spurring innovation. Stronger growth in the region has been held back by the absence of a thriving private sector.
The report finds that most of the private sector in MENA is not dynamic. Labor market productivity has been largely declining across many countries in the region. Few firms invest and innovate. There is little firm entry into and exit from markets. Moreover, a divide persists between a small formal sector and a large informal sector in terms of productivity. Few women participate in the private sector.
"The region has long underused human capital. Women are largely left out of the labor market. Businesses can find more talent by attracting women leaders, who in turn will hire more women," said Ousmane Dione, World Bank Vice President for the Middle East and North Africa. "Closing the gender employment gap could substantially boost income per capita by around 50 percent in a typical MENA economy."
Both governments and businesses play complementary roles in developing a more dynamic private sector. Governments in the region can boost the performance of firms by promoting competition in markets, improving the business environment, and investing in data collection and access.
"A dynamic private sector is essential to unlocking sustainable growth and prosperity in the region," added Roberta Gatti, World Bank Chief Economist for the Middle East and North Africa. "To realize this potential, governments across the region must embrace their role as stewards of competitive markets."
Businesses themselves can build capacity by improving their management practices. Harnessing the untapped talent of women entrepreneurs and workers could foster growth. The report contends that a brighter future for the MENA private sector is within reach if governments rethink their role and firms effectively invest and harness talent.
