World Bank lifts 2025 Middle East growth outlook

BEIRUT — The World Bank has raised its 2025 growth forecast for the region spanning the Middle East, North Africa, Afghanistan and Pakistan (MENAAP), while slashing its forecast for next year due to conflicts and reduced oil output in Iran and Libya.

In new projections released ahead of its joint annual meetings with the International Monetary Fund, scheduled for Oct. 13-18 in Washington, the bank said it now expects regional GDP to grow 2.8 percent this year, up from the 2.6 percent projected in April.

The upward revision is largely driven by Gulf economies, where activity has strengthened amid a faster-than-expected easing of oil production cuts and robust expansion in non-oil sectors.

“The outlook has also improved in oil-importing countries, thanks to private consumption and investment, as well as a rebound in agriculture and tourism,” the World Bank said in its report issued Tuesday.

Consequences of conflict

Despite the brighter headline figures, the region remains deeply affected by ongoing conflicts in Syria, Yemen, Lebanon, the occupied West Bank and Gaza, as well as Afghanistan — crises that have triggered humanitarian emergencies, mass displacement and severe economic downturns.

“Neighboring countries are also experiencing negative spillover effects from the conflicts, including economic disruptions, refugee flows and heightened insecurity,” the report noted.

The World Bank has not yet updated its forecast for Lebanon’s economy. In April, it projected a 4.7 percent growth rate for 2025.

Developing oil exporters are expected to slow sharply due to conflict-related disruptions and further cuts in oil production, the bank added.

Iran’s economy, in particular, is forecast to shrink 1.7 percent this year and 2.8 percent in 2026 — a sharp reversal from the 0.7 percent expansion projected in April. The contraction “reflects a decline in both oil exports and non-oil economic activity amid tighter sanctions, including the reimposition of U.N. measures, and disruptions following the June conflict,” the report said.

In September, the United Nations reinstated an arms embargo and other sanctions on Iran over its nuclear program after action by European powers, prompting Tehran to threaten retaliation. The renewed restrictions came only months after Israeli and U.S. airstrikes targeted Iran.