The regional director of the International Monetary Fund for the Middle East and Central Asia, Lebanese Jihad Azour, during an interview in Dubai. (Archive photo/AFP)
In an opinion piece published earlier this week in the daily al-Sharq al-Awsat, the International Monetary Fund (IMF) regional director for the Middle East and Central Asia, Lebanese national Jihad Azour, identified five risks facing the economies of the Middle East and North Africa (MENA) region, which is coming off a generally positive 2025 despite uncertainties.
In October, the IMF revised upward its growth forecast for the roughly 20 countries it includes in this region — which covers Lebanon, Syria, Iran, the Gulf states but not Israel — raising it from 2.6 percent to 3.3 percent in 2025, then from 3.4 percent to 3.7 percent in 2026, despite “global headwinds” and severe “domestic shocks” endured by several of these economies: wars in the Middle East, drought in North Africa or the ending of pandemic-related support measures.
The organization attributes this “resilience” to several factors highlighted in Azour’s column. First, “limited trade exposure to the United States reduced the direct impact of increases in American tariffs” on these countries. Next, “higher oil production — following OPEC+ decisions to gradually phase out voluntary cuts totaling 2.2 million barrels per day since November 2023 — supported exporting countries, while lower energy prices benefited importers.”
Other factors cited include “robust remittances, tourism, and strong domestic demand.”
Delayed effects, oil prices and AI
Azour then lists five factors that could break this momentum in 2025, starting with the fact that the impact of uncertainty on public policies “rarely produces immediate effects,” so it is possible that the effects of the “headwinds” seen in 2025 will carry over into 2026.
“A broad body of empirical evidence, including IMF research, shows that the effects of uncertainty on investment, employment, and consumption often appear with significant lags. If global uncertainty persists, it could lower global GDP by up to 5 percent by 2027,” Azour explains.
The second risk relates to the rapid development of artificial intelligence. While it has acted as a “counterweight to this year’s shocks,” with “high stock valuations and significant investment flows into technology sectors that have supported global confidence,” Azour says there are “growing concerns about possible overheating,” raising “the question of what impact a market correction would have on the region.”
Third, Azour points to the risk that “global financial conditions could tighten unexpectedly,” despite the current trend marked by a tamping down of inflation and lower policy rates in “major advanced economies” — in the United States, for example, the Fed lowered rates in December 2025 for the third consecutive time, marking a first since 2019.
Such tightening would prove costly for MENA countries, whose “gross financing needs are expected to remain very high in 2026.” In short, if borrowing costs rise, countries with significant financing needs will see their financial flexibility greatly limited.
The fourth factor is that oil prices remain volatile and can quickly rise — if demand exceeds expectations or due to geopolitical tensions — or fall, resulting in negative effects for oil producing countries (reduced revenues) and for oil-importers (higher energy prices). “Managing this volatility will remain crucial,” Azour stresses.
The last risk, he says, is directly linked to the geopolitical context. “The end of 2025 brought tentative signs of progress toward peace and reconstruction in some parts of the region, including Syria.
But post-conflict recovery is fragile and complex. Consolidating peace, rebuilding institutions, and securing lasting external support will be critical for a sustained recovery,” Azour summarizes. He concludes by calling on MENA countries to launch or continue the necessary structural reforms in order to “turn” the resilience shown in 2025 into “a lasting strength.”
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