The International Monetary Fund painted an unexpectedly upbeat picture for the Middle East, North Africa, and Pakistan, projecting that regional economies will expand by 3.2% in 2025 and accelerate further to 3.7% in 2026 — a marked rise from last year’s 2.1% pace.
Oil exporters, buoyed by increased production after the rollback of OPEC+ cuts, are driving much of the momentum. Meanwhile, oil-importing nations and Pakistan are reaping the benefits of subdued energy costs, steady remittances, and a thriving tourism rebound that’s feeding domestic demand.
“The region’s performance has outpaced earlier forecasts,” said Jihad Azour, who heads the IMF’s Middle East and Central Asia Department, during a briefing on the sidelines of the Fund’s annual meetings. “Inflation is expected to stay moderate, supported by tighter monetary policy and softer food and energy prices.”
In the Caucasus and Central Asia, growth is expected to hold firm this year at 5.6%, propelled by strong consumption and credit expansion before gradually easing to around 4% as hydrocarbon output steadies and fiscal tightening gains traction.
Despite global turbulence — from geopolitical strains to trade frictions — regional resilience has been striking. Exchange rates have remained steady, investor confidence is returning, and several governments have made successful comebacks to global bond markets. Inflation trends, however, diverge: easing across much of MENA and Pakistan, yet still stubbornly high in parts of Central Asia where demand and price pressures remain intense.
Azour cautioned that while the outlook is broadly positive, vulnerabilities persist. “Lingering global uncertainty, elevated borrowing costs, and climate shocks could still disrupt recovery paths,” he noted. “But faster reforms and stability progress could turn this resilience into sustainable, inclusive growth.”
The IMF urged regional policymakers to use the current window of stability to rebuild financial cushions, enhance fiscal discipline, and advance structural reforms that diversify economies and attract job-creating private investment.
Since 2020, the IMF has extended nearly $56 billion in financing and backed over 385 capacity-building programs across 31 nations in these regions.
“The region has proven its strength time and again,” Azour concluded. “The next challenge is to transform short-term stability into lasting prosperity — by modernizing policies, building resilience, and ensuring growth benefits all.”
