RIYADH: The Middle East and North Africa is on track for a modest economic recovery after 2024’s muted growth, with real gross domestic product projected to rise 2.6 percent in 2025 and 3.7 percent in 2026, the World Bank has said. 

Its latest economic outlook, titled “Shifting Gears: The Private Sector as an Engine of Growth in the Middle East and North Africa,” attributed the improved forecast to the easing of OPEC+ production cuts, a rebound in agricultural output across oil-importing economies, and resilient private consumption. 

This follows growth of just 1.9 percent in 2024, with the report noting that while the recovery is underway, the region remains vulnerable to geopolitical tensions, climate-related disruptions, and volatility in global oil and trade markets. 

Ousmane Dione, World Bank vice president for the Middle East and North Africa, said in the report’s foreword: “Our macroeconomists forecast a moderate acceleration of growth in 2025 and 2026.

“Realizing the potential of the region will depend on navigating risks and advancing much-needed reforms.” 

He added that the economic outlook remains uncertain, with persistent challenges and fragility shaping the region’s trajectory.

“While some positive signs are emerging in conflict-affected economies, the situation remains fragile, and deep structural challenges persist amidst global policy uncertainty,” Dione noted. 

The report added that economic activity in the Gulf Cooperation Council countries, including Saudi Arabia, is expected to benefit from rising oil output following OPEC+’s decision to accelerate production increases from May. 

Saudi Arabia’s GDP is projected to grow by 2.8 percent in 2025, compared to 1.3 percent in 2024, with growth driven by non-oil sectors, the World Bank said. 

For oil-importing countries such as Egypt and Morocco, the easing of inflation and improvements in agriculture are expected to support higher growth. 

Egypt’s growth is forecast to reach 3.8 percent in the fiscal year 2025, while Morocco is expected to grow by 3.4 percent. 

The World Bank report pointed out that the region’s long-standing low productivity is partly due to the lack of a dynamic private sector. 

It noted that few firms invest, innovate or provide formal training, while a significant divide persists between a small formal sector and a large informal one. 

“A dynamic private sector is essential to unlocking sustainable growth and prosperity in the region,” said Roberta Gatti, World Bank chief economist for MENA. 

“To realize this potential, governments across the region must embrace their role as stewards of competitive markets,” she added. 

The report also underscored the need to better harness the region’s human capital, particularly by improving female participation in the labor market. 

“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 Dione. 

“Closing the gender employment gap could substantially boost income per capita by around 50 percent in a typical MENA economy,” he added. 

The report has called for increased competition, improvements in the regulatory environment, better data access, and a reconsideration of the role of state-owned enterprises. 

It also highlighted the need for firms to adopt improved management practices and leverage the untapped potential of women entrepreneurs and employees. 

While the outlook signals a cautious recovery, the World Bank stressed that unlocking the full potential of the private sector is essential to achieving long-term, inclusive economic growth across the region.

BEIJING: Oil prices ticked up on Thursday after falling nearly 2 percent in the previous session, with investors weighing a potential OPEC+ output increase against conflicting tariff signals from the White House and ongoing US-Iran nuclear talks.

Brent crude futures rose 8 cents, or 0.12 percent, to $66.20 a barrel by 8:05 a.m. Saudi time, while US West Texas Intermediate crude gained 9 cents, or 0.14 percent, to $62.36 a barrel.

Prices settled down 2 percent in the previous trading session after Reuters reported that several OPEC+ members would suggest the group accelerate oil output increases for a second month in June, citing three sources familiar with the OPEC+ talks.

“While a risk-on move lifted most risk assets yesterday, oil was left behind thanks to OPEC+ discord,” ING analysts wrote in a note.

Kazakhstan, which produces about 2 percent of global oil output and has repeatedly exceeded its quota over the past year, said it would prioritize national interest, rather than that of OPEC+ in deciding production levels, Reuters reported on Wednesday.

There have previously been disputes among OPEC+ members over compliance with production quotas, one of which resulted in Angola exiting OPEC+ in 2023.

“Further disagreement between OPEC+ members is a clear downside risk, as it could lead to a price war,” the ING analysts said.

Signs that the US and China could be moving closer to trade talks supported prices. The Wall Street Journal reported that the White House would be willing to lower its tariffs on China to as low as 50 percent in order to open up negotiations.

US Treasury Secretary Scott Bessent said on Wednesday that current import tariffs — of 145 percent on Chinese products headed into the US and 125 percent on US products headed into China — were not sustainable and would have to come down before trade talks between the two sides could begin.

White House Press Secretary Karoline Leavitt later told Fox News, however, that there would be no unilateral reduction in tariffs on goods from China.

Rystad Energy analysts say a prolonged US-China trade war could cut China’s oil demand growth in half this year to 90,000 barrels per day from 180,000 bpd.

Trump is also mulling tariff exemptions on car part imports from China, the Financial Times reported on Wednesday.

Potentially putting downward pressure on oil prices, the US and Iran will hold a third round of talks this weekend on a possible deal to reimpose restraints on Tehran’s uranium enrichment program. The market is watching the talks for any sign that a US-Iran rapprochement could lead to the easing of sanctions on Iran oil and boost supply.

But the US on Tuesday put fresh sanctions on Iran’s energy sector, which Iran’s foreign ministry spokesperson said showed a “lack of goodwill and seriousness” over dialogue with Tehran.