Moody’s: MENA region set to drive global growth in 2025

Shafaq News/ The Middle East and North Africa (MENA) region is poised to lead global economic growth in 2025, driven by recovering oil production and accelerated investment initiatives.

Moody’s Ratings estimates regional economic growth to accelerate to 2.9% in 2025, up from 2.1% in 2024, fueled by stronger growth in oil-exporting countries. This rebound is attributed to a partial easing of oil production cuts under the OPEC+ agreement and non-oil investments aimed at economic diversification.

Real GDP growth among oil-exporting nations is projected to rise to 3.5% in 2025, compared to 1.9% in 2024, with increased oil production expected to boost overall growth by 0.5%.

Despite robust reform and investment momentum, oil-importing nations in the region are forecast to grow at 2.3% in 2025, the same as in 2024. This remains significantly below the 2015–2019 average of 3.9%, largely due to policy adjustments in Turkiye and Egypt and economic disruptions stemming from the conflict in Israel and Lebanon.

While oil production cuts reduced growth in oil-exporting nations by over 3% during 2023 and 2024, challenges to increasing output remain due to slowing demand from key importers like China and rising oil production outside OPEC+, particularly in the US.

In December 2024, OPEC+ delayed a planned production increase to April 2025. However, Moody’s expects non-oil economic activity in the MENA region to remain strong, driven by structural reforms and large-scale investment projects, including government-led diversification initiatives.

Iraq is poised for higher non-oil growth if security conditions stabilize, thanks to infrastructure projects such as the $17 billion Development Road initiative, equivalent to 6.5% of GDP. This project includes railways, highways, and ports connecting Asia and Europe.

Saudi Arabia is expected to see substantial gains from Vision 2030-linked government and sovereign wealth fund investments, with strong growth anticipated in construction, real estate, and non-oil mining. Retail and hospitality will also benefit from tourism-related investments.

Qatar’s growth will be supported by the development of its petrochemical sector and construction activities tied to LNG capacity expansion, set to come online between 2026 and 2030.

In Kuwait, non-oil growth will be driven by major projects like a new port and airport terminal, while the UAE’s non-oil growth is forecast to moderate slightly as some infrastructure projects near completion but remain robust at approximately 5% in 2025.

Turkiye, the region's largest economy, is expected to experience further economic slowdown in 2025, as authorities focus on reducing inflation. High interest rates and fiscal tightening are projected to rebalance the economy, curbing unsustainable domestic demand and inflationary pressures.

Tunisia’s growth is anticipated to improve modestly after a prolonged post-pandemic recovery, although challenging financial conditions and weak investment will continue to weigh on economic activity.