The North Africa Initiative and MENA Club at SAIS Host Event on Economic Growth and Challenges in the Region
November 19, 2024
On November 19, the Foreign Policy Institute’s North Africa Initiative (NAI) and MENA Club at SAIS hosted an event on the economic challenges facing the region considering this year’s World Bank and the IMF Regional Economic Outlooks.
The event featured welcome remarks by Vali Nasr, the Majid Khadduri Professor of Middle East Studies and International Affairs at SAIS, and remarks by Dr. Roberta Gatti, chief economist of the Middle East and North Africa (MENA) region at the World Bank, Taline Koranchelian, deputy director in the Middle East and Central Asia Department at the International Monetary Fund, and Dr. Amr Hamzawy, director of the Middle East Program at Carnegie Endowment for International Peace. The panel discussion was moderated by Hafed Al-Ghwell, NAI’s executive director.
In his opening remarks, Professor Nasr outlined the region’s trajectory in light of the Arab Spring and the war in Gaza, providing a profound lens for understanding the enduring challenges of regional insecurity. Gatti tackled three main questions related to the region; the question of growth, the inevitable conflict, and the question of optimism. She discussed the role of the World Bank in navigating the dynamics of economic growth, the ramifications of uncertainty, and the impact of ongoing conflicts on development in North Africa, with a particular focus on human capital and productivity.
Gatti noted that the World Bank puts the real GDP growth of the MENA region at 2.2% which is deemed a fragile increase. She attributed this to increasing uncertainty due to continuous conflicts. If there had not been conflicts across the region over the years, she added, the regional GDP per capita would be 45% higher, equivalent to 35 years of development. She reiterated the importance of peace for regional economic growth, in addition to the significance of innovation, better data access, and more trade.
Offering the IMF perspective, Koranchelian discussed the multifaceted impact of direct conflicts, spillover effects, and broader factors including oil production, exports, and country-specific issues such as climate change and drought, while emphasizing the importance of governance reforms, state footprints, labor force participation, and trade integration for better economic growth in the region. She added that during the 2024 IMF annual meetings, the most dominant topics for the region were uncertainty and building resilience to manage this uncertainty.
The IMF projects a MENA economic growth of 2.1% in 2024, and 2.2% for North Africa specifically. Koranchelian noted that there is a decrease in inflation in most countries from double digits to single digit. However, she added that there are some parts of the region that are directly impacted by ongoing conflicts, such as Gaza and Lebanon, or affected by conflict spillover, including Egypt, which has seen a 70% drop in Suez Canal revenue; and Jordan, where tourism has been negatively affected. This is in addition to the broader regional impact particularly on oil and gas prices, financial markets, and trade. She reiterated the importance of structural reforms for regional economic growth through three key points: governance reforms, reducing the state’s footprint, increasing the female labor force participation, and regional trade integration.
Dr. Hamzawy also highlighted the indirect costs of decades-long regional conflicts and added that there is a new war of attrition in the region, which makes it extremely difficult for any Arab government to improve governance and take the state out of the economic challenges. He further referred to the geostrategic risks posed by state and non-state actors, and the profound human toll on economies and societies. He also reiterated the importance of prioritizing governance reforms, women’s inclusion, renewable energy, and regional security that needs to be reestablished to foster stability and economic growth.”