The World Bank on Wednesday revised downward its outlook for the Middle East and North Africa's economic growth due to heightened uncertainties caused by the Gaza war, although the Gulf region is on track to expand amid diversification efforts.
The Mena region's gross domestic product is forecast to grow at 2.2 per cent this year, a “modest increase” from last year, but half a percentage lower from the World Bank's April projection of 2.7 per cent.
The increase is driven by the Gulf region, where growth is projected to rise to 1.9 per cent this year from 0.5 per cent in 2023, the lender said in its Mena Economic Update. In the rest of the region, “growth is expected to decelerate”, with oil importers' growth forecast to slow to 2.1 per cent this year from 3.2 per cent in 2023, and for non-GCC oil exporters, to 2.7 per cent from 3.2 per cent.
“The continuing conflict in the Middle East is causing profound suffering,” Ousmane Dione, World Bank vice president for the Middle East and North Africa, said in the report.
While the cost of conflict goes beyond what economic indicators can measure, they “lead to immediate economic losses and can have long-term detrimental effects on development”.
“These outcomes stem from human capital losses, forced displacement, the destruction of physical infrastructure, and various forms of economic disorganisation, including supply chain disruptions,” he said.
While the war has brought Gaza's economy to an almost complete standstill, neighbouring countries also continue to be affected. Jordan recorded a 6.6 per cent decrease in tourist arrivals through August, while there was a 62 per cent drop in Suez Canal revenue in Egypt in the first half of this year.
In Lebanon, escalating tensions are causing “human and economic tolls”, although the full extent of the impact “will be shaped by the future trajectory of the conflict”.
The Washington-based institution also said countries in the region affected by conflict could have seen their income-per-capita on average 45 per cent higher without it, measured seven years after its onset. The group said the loss is “equivalent to 35 years' worth of progress in the region”.
The downgrade also partly reflects the extension of Opec oil production cuts, the World Bank said.
Oil prices are expected to end the year slightly lower at $81 per barrel, compared to $83 per barrel last year. Prices climbed to $88 per barrel in April on escalating tensions in the region before retreating. Brent Crude was trading at $74.36 per barrel at 5.42 Pm UAE time on Wednesday, while West Texas Intermediate was trading at $70.60.
Meanwhile, inflation in the region is easing overall, reflecting a broader global trend in tamping down prices. Inflation is projected to decline to 2.2 per cent in the Mena this year after a decrease to 3.6 per cent last year.
However, the disinflation trend will not be felt evenly in the region. In GCC economies, whose currencies are pegged to the dollar, inflation is projected to slow to 1.7 per cent. Inflation is elevated among developing oil exporters at 4 per cent and oil importers at 5 per cent.
'Significant untapped potential'
The World Bank also noted key areas of opportunity for the region, including closing the gender gap.
At 19 per cent, the rate of female labour force participation in the region is the lowest in the world. Closing the gender gap would result in a 51 per cent increase in per capita income on average in the region, it said.
“Despite the region's current challenges, there is significant untapped potential” in the region, the institution said.
The World Bank also called for other reforms including transforming the role and size of the state, promoting innovation and better allocating talent in the labour market.
Mobilising talent towards the private sector would see aggregate productivity gains to increase by 45 per cent, it said.
“Transforming the role of the state would lead to substantial gains in productivity,” said Roberta Gatti, World Bank chief economist for the Middle East and North Africa.
Global state-owned investor ranking by size
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United States
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China
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UAE
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Japan
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Norway
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Canada
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Singapore
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Australia
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South Korea
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Timeline
2012-2015
The company offers payments/bribes to win key contracts in the Middle East
May 2017
The UK SFO officially opens investigation into Petrofac’s use of agents, corruption, and potential bribery to secure contracts
September 2021
Petrofac pleads guilty to seven counts of failing to prevent bribery under the UK Bribery Act
October 2021
Court fines Petrofac £77 million for bribery. Former executive receives a two-year suspended sentence
December 2024
Petrofac enters into comprehensive restructuring to strengthen the financial position of the group
May 2025
The High Court of England and Wales approves the company’s restructuring plan
July 2025
The Court of Appeal issues a judgment challenging parts of the restructuring plan
August 2025
Petrofac issues a business update to execute the restructuring and confirms it will appeal the Court of Appeal decision
October 2025
Petrofac loses a major TenneT offshore wind contract worth €13 billion. Holding company files for administration in the UK. Petrofac delisted from the London Stock Exchange
November 2025
180 Petrofac employees laid off in the UAE
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Five hymns the crowds can join in
Papal Mass will begin at 10.30am at the Zayed Sports City Stadium on Tuesday
Some 17 hymns will be sung by a 120-strong UAE choir
Five hymns will be rehearsed with crowds on Tuesday morning before the Pope arrives at stadium
‘Christ be our Light’ as the entrance song
‘All that I am’ for the offertory or during the symbolic offering of gifts at the altar
‘Make me a Channel of your Peace’ and ‘Soul of my Saviour’ for the communion
‘Tell out my Soul’ as the final hymn after the blessings from the Pope
The choir will also sing the hymn ‘Legions of Heaven’ in Arabic as ‘Assakiroo Sama’
There are 15 Arabic speakers from Syria, Lebanon and Jordan in the choir that comprises residents from the Philippines, India, France, Italy, America, Netherlands, Armenia and Indonesia
The choir will be accompanied by a brass ensemble and an organ
They will practice for the first time at the stadium on the eve of the public mass on Monday evening
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The story in numbers
18
This is how many recognised sects Lebanon is home to, along with about four million citizens
450,000
More than this many Palestinian refugees are registered with UNRWA in Lebanon, with about 45 per cent of them living in the country’s 12 refugee camps
1.5 million
There are just under 1 million Syrian refugees registered with the UN, although the government puts the figure upwards of 1.5m
73
The percentage of stateless people in Lebanon, who are not of Palestinian origin, born to a Lebanese mother, according to a 2012-2013 study by human rights organisation Frontiers Ruwad Association
18,000
The number of marriages recorded between Lebanese women and foreigners between the years 1995 and 2008, according to a 2009 study backed by the UN Development Programme
77,400
The number of people believed to be affected by the current nationality law, according to the 2009 UN study
4,926
This is how many Lebanese-Palestinian households there were in Lebanon in 2016, according to a census by the Lebanese-Palestinian dialogue committee
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MATCH INFO
Inter Milan 1 (Martinez 18' pen)
Juventus 2 (Dybala 4', Higuain 80')