World Bank MENA Economic Update: Modest Growth Amidst Uncertainty
The latest report from the World Bank, titled World Bank MENA Economic Update, forecasts a slight increase in the growth of the Middle East and North Africa (MENA) region's Gross Domestic Product (GDP), reaching 2.2% in 2024, up from 1.8% in 2023. However, this improvement remains modest in a context of increased uncertainties, marked by economic crises and persistent geopolitical tensions.
Devastating Effects of Conflicts on the Palestinian Economy
The report highlights the devastating effects of conflicts on the Palestinian economy, particularly in Gaza, where the economy has plummeted by 86% in the second quarter of 2024. In the West Bank, a contraction of 23% was recorded during the same period, exacerbated by movement restrictions and an acute budget crisis. The financial situation of the Palestinian Authority is alarming, with a projected financing gap of $1.86 billion in 2024, more than double that of 2023.
Underutilization of Human Capital
One of the report's main conclusions is that the MENA region is not fully exploiting its human capital potential. Despite significant progress in education, particularly for women, female participation in the labor market has stagnated. Better integration of women into the workforce could lead to a 51% increase in per capita income in MENA countries.
Disproportionate Importance of the Public Sector
The report also sheds light on the disproportionate importance of the public sector in the region, particularly for female employment. In MENA, 37% of employed women work in the public sector, a figure significantly higher than in other regions. This concentration hinders the private sector, limiting potential gains in productivity and innovation. Reforms to redirect talent towards the private sector could improve economic growth, particularly in Algeria and Iraq, where gains could reach 45%.
Opportunities for Growth
Despite the challenges, the report identifies significant opportunities for the region. Reforms such as those initiated by Saudi Arabia to increase women's participation in the labor market are showing promising results. Furthermore, increased integration into international trade and a better circulation of ideas and technologies could offer MENA a lever to stimulate productivity and position itself as a key player in the global economy.
