How the Middle East and North Africa are navigating a turbulent era

The Middle East and North Africa (MENA) region experienced a series of shocks at the end of February, including hostilities in the Gulf that caused a significant oil and energy shock. Policymakers were concerned that economies in the region might be overwhelmed by rising energy prices and disrupted shipping lanes. However, eight months later, the region has shown surprising resilience.

Despite a projected contraction of 1.3% in 2026, many economies have continued to expand, and several Gulf countries face deep contractions this year. Major importers like Egypt, Jordan, and Morocco have grown by over 4% this year, supported by remittances, tourism, investment, and favorable financial conditions. However, inflation is expected to decline more slowly than forecast, and risks of further energy price spikes will grow if the conflict persists.

The consensus among MENA policymakers is that maintaining macroeconomic stability is the immediate policy priority. The region needs to focus on containing inflation, preserving fiscal sustainability, and protecting the vulnerable. Governments should prioritize targeted and temporary support for households, while keeping debt manageable and pursuing investment and reforms for future growth.

Diversifying trade and production, improving infrastructure, and investing in renewable energy are important long-term strategies for reducing reliance on vulnerable transport routes and volatile fuel markets. The past eight months have shown that resilience has been earned through adjustment and stronger policy frameworks, but managing future crises will require further preparation and adaptation.