IMF Downgrades Growth Forecasts for Egypt and Saudi Arabia, Impacting MENA Region
The International Monetary Fund (IMF) has revised its economic growth forecasts for Egypt and Saudi Arabia, signaling a challenging road ahead for the Middle East and North Africa (MENA) region. In its updated World Economic Outlook report, the IMF highlighted reduced growth expectations for both nations, citing geopolitical tensions, declining energy prices, and structural economic pressures.
Egypt’s Economic Outlook: A Mixed Bag
Table of Contents
Egypt, the most populous Arab country and the third-largest economy in the region, faces a tempered growth trajectory. The IMF now expects Egypt’s real GDP to grow by 3.6% in the 2024-2025 fiscal year, a 0.5 percentage point drop from its October forecast. For the following fiscal year, growth expectations were slashed by a full percentage point to 4.1%.
The report noted that egypt’s economy grew by 2.4% in the fiscal year ending June 2024, a 0.3 percentage point reduction from earlier estimates. While the IMF did not specify the reasons for this downgrade, recent economic data points to challenges such as geopolitical tensions, a decline in gas production, and a deficit in the balance of payments.
Exports and Suez Canal revenues have declined, but remittances from Egyptians abroad and a boost in tourism revenues have provided some relief. These factors underscore the delicate balance Egypt must maintain to stabilize its economy.
Saudi Arabia: Oil Production Cuts Weigh on Growth
Saudi Arabia, the region’s largest economy, also saw its growth forecasts trimmed.The IMF reduced its 2025 growth expectations by 1.3 percentage points to 3.3%, marking the third consecutive downgrade. While growth is expected to accelerate to 4.1% in 2026, it remains 0.3 percentage points below October’s projections.
the IMF attributed this reduction to the OPEC+ alliance’s decision to extend oil production cuts. In December, OPEC+ postponed a planned production increase, opting rather for a gradual rise of 180,000 barrels per day starting in April 2025. Additionally, the IMF expects oil prices to average $69.75 per barrel in 2025, declining further to $67.96 in 2026 due to weak demand from China and increased non-OPEC+ supplies.
Implications for the MENA Region
The downgrades for Egypt and saudi Arabia have had a ripple effect on the IMF’s regional outlook. Growth forecasts for the MENA region were reduced by 0.5 percentage points to 3.5% for 2025 and by 0.3 percentage points to 3.9% for 2026.
Despite these challenges, the global economic outlook shows some resilience. The IMF expects global growth to reach 3.3% in 2025, a slight 0.1 percentage point increase from its October forecast. The U.S. economy is projected to grow by 2.7%, while China and India are expected to expand by 4.6% and 6.8%, respectively.
Key Takeaways
Below is a summary of the IMF’s revised growth forecasts for 2025:
| Economy | 2025 Growth Forecast | Change from October Forecast |
|——————–|————————–|———————————-|
| Global | 3.3% | +0.1 percentage points |
| U.S. | 2.7% | +0.5 percentage points |
| China | 4.6% | +0.1 percentage points |
| India | 6.8% | No change |
| MENA Region | 3.5% | -0.5 percentage points |
| Egypt | 3.6% | -0.5 percentage points |
| Saudi Arabia | 3.3% | -1.3 percentage points |
The IMF’s report underscores the need for flexible economic policies to address slowing global demand and declining energy prices. For Egypt,diversifying revenue streams and addressing structural inefficiencies will be critical. Saudi Arabia, meanwhile, must balance its reliance on oil revenues with efforts to diversify its economy under its Vision 2030 initiative.
As the MENA region navigates these challenges, investors are encouraged to explore opportunities in emerging markets. Platforms like InvestingPro are offering new AI-driven strategies, such as SAFE10 and TASI20, to help investors capitalize on the Saudi market. With New Year’s discounts of up to 50%, now is an ideal time to subscribe and stay ahead of market trends.
the road ahead may be uncertain, but with strategic planning and innovative solutions, the MENA region can weather these economic storms.
IMF Downgrades Growth Forecasts for Egypt and saudi Arabia, Impacting MENA Region
The International Monetary Fund (IMF) has revised its economic growth forecasts for Egypt and Saudi Arabia, signaling a challenging road ahead for the Middle East and North Africa (MENA) region. In its updated World Economic outlook report, the IMF highlighted reduced growth expectations for both nations, citing geopolitical tensions, declining energy prices, and structural economic pressures. To delve deeper into these developments, we sat down with Dr. Ahmed Al-Mansoori, a renowned economist specializing in MENA economies, to discuss the implications of these revisions and what lies ahead for the region.
Egypt’s Economic Outlook: A Mixed Bag
Senior Editor: Dr. Al-Mansoori, thank you for joining us. Let’s start with Egypt. The IMF has downgraded its growth forecast for Egypt by 0.5 percentage points to 3.6% for 2025. What are the key factors driving this revision?
Dr. Al-Mansoori: Thank you for having me. Egypt’s economic challenges are multifaceted. The IMF’s downgrade reflects a combination of external and internal pressures. Geopolitical tensions in the region have disrupted trade and investment flows, while declining gas production has hurt export revenues. Additionally, the Suez Canal, a critical revenue source, has seen reduced traffic due to global economic slowdowns. However, remittances from Egyptians abroad and a rebound in tourism have provided some cushion. The key for Egypt will be to diversify its economy and address structural inefficiencies to sustain growth in the long term.
Senior Editor: The IMF also noted a decline in Egypt’s balance of payments. How significant is this, and what steps can Egypt take to address it?
Dr. Al-Mansoori: The balance of payments deficit is a serious concern. It reflects a gap between the country’s imports and exports, exacerbated by reduced foreign currency inflows. To address this, Egypt needs to boost its export capacity, attract foreign direct investment, and implement reforms to improve the business environment. The recent IMF loan tranche of $1.2 billion is a step in the right direction, but sustained efforts are required to stabilize the economy.
Saudi Arabia: Oil Production Cuts Weigh on Growth
Senior Editor: Moving to Saudi Arabia, the IMF has revised its 2025 growth forecast downward by 1.3 percentage points to 3.3%. This is the third consecutive downgrade. What’s behind this trend?
Dr. Al-Mansoori: Saudi Arabia’s growth revisions are largely tied to the OPEC+ alliance’s decision to extend oil production cuts. the kingdom has been a key player in these cuts to stabilize global oil prices, but this has come at the cost of reduced oil revenues. The IMF expects oil prices to average $69.75 per barrel in 2025,which is lower than previous projections due to weak demand from China and increased non-OPEC+ supplies. While Saudi arabia’s Vision 2030 initiative aims to diversify the economy,the transition is still in progress,and the reliance on oil remains significant.
Senior Editor: How do you see Saudi Arabia balancing its oil dependency with its diversification goals under Vision 2030?
Dr. Al-Mansoori: Vision 2030 is a bold and necessary strategy, but it requires time and sustained investment. The kingdom has made strides in sectors like tourism, entertainment, and renewable energy, but these are still in their early stages. The challenge is to accelerate these efforts while managing the short-term economic impact of reduced oil revenues. Fiscal discipline and targeted investments in non-oil sectors will be crucial.
Implications for the MENA Region
Senior Editor: The IMF has also downgraded its growth forecasts for the broader MENA region. What does this mean for the region’s economic stability?
Dr. Al-Mansoori: The MENA region is highly interconnected, and the downgrades for egypt and Saudi Arabia have a ripple effect. The IMF now expects regional growth to be 3.5% in 2025, down by 0.5 percentage points. This reflects not only the challenges faced by these two economies but also broader issues like geopolitical tensions, fluctuating oil prices, and weak global demand. However, there are opportunities as well. countries that can implement structural reforms and attract investment will be better positioned to weather these challenges.
Senior Editor: what advice would you give to policymakers and investors in the MENA region as they navigate these economic headwinds?
Dr. Al-Mansoori: Policymakers need to focus on flexibility and resilience. Diversifying revenue streams, improving governance, and investing in human capital are critical. For investors,this is a time to be strategic. Emerging markets in the MENA region still offer significant opportunities,notably in sectors like technology,renewable energy,and infrastructure. Platforms like InvestingPro are providing innovative tools to help investors capitalize on these opportunities. With the right strategies, the region can turn these challenges into opportunities for growth.
Senior Editor: Thank you, Dr. Al-Mansoori, for your insights. It’s clear that while the road ahead is challenging, there are pathways to resilience and growth for the MENA region.
Dr. Al-Mansoori: Thank you. Indeed, with strategic planning and collaboration, the region can navigate these turbulent times and emerge stronger.
