World Bank Raises 2025 MENAAP Growth but Cuts 2026 Outlook

The World Bank has updated its economic projections for the Middle East, North Africa, Afghanistan, and Pakistan (MENAAP), reflecting a mix of optimism and caution for the region. According to the latest report, regional GDP growth is now expected to average 2.8 percent in 2025, slightly higher than the 2.6 percent projected earlier this year.

This upward revision is largely driven by Gulf countries, where the economy is receiving a boost following a faster-than-expected end to oil production cuts. Non-oil sectors are also showing robust performance, helping offset some of the volatility from global markets.

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Oil Exporters Face Challenges

Despite overall positive growth, developing oil-exporting nations in the region are expected to experience slower economic activity. Conflicts, political instability, and adjustments in oil production have contributed to these downward pressures.

Iran, in particular, is facing a difficult period. The World Bank now predicts that Iran's economy will contract by 1.7 percent in 2025 and shrink further by 2.8 percent in 2026, a sharp reversal from the earlier forecast of 0.7 percent growth.

Global Factors at Play

The report points to several global economic challenges that could affect the region’s performance. Rising interest rates, supply chain disruptions, and lingering geopolitical tensions are cited as key risks for both oil-dependent and non-oil economies.

Balancing Growth and Risks

While Gulf economies are showing resilience, the mixed outlook underscores the fragility of growth across MENAAP. Countries reliant on oil exports will need to navigate both internal and external pressures, including fluctuating commodity prices and regional instability.

The World Bank’s assessment highlights the importance of diversifying economic activities and strengthening political and economic stability to sustain growth in the coming years.