Ongoing war hit MENA region’s economy hard with projected GDP growth of 1percent

MANAMA: Ongoing war in Middle East has left the projected GDP growth at the lowest levels in the recent years to mere a 1 per cent in 2024, S&P Global Market Intelligence, in a report issued on Monday, said.
“The Middle East and North Africa (MENA) region is likely to continue facing challenging economic conditions in the near term amidst Israel’s ongoing war with Hamas in Gaza and Hezbollah in Lebanon and heightened regional geopolitical risks. In S&P Global Market Intelligence’s base case — which assumes no regional escalation of the conflict — we project the MENA region’s real GDP growth at a mild 1 per cent in 2024, before picking up to 3per cent and 4 per cent in 2025–26 on accelerating Gulf Cooperation Council (GCC) economic expansion and expectations of a gradual phasing out of conflict repercussions,” the report added.
“In our base case that assumes no regional escalation of the conflict but continued confrontations between Israel and each of Hamas and Hezbollah, the MENA region will face a tough environment into 2025 and record multi-paced economic performances,” it said.
“We expect MENA real GDP growth at a subdued 1.4 per cent in 2024, before an acceleration to 3.6 per cent on average in 2025–26, uplifted by healthy momentum in heavyweight GCC countries as oil output resumes an upward trend and monetary easing kicks in.
“We assess that, Israel; Lebanon and the Palestinian Territory will be the hardest hit economies. Egypt and Jordan, bordering conflict areas, will feel the pinch of the escalating conflict through weaker trade, tourism, and service sector prospects.
“The GCC bloc will only see a limited impact from the escalating confrontations in the Middle East, barring a major conflict in the Gulf, as suggested by our PMIs showing still expanding non-oil economic activity and improving supply chain performances.
“Risks to our outlook are skewed to the downside, with severe shipping disruptions in the unlikely event of the Strait of Hormuz closure apt to trigger ripple effects on supply chains and the global economy through higher inflation, tighter financial conditions and weaker confidence.”