jordan pulse -

MENA’s Economic Outlook: From a Shared Shock to Diverging Fates

By Prof. Khalid Wassef Al-Wazani

Professor of Economics and Public Policy

Mohammed Bin Rashid School of Government

In its latest to the World Economic Outlook (WEO), the International Monetary Fund lowered its global growth projections, and the Middle East and North Africa was no exception. The Fund now expects the region's average growth to reach only about 0.7 percent by the end of this year, down from the 1.9 percent projected last April, before rebounding to 6.5 percent in 2027 — contingent on the developments of the geopolitical crisis unfolding around Iran. Yet these headline figures conceal a sharp divergence, not only between energy-exporting and energy-importing economies, but among the exporters themselves: Iraq, Kuwait, and Qatar are all headed toward steep contractions in 2026 as a result of disrupted production and supply chains, while Saudi Arabia and the United Arab Emirates are expected to post more moderate growth this year before accelerating well above the regional average, surpassing 5.5 percent by 2027. Among the energy importers, Jordan stands out for its relative stability, with WEO projections placing its growth above 3 percent in 2027, buoyed by a tourism recovery, industrial exports, and expatriate remittances — even as it continues to carry a heavy and worsening public debt burden and a distorted debt structure, a condition it shares with Egypt, Lebanon, and Syria. The region's most resilient economies are precisely those that built sufficient flexibility long before any shock arrived, allowing them to absorb disruption without their productive base collapsing. The UAE and Saudi Arabia — and arguably Jordan as well — rank among the models that can genuinely be described as resilient and enduring across cycles and periods of stress, with the UAE standing out as the most agile economy in the region.

The point here is that economic diversification — in production, income, and trade — is no longer a developmental luxury but a strategic insurance policy that is genuinely tested in moments of shock and crisis, not in times of prosperity. The Global Economic Diversification Index, published annually by the Mohammed Bin Rashid School of Government in partnership with international institutions, offers policymakers across the region a compass for tracking their countries' economic capacity and resilience, and it reinforces a broader narrative: that “shock and risk management” is the pathway to “building immunity and resilience,” achieved through three integrated and interlinked pillars. The first pillar centers on accelerating the diversification of export channels, and with it, the diversification of foreign-currency earnings and export revenue sources. The second lies in building sovereign financial reserves and achieving smart, proactive monetary flexibility that can be deployed wisely in times of shock, rather than relying solely on conventional monetary-stability tools — much as Singapore and Estonia have done in contexts radically different from the region's own, yet still instructive for designing tools of financial resilience. The third pillar, and the most urgent for economies that have achieved relative macroeconomic stability — Jordan chief among them — but continue to suffer a structural deficit in job creation, is to link internationally supported fiscal reform programs to a bold path for stimulating private-sector investment, so that stability is no longer treated as an end in itself but becomes a launchpad toward higher growth capable of absorbing new entrants into the labor market.

What is required today is for the countries of the Arab region, along with Turkey, to chart a development path grounded fundamentally in shared interests — by forming a critical economic bloc that steers clear of political disputes and gives precedence to economic cooperation rooted in the mutual interests of the public and private sectors alike. The ASEAN and BRICS models stand as living, vivid examples of what is possible. These countries must move urgently to build a unified economic bloc around shared interests, even where their political alliances, outlooks, or geographic positions diverge.

Prof. Khalid W. Al Wazani