The IMF updated its regional economic outlook for the Middle East in early May. Its report highlights economies that have withstood the global shocks of 2022, but are expected to face an economic slowdown.
Indeed, the rigorous policies to fight inflation, reduce vulnerabilities and rebuild reserves are beginning to slow down economic activity in many countries in the zone.
In countries whose currencies are pegged to the US dollar (Jordan), central banks have continued to raise their key rates, following the example of the Federal Reserve, pushing real rates into positive territory.
Tighter monetary and fiscal policies across the region amid tight global financial conditions call for an acceleration of structural reforms to support potential growth and improve resilience.
Notably, the monetary policy stance may need to tighten further to stabilize inflation in Egypt.
According to the IMF, oil exporters should manage oil revenues carefully, avoid increasing current spending, improve fiscal transparency and strengthen medium-term fiscal frameworks.
In low-income countries and fragile or conflict-affected states, the lack of fiscal space to protect the vulnerable requires support from the international community and global cooperation.
Finally, remittance flows (diaspora) remained strong in mid-2022, particularly in Egypt and Jordan.