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Growth of economies in the MENA region will surpass global growth this year at 3.6%, but it will still be weaker than pre-pandemic, so countries must find ways to avoid a low-growth, high debt scenario, Kristalina Georgieva, managing director of the International Monetary Fund (IMF), said at the World Governments Summit in Dubai on Monday
Global growth is set to hold at 3.3% this year and next year, and then slow to 3%, which is well below historical average, according to IMF.
The MENA region will rebound to 3.6% growth driven by oil production recovery and easing of regional conflicts.
“Digitalised countries have substantially higher productivity than those that are less so, with some in the region the most developed in the world in this area,” Georgieva said.
“Digital innovation with AI Technologies is expected to raise the UAE’s GDP significantly by 2030. More research and development spending will further enhance productivity.”
Saudi Arabia is an example of a state reducing its footprint in the economy and strengthening governance with regulatory improvements, fostering private sector investment, especially in the non-oil economy, she said.
The UAE’s National Agenda for Entrepreneurship has supported a vibrant start-up economy and Morocco’s New Model of Development aims to spur markets by improving public sector governance, she added.
However, while policymakers around the world have succeeded in taming inflation, it is beginning to pick up again in some countries, which could lead to divergence in interest rates and higher borrowing costs for emerging markets and developing economies.
Meanwhile, global public debt is set to hit 100% of GDP by 2030 with many MENA countries facing debt levels of 70% of GDP, which risks them becoming trapped in the low-growth, high-debt scenario, Georgieva said.
The region must therefore find ways to create jobs, enhance social safety nets and build resilience to more frequent national disasters and support economic diversification, she added.
Governments globally are shifting priorities, with the USA being clear it will take action in trade, tax and spending, deregulation and digital assets, she said, meaning, recipes of the past may no longer provide the path to prosperity.
(Reporting by Imogen Lillywhite; editing by Seban Scaria)
