World Bank lifts 2025 Middle East growth forecast to 2.8% on Gulf recovery

The World Bank has raised its growth outlook for 2025 across the region encompassing the Middle East, North Africa, Afghanistan and Pakistan (MENAAP), while cutting its projection for 2026 due to persistent global and regional challenges, Reuters reported.

The Washington-based institution now expects regional GDP growth to average 2.8 per cent in 2025, up from 2.6 per cent in its April forecast.

The upgrade reflects stronger-than-expected economic activity in Gulf Cooperation Council (GCC) states, buoyed by the faster phasing out of oil production cuts and continued expansion in the non-oil economy.

World Bank forecasts

However, the World Bank warned that developing oil exporters across the wider region are facing a sharp slowdown, weighed down by conflict disruptions and reduced oil output.

The report also noted a marked deterioration in Iran’s economic outlook, with the country’s economy projected to contract by 1.7 per cent this year and shrink by 2.8 per cent in 2026 — a major reversal from the 0.7 per cent expansion predicted in April.

The World Bank said political instability and tightening global financial conditions remain key risks for the region’s medium-term performance.