MENA economies' growth to be higher than global figures; taxation still priority to tackle debt, says top official
Economic growth in the MENA region will be higher than global economic growth, according to a top official.
Arab countries should harness technology and investment opportunities for the benefit of its people, Kristalina Georgieva, managing director of the International Monetary Fund (IMF) said.
'Global growth is projected to hold at 3.3 per cent this year and the next, and then to slow over the next five years, to just above 3 per cent,' she said. 'For the Middle East and North Africa, we expect growth to rebound to about 3.6 per cent in 2025, driven by a recovery in oil production and an easing of regional conflicts.'
She was addressing the Arab Fiscal Form at the World Government Summit (WGS) 2025 on Monday when she revealed the figures, adding that despite the encouraging figures, the medium-term outlook for the region sees a weaker growth than before the pandemic.
She pointed out that that UAE is a great model for other countries in the region in term of accelerating technological investments.
'Digital innovation, with AI technologies, is expected to raise UAE's GDP significantly by 2030,' she said. She also added that it was important for governments to reduce their involvement in the economy and strengthen the private sector's role. Georgieva commended the UAE's National Agenda for Entrepreneurship for supporting a vibrant startup community.
However, Georgieva noted that Arab economies were undergoing various challenges, including inflation, debt and rapid change. 'This region faces the pressing need to create jobs, enhance social safety nets, build resilience to more frequent natural disasters, and support economic diversification,' she said. 'Many countries have debt levels exceeding 70 per cent of GDP. This poses the risk of them becoming trapped in a low-growth, high-debt scenario.'
She pointed out that taxation was an effective way to deal with these issues. 'Increasing tax revenues remains a priority,' she said. 'Our research finds significant potential in strengthening domestic tax systems,' she said. 'As new sectors grow, including through digitalisation, they can become an important source of tax revenues. In addition, digitalisation and AI can help modernise tax administrations.'
She said that domestic taxes will remain the primary source of funding government spending but countries needed to build an investment-friendly environment.
'Addressing the impact of more frequent natural disasters will potentially require a cumulative $1 trillion in investment by 2030,' she said. 'The financial sector must play a larger role, while governments can enable an investment-friendly environment.'
At the conference, UAE's Minister of State for Financial Affairs Mohamed Al Hussaini also said that Arab countries needed to modernise their taxation system.
Ingredients of success
According to Georgieva, increasing productivity is essential for stronger growth. 'Our research in the Arab region shows how to do it – accelerate digitalisation, reduce the state's footprint in the economy, foster trade diversification, and encourage the free flow of capital to dynamic firms,' she said.
She also highlighted the importance of encouraging employment for stronger growth. 'With a growing working-age population, the region has to make the most of its demographic advantage,' she said. 'Creating more private jobs, for women and youth in particular, can lead to more vibrant and inclusive economies. This requires more-flexible labour markets, and investment in education and vocational training.'
Georgieva added reallocating resources toward new economic sectors and services like batteries for electric cars and green supply chains as well as deepening regional cooperation is important. 'The GCC is an excellent example of the benefits of regional integration — one that I can imagine can be emulated elsewhere,' she said.
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