As in other regions in the world, countries in MENAP and CCA regions are exposed to tightening in global financing conditions and ongoing global trade tensions. The former has already begun to impact several emerging market economies in MENAP and could have more severe implications should financial market sentiment suddenly deteriorate. Escalating global trade tensions will have a limited direct and immediate impact on these regions but could impart significant strains over time through negative effects on trading partners and through market confidence effects.

The outlook for the Middle East and North Africa region is mixed. Oil-importing countries are witnessing tepid growth, and the moderate recovery expected in 2013 is subject to heightened downside risks. For the Arab countries in transition, ongoing political transitions also weigh on growth. With policy buffers largely eroded, the need for action on macroeconomic stabilization and growth-oriented reforms is becoming increasingly urgent. Countries will need to put in place safety nets to protect the poor and build consensus for some difficult fiscal choices. The region’s oil exporters are expected to post solid growth in 2012, in part due to Libya’s better-than-expected postwar recovery. In the countries of the Gulf Cooperation Council, robust growth is supported by expansionary fiscal policies and accommodative monetary conditions. In the Caucasus and Central Asia, the outlook remains favorable, reflecting high oil prices that are benefiting oil and gas exporters, supportive commodity prices and remittance inflows benefiting oil and gas importers, and, for both groups, moderate direct exposure to Europe. The positive outlook provides an opportunity to strengthen policy buffers to prepare for any downside risks.

Growth in the near term remains subdued for oil exporters in the Middle East, North Africa, Afghanistan, and Pakistan (MENAP) region, amid volatile oil prices, precarious global growth, elevated fiscal vulnerabilities, and heightened geopolitical tensions. In addition, declining productivity is dampening medium-term growth prospects. To reduce dependence on oil prices and pave the way for more sustainable growth, fiscal consolidation needs to resume, underpinned by improved medium-term fiscal frameworks. In parallel, structural reforms and further financial sector development would boost foreign direct investment (FDI) and domestic private investment and foster diversification, thus contributing to improved productivity and potential growth.

This issue discusses economic developments in the Middle East, North Africa, Afghanistan, and Pakistan (MENAP), which continue to reflect the diversity of conditions prevailing across the region. Most high-income oil exporters, primarily in the GCC, continue to record steady growth and solid economic and financial fundamentals, albeit with medium-term challenges that need to be addressed. In contrast, other countries—Iraq, Libya, and Syria—are mired in conflicts with not only humanitarian but also economic consequences. And yet other countries, mostly oil importers, are making continued but uneven progress in advancing their economic agendas, often in tandem with political transitions and amidst difficult social conditions. In most of these countries, without extensive economic and structural reforms, economic prospects for the medium term remain insufficient to reduce high unemployment and improve living standards.

The Regional Economic Outlook assesses the near-term outlook for each of the three subregions: the Middle East, North Africa, Afghanistan, and Pakistan (MENAP) oil exporters, the MENAP oil importers, and the Caucasus and Central Asia (CCA). The report also looks at medium-term issues of particular concern to the region, namely the need to boost competitiveness and growth to address high levels of long-standing unemployment in the MENAP region, and enhance the effectiveness of monetary policy and regional cooperation in the CCA.

IFPRI’s flagship report reviews the major food policy issues, developments, and decisions of 2018, and considers challenges and opportunities for 2019. This year’s Global Food Policy Report highlights the urgency of rural revitalization to address a growing crisis in rural areas. Rural people around the world continue to struggle with food insecurity, persistent poverty and inequality, and environmental degradation. Policies, institutions, and investments that take advantage of new opportunities and technologies, increase access to basic services, create more and better rural jobs, foster gender equality, and restore the environment can make rural areas vibrant and healthy places to live and work. Drawing on recent findings, IFPRI researchers and other distinguished food policy experts consider critical aspects of rural revitalization.

This issue of the Regional Economic Outlook: Middle East and Central Asia provides an in-depth look at the Middle East, North Africa, Afghanistan, and Pakistan (MENAP) region, as well as the Caucasus and Central Asia (CCA). Four chapters deal with MENAP oil exporters, MENAP oil importers, policy challenges facing MENAP, and sustaining the recovery in the CCA countries. Two developments mark the outlook for the MENAP region: the social and political unrest and the surge in global fuel and food prices, which have resulted in unusually large uncertainties in the near-term economic outlook. Meanwhile, growth in the CCA countries was higher than expected. Three main policy challenges to CCA countries are rising inflation, heightened social pressures to spend, and the poor quality of bank portfolios. Job creation and poverty reduction are key objectives for all CCA countries.

This issue discusses economic developments in the Middle East, North Africa, Afghanistan, and Pakistan (MENAP), which continue to reflect the diversity of conditions prevailing across the region. Most high-income oil exporters, primarily in the GCC, continue to record steady growth and solid economic and financial fundamentals, albeit with medium-term challenges that need to be addressed. In contrast, other countries—Iraq, Libya, and Syria—are mired in conflicts with not only humanitarian but also economic consequences. And yet other countries, mostly oil importers, are making continued but uneven progress in advancing their economic agendas, often in tandem with political transitions and amidst difficult social conditions. In most of these countries, without extensive economic and structural reforms, economic prospects for the medium term remain insufficient to reduce high unemployment and improve living standards.

Oil exporters in the Middle East and North Africa, Afghanistan, and Pakistan region (MENAP) are continuing to adjust to lower oil prices, which have dampened growth and contributed to large fiscal and external deficits.

The macroeconomic outlook for sub-Saharan Africa continues to strengthen. Growth is expected to increase from 2.7 percent in 2017 to 3.1 percent in 2018, reflecting domestic policy adjustments and a supportive external environment, including continued steady growth in the global economy, higher commodity prices, and accommodative external financing conditions. Inflation is abating; and fiscal imbalances are being contained in many countries. Over the medium term, and on current policies, growth is expected to accelerate to about 4 percent, too low to create the number of jobs needed to absorb anticipated new entrants into labor markets.