The year 2025 will be remembered as an epoch of shocks and resilience, a period of uncertainty, but also one of technological boom and high performance. Despite rising tariffs, geopolitical fragmentation, and increasing policy uncertainty, global trade and economic activity remained stable. The many feared inflationary pressures did not materialize, financial markets remained largely stable, and the technological boom contributed to record market performances.
The resilience of the Middle East and North Africa region has been particularly notable. In addition to global difficulties, many of the region's economies faced severe internal shocks, including escalating conflicts, and another year of extreme weather events such as drought in North Africa. Despite this, growth has remained stable.
Several factors help explain this outcome. Limited trade with the United States lessened the direct impact of the higher tariffs, while increased oil production, following OPEC's decision to end the voluntary production cuts of 2.2 million barrels per day, also benefited exporters, and importers profited from lower energy prices. In addition, high remittances, strong tourism flows, and resilient domestic demand mitigated the negative impact of these challenges.
But will this situation continue? As we begin 2026, the main question remains: is it possible to maintain this flexibility?
The International Monetary Fund remains cautiously optimistic, projecting that growth in the Middle East and North Africa region will rise to around 3.7 percent in 2026, compared to 3.2 percent in 2025, supported by increased oil production, strong domestic demand, and ongoing reforms. However, this optimism should be tempered, as there are at least five risks that call for attention:
First, the effects of uncertainty rarely manifest immediately in policy. Much empirical evidence suggests that the impact of uncertainty on investment, employment, and consumption often appears much later. If global uncertainty persists, it could reduce global GDP by as much as 5 percent by 2027.
Second, the boom in artificial intelligence has been a strong counterbalance to these shocks, with high stock valuations and large investment flows into AI-related sectors supporting global self-reliance. Many economies in the region, particularly the Gulf states, have invested heavily in artificial intelligence and data infrastructure, benefiting from abundant land, capital, and relatively cheap renewable energy.
Third, while inflation rates are expected to remain low and interest rates are expected to fall in major advanced economies, global financial conditions could see an unexpected contraction. The overall financing needs of countries in the Middle East and North Africa region are expected to remain at very high levels.
Fourth, oil markets remain a double-edged sword. In 2025, oil dynamics supported both exporters and importers. Looking ahead, prices could rise if demand for fossil fuels is stronger than expected, or if geopolitical tensions disturb suppliers. On the other hand, any sharp decline in prices will put pressure on exporters, even with current account surpluses in the GCC countries expected to decrease in the medium term. Therefore, managing volatility will remain crucial.
Fifth, geopolitics continue to cast a long shadow. By the end of 2025, there were initial signs of progress toward peace and reconstruction in some parts of the region, including Syria. However, recovery from conflict remains fragile and complex, and consolidating peace, rebuilding institutions, and ensuring continued external support will be crucial for achieving a sustainable recovery.
In this context, policymakers have no option but to pursue a cautious macroeconomic approach in 2026. The current momentum provides an opportunity to rebuild fiscal and external reserves, especially given the limited resources available. Strengthening fiscal frameworks and encouraging the credibility of monetary policies are among the most important protections against future shocks.
In the medium term, structural reforms remain essential. Accelerating private sector development, reducing the dominance of state-owned enterprises, promoting financial inclusion, and diversifying trade patterns will be key to job creation and inclusive growth.
Preparing for the age of artificial intelligence will require investment in digital infrastructure, regulations, and human capital. Labour market reforms, particularly those addressing youth unemployment, are equally urgent.
The Middle East and North Africa region has demonstrated remarkable resilience, and the challenge now lies in transforming short-term stability into lasting strength. If policymakers succeed in building reserves and modernizing policy frameworks, the year 2026 may be remembered not just as another year of resilience, but as a turning point.