1、IMF|Middle East and Central Asia Department 1 JANUARY 2024 Middle East and North Africa:Conflict Compounding Economic Challenges1 The conflict in Gaza and Israel is yet another shock to the Middle East and North Africa(MENA)region.It is causing immense human suffering and exacerbating an already cha
2、llenging environment for neighboring economies and beyond.This Update covers economies in the MENA region and does not discuss developments in Israel.Overall,the major factors weighing on regional growth in MENA are(i)the impact of the conflict;(ii)oil production cuts(even as robust non-oil sector a
3、ctivity continues tosupport growth in several oil exporters);and(iii)continued necessary tight policy settings in severaleconomies.Social unrest has also picked up.Projected growth in the MENA region this year isdowngraded by 0.5 percentage point to 2.9 percent(relative to the October 2023 Regional
4、EconomicOutlook:Middle East and Central Asia),from already weak growth of 2.0 percent in 2023.Primarily drivenby the ongoing conflict in Sudan,average growth across low-income countries(LICs)in MENA is forecastto remain negative this year,continuing the estimated sharp decline in 2023.Disinflation i
5、s expected tocontinue in most MENA economies,although price pressures have proven persistent in some casesbecause of country-specific factors.The outlook for the MENA region is highly uncertain,and downside risks are resurgent.An escalation or spread of the conflict beyond Gaza and Israel,as well as
6、 an intensification of the disruptions in the Red Sea,could have a severe economic impact,including on trade and tourism.The appropriate policy response will depend on countries exposure to the conflict,preexisting vulnerabilities,and policy space.Crisis management and precautionary policies will be