The Middle East and North Africa (MENA) region has demonstrated surprising resilience in the face of a succession of shocks, including the largest oil and energy shock in history, according to discussions at the recent IMF-World Bank Annual Meetings in Bangkok. While the region’s economies have slowed, they have not collapsed, with many continuing to expand despite the challenges.

The IMF’s latest Regional Economic Outlook for the Middle East and Central Asia projects output in the MENA region to contract by 1.3% in 2026, a less severe decline than initially feared. However, this figure conceals considerable differences among the region’s diverse economies.

Gulf economies are expected to face deep contractions this year due to disrupted energy production and trade, while major oil importers like Egypt, Jordan, and Morocco have shown resilience, with growth expected to exceed 4%. Remittances, tourism, investment, and favorable financial conditions have helped sustain growth, while policy measures have cushioned households from higher food and energy costs.

Policymakers in the MENA region recognize the importance of preserving macroeconomic stability as the immediate priority. This involves focusing on containing inflation, preserving fiscal sustainability, and protecting the vulnerable. Central banks must guard against renewed inflation, while governments should prioritize targeted and temporary support for vulnerable households while keeping debt manageable and pursuing investment and reforms for future growth.

Looking ahead, regional economies need to prepare for future crises by diversifying trade and production, improving infrastructure and regional integration, and investing in renewable energy. Digital technologies, including AI, offer opportunities for growth as Gulf economies invest in digital infrastructure. However, turning this investment into broader prosperity will require better education and skills, stronger governance and competition, and deeper links to global markets.

The MENA region’s resilience thus far can be attributed to adjustment, stronger policy frameworks, and buffers built before the conflict. However, if the conflict persists and buffers are depleted, the delayed effects could lead to larger adjustments in the future. Governments have an opportunity to act now, preparing their economies for the next disruption to emerge stronger in an era of recurring shocks.