IMF Projects Inflation Ease and Steady Growth Across MENA Region

Inflation across the Middle East and North Africa (MENA) is expected to ease to 12.2 percent in 2025 and 10.3 percent in 2026, driven by lower energy costs, fiscal tightening, and subsidy reforms, according to the International Monetary Fund (IMF). The projections were released in the IMF’s October 2025 Regional Economic Outlook, which highlights a continued moderation from 14.2 percent recorded in 2024.

The IMF noted that Gulf Cooperation Council (GCC) economies remain among the most stable globally, with inflation projected at 1.7 percent in 2025 and 2 percent in 2026. This resilience is attributed to prudent fiscal management and stable exchange rates that have shielded the region from global price pressures.

Saudi Arabia is forecast to maintain inflation at 2.1 percent in 2025 and 2 percent in 2026, while in the UAE, rates are expected at 1.6 percent and 2 percent respectively. Qatar’s inflation is projected at 0.1 percent in 2025, rising to 2.6 percent in 2026.

Jihad Azour, Director of the IMF’s Middle East and Central Asia Department, said inflation dynamics differ across the region but are generally trending downward. “In most economies, inflation is moderating or declining, supported by tight monetary policy and lower food and energy prices,” he said. “Financial conditions have also improved, with sovereign spreads narrowing, currencies adjusting smoothly, and several countries regaining market access.”

However, the report pointed out that several non-GCC countries continue to face double-digit inflation. Iran’s inflation is projected at 42.4 percent in 2025, slightly easing to 41.6 percent in 2026. Egypt’s rate is expected to decline to 20.4 percent from 33.3 percent last year, while Sudan remains the region’s outlier with inflation forecast at 87.2 percent in 2025 and 54.6 percent in 2026. Kazakhstan’s inflation, meanwhile, is expected to stay elevated at 11.4 percent in 2025.

For the broader Middle East, North Africa, Afghanistan, and Pakistan (MENAP) region, the IMF forecasts inflation of 11.2 percent in 2025 and 9.8 percent in 2026, down from 15.2 percent in 2024.

On growth, the IMF expects the MENA economy to expand by 3.3 percent in 2025 and 3.7 percent in 2026, supported by rising domestic demand, higher oil output, and ongoing economic reforms. The GCC’s growth is projected at 3.9 percent in 2025, accelerating to 4.3 percent the following year.

Saudi Arabia’s economy is forecast to grow by 4 percent annually in 2025 and 2026, while the UAE is expected to lead with 4.8 percent growth next year and 5 percent in 2026.

Azour noted that the region’s economic activity has shown “remarkable resilience” despite global uncertainties and geopolitical challenges, though he cautioned that rising tensions or tighter global financial conditions could weigh on future growth.