If 2025 proved anything about the Middle East and North Africa, it was that the region has become better at absorbing shocks. Growth held up despite a messy global backdrop, geopolitical conflict and repeated reminders that supply chains can still be rerouted overnight.
As we move into 2026, the region’s outlook centres on whether macro stability and reform momentum can be sustained as geopolitics keeps testing the region’s balance.
Where MENA stands now
2025 left an uneven picture across the region. Oil exporters, particularly in the Gulf Co-operation Council, benefitted from credible policy frameworks, large buffers and steady progress on investment programmes and non-oil activity. Importers faced a tougher mix of high debt, tighter financing conditions and the real economic consequences of trade disruptions. The World Bank pointed to moderate growth in 2025, but with high uncertainty around the outlook.
Trade routes were a tangible reminder of that uncertainty. Egypt, a key example of the region’s macro vulnerability, reported significant losses in Suez Canal revenues during periods of Red Sea insecurity, with the president citing losses of around $800m per month at one point. Even as conditions eased later in 2025 and revenues improved, the episode underlined how quickly external shocks hit fiscal income, foreign currency availability and investor sentiment.
The International Monetary Fund’s October 2025 regional outlook noted inflation easing across most MENA economies, while growth was expected to strengthen gradually, supported by higher oil output, resilient demand and reforms. That caveat matters: reforms are doing more of the heavy lifting now as the external environment is offering less support.
External risks and oil politics
2026 will be a year of tighter margins. The World Bank projects regional growth strengthening into 2026, helped by improved performance in both GCC economies and developing oil importers. But this path looks more like a balance between three forces.
First is oil, and it is the volatility that matters as much as the price itself. The Organization of the Petroleum Exporting Countries remains the main reference point and has indicated it will pause planned increases at the start of 2026. At the same time, sanctioned supply is increasingly driving the risk premium, with Iran and Venezuela influencing the availability of discounted crude. For MENA, that means more fluctuations in revenues and import bills, which supports GCC fiscal space but puts more pressure on oil importers and makes inflation and policy planning harder.
Second is geopolitics. The Gaza ceasefire has helped reduce the intensity of disruptions, and shipping companies have begun cautious returns through the Red Sea and Suez route. If that holds, it quietly supports 2026 disinflation by shortening delivery times and easing freight costs. If it weakens, then the region relives a familiar combination of imported inflation and weaker external balances.
Third is domestic policy implementation. The GCC’s big opportunity in 2026 is to turn investment surges into productivity gains, not just construction multipliers. For oil importers, the priority is to protect macro stability while creating space for private sector hiring and exports. In a year where the oil and risk cycle may be volatile, credibility and reform sequencing will matter more than headline growth rates.
MENA enters 2026 with momentum, but with less support. The upside depends on calmer shipping conditions, steady reforms and a stable oil market. The downside is higher energy risk as changes in sanctions on Iran and Venezuela shift supply expectations, while trade routes become a pressure point again.
Yara Aziz is Senior Economist at OMFIF.
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