DUBAI: Double-digit food price inflation will weigh on the Middle East and North Africa region this year, causing growth to slow to 3% from 5.8% last year, the World Bank said in a regional report on Thursday.
The new forecast is a downward revision to the 3.5% growth rate for 2023 forecast in its October report.
The report was compiled before surprise OPEC+ oil output cuts were announced on Sunday, which have driven up oil prices and price expectations, and the World Bank said its projections do not incorporate any impact from that decision.
Average year-on-year food inflation across 16 MENA economies between March and December 2022 was 29%, which was higher than the headline inflation of 19.4% year-on-year during that period, the World Bank said.
The report warned that deteriorating nutrition resulting from high food prices would have long-lasting impacts on child development and future prospects.
“Bold policies are needed in a region where young people make up more than half of the population,” said World Bank MENA Vice President Ferid Belhaj.
The World Bank sees GDP per capita growth, a proxy for living standards, slowing to 1.6% in 2023 from 4.4% in 2022.
MENA economies vary widely between the high-income oil exporters of the six-nation Gulf Cooperation Council (GCC), conflict countries such as Yemen, developing oil importers such as Jordan, and developing oil exporters such as Iraq.
Growth in the GCC is expected to decelerate to 3.2% this year from an estimated 7.3% last year, driven an expected oil price decline from highs in 2022.
Developing oil exporters, including Algeria and Iraq, are forecast to grow at 2.2% in 2023, down from 3.9% in 2022.
Excluding Egypt, developing oil importers such as Lebanon and Tunisia are expected to grow by 2.8% in 2023 and 3.1% in 2024.
Egypt is forecast to have a relatively high expected growth of 4% for 2023 and 2024.
The impact of higher food prices is estimated to increase the risk of childhood stunting by 17%-24% in developing MENA countries - equal to around 200,000 to 285,000 newborns at risk of stunting, the report said.
“Close to one out of five people living in developing countries in MENA is likely to be food insecure this year,” said World Bank MENA Chief Economist Roberta Gatti.
The World Bank forecast 3.1% growth across the region in 2024.
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