IMF Expects MENA Inflation to Ease in 2025 and 2026
Lower energy costs contribute to projections of decreasing inflation rates across the Middle East and North Africa.
The International Monetary Fund (IMF) anticipates that inflation will moderate throughout the Middle East and North Africa (MENA) region over the next two years, with significant contributions from lower energy prices.
According to the IMF's October 2025 Regional Economic Outlook, the overall inflation rate for the MENA area is projected to decline from 14.2 percent in 2024 to 12.2 percent in 2025 and further ease to 10.3 percent by 2026.
This downward trend reflects the impact of fiscal tightening measures and subsidy reforms implemented across various nations within the region.
Inflation rates within Gulf Cooperation Council (GCC) economies are expected to remain among the lowest globally, averaging 1.7 percent in 2025 and slightly increasing to 2 percent by 2026.
Saudi Arabia is forecasted to maintain a stable inflation rate of 2.1 percent in both years under review.
The IMF attributes this low inflation environment within the GCC to the stability of exchange rates and the prudent fiscal policies enacted by these nations.
Jihad Azour, director of the IMF's Middle East and Central Asia Department, noted that while inflation trends vary across individual countries within the region, most economies are experiencing either moderating or declining inflation rates.
This stabilization is supported by tight monetary policy measures and decreased prices for food and energy products.
Furthermore, Azour highlighted improvements in financial conditions throughout the MENA region, citing a narrowing of sovereign debt spreads, smooth adjustments to currency values, and regained market access for several countries.
In contrast, nations such as Iran, Kazakhstan, Egypt, and Sudan are projected to experience significantly higher consumer price increases.
Iran's inflation rate is expected to stabilize at 42.4 percent in 2025 before slightly decreasing to 41.6 percent by 2026.
Similarly, Kazakhstan's rate remains concerning with projections of 11.4 percent for 2025, up from 8.7 percent the previous year.
Sudan faces the region's highest inflation level, with projected rates reaching 87.2 percent in 2025 before easing to 54.6 percent by 2026.
Egypt is anticipated to see its inflation rate decrease to 20.4 percent in 2025 down from 33.3 percent in 2024.
The IMF projects that the broader MENAP region, encompassing the Middle East, North Africa, Afghanistan, and Pakistan, will experience an overall inflation rate of 11.2 percent in 2025 before declining to 9.8 percent by 2026 – a reduction from the 15.2 percent observed in 2024.
Regarding GDP growth projections for the MENA region, the IMF expects a gross domestic product expansion of 3.3 percent in 2025 and an acceleration to 3.7 percent by 2026.
Within the MENAP region, economic growth is forecasted at 3.2 percent in 2025, with a subsequent increase to 3.7 percent in 2026 – aided by increased oil output, rising domestic demand, and ongoing reform initiatives.
Azour emphasized that the Middle East and North Africa have demonstrated remarkable resilience throughout 2025 despite global uncertainties and geopolitical tensions.
The region has avoided direct impacts from heightened US tariffs and international trade restrictions, although some recent tensions have raised concern.
Nevertheless, these effects proved limited and short-lived.
Economies within the GCC are projected to expand by 3.9 percent in 2025, with an acceleration to 4.3 percent by 2026.
Increased oil production following the relaxation of OPEC+ output cuts is a primary driver for stronger growth among MENA oil exporters.
Growth projections for these economies are set at 3 percent in 2025 and 3.4 percent in 2026, compared to 2.5 percent the previous year.
The IMF forecasts Saudi Arabia's economy to grow by 4 percent in both years under review while anticipating the UAE economy to expand by 4.8 percent in 2025 and 5 percent in 2026.
Azour is optimistic that GDP growth within MENA will strengthen further, driven by robust demand, increased oil output, and ongoing reforms, with the potential for more sustained growth in the medium term as implemented policies continue to take hold.
However, there are concerns over the potential negative impact on economic growth due to elevated geopolitical tensions in the region.
Additionally, lower global demand or tighter financial conditions could exert pressure on countries with significant financing needs or banking systems heavily exposed to sovereign debt.
According to the IMF's October 2025 Regional Economic Outlook, the overall inflation rate for the MENA area is projected to decline from 14.2 percent in 2024 to 12.2 percent in 2025 and further ease to 10.3 percent by 2026.
This downward trend reflects the impact of fiscal tightening measures and subsidy reforms implemented across various nations within the region.
Inflation rates within Gulf Cooperation Council (GCC) economies are expected to remain among the lowest globally, averaging 1.7 percent in 2025 and slightly increasing to 2 percent by 2026.
Saudi Arabia is forecasted to maintain a stable inflation rate of 2.1 percent in both years under review.
The IMF attributes this low inflation environment within the GCC to the stability of exchange rates and the prudent fiscal policies enacted by these nations.
Jihad Azour, director of the IMF's Middle East and Central Asia Department, noted that while inflation trends vary across individual countries within the region, most economies are experiencing either moderating or declining inflation rates.
This stabilization is supported by tight monetary policy measures and decreased prices for food and energy products.
Furthermore, Azour highlighted improvements in financial conditions throughout the MENA region, citing a narrowing of sovereign debt spreads, smooth adjustments to currency values, and regained market access for several countries.
In contrast, nations such as Iran, Kazakhstan, Egypt, and Sudan are projected to experience significantly higher consumer price increases.
Iran's inflation rate is expected to stabilize at 42.4 percent in 2025 before slightly decreasing to 41.6 percent by 2026.
Similarly, Kazakhstan's rate remains concerning with projections of 11.4 percent for 2025, up from 8.7 percent the previous year.
Sudan faces the region's highest inflation level, with projected rates reaching 87.2 percent in 2025 before easing to 54.6 percent by 2026.
Egypt is anticipated to see its inflation rate decrease to 20.4 percent in 2025 down from 33.3 percent in 2024.
The IMF projects that the broader MENAP region, encompassing the Middle East, North Africa, Afghanistan, and Pakistan, will experience an overall inflation rate of 11.2 percent in 2025 before declining to 9.8 percent by 2026 – a reduction from the 15.2 percent observed in 2024.
Regarding GDP growth projections for the MENA region, the IMF expects a gross domestic product expansion of 3.3 percent in 2025 and an acceleration to 3.7 percent by 2026.
Within the MENAP region, economic growth is forecasted at 3.2 percent in 2025, with a subsequent increase to 3.7 percent in 2026 – aided by increased oil output, rising domestic demand, and ongoing reform initiatives.
Azour emphasized that the Middle East and North Africa have demonstrated remarkable resilience throughout 2025 despite global uncertainties and geopolitical tensions.
The region has avoided direct impacts from heightened US tariffs and international trade restrictions, although some recent tensions have raised concern.
Nevertheless, these effects proved limited and short-lived.
Economies within the GCC are projected to expand by 3.9 percent in 2025, with an acceleration to 4.3 percent by 2026.
Increased oil production following the relaxation of OPEC+ output cuts is a primary driver for stronger growth among MENA oil exporters.
Growth projections for these economies are set at 3 percent in 2025 and 3.4 percent in 2026, compared to 2.5 percent the previous year.
The IMF forecasts Saudi Arabia's economy to grow by 4 percent in both years under review while anticipating the UAE economy to expand by 4.8 percent in 2025 and 5 percent in 2026.
Azour is optimistic that GDP growth within MENA will strengthen further, driven by robust demand, increased oil output, and ongoing reforms, with the potential for more sustained growth in the medium term as implemented policies continue to take hold.
However, there are concerns over the potential negative impact on economic growth due to elevated geopolitical tensions in the region.
Additionally, lower global demand or tighter financial conditions could exert pressure on countries with significant financing needs or banking systems heavily exposed to sovereign debt.
