The World Bank has released its latest economic update for the Middle East and North Africa region, revealing that the ongoing conflict has imposed significant economic costs on various economies in the region. According to the report, the conflict has led to a decline in growth, with the regional economy expected to contract by 2.1% in 2026, after growing by 3.3% in 2025. The report also notes that the conflict has had a disproportionate impact on oil-exporting countries in the Gulf region.
The World Bank report highlights the potential of artificial intelligence (AI) to enhance productivity and growth in the region. According to the report, AI has the potential to increase productivity by up to 20% in certain sectors. The report notes that while less than 10% of jobs in the region are at risk of automation, between 13% and 20% of jobs have the potential to be significantly enhanced by AI. However, the report also notes that realizing the full potential of AI will require addressing structural gaps, including a lack of representation of regional languages and data in global AI systems.
The report also notes that the region is experiencing a rise in inflation, driven by higher food prices and supply chain disruptions. In economies that are fragile and conflict-affected, these shocks are exacerbating chronic vulnerabilities. The report highlights that the Middle East and North Africa region is the only region in the world where poverty levels have increased over the past decade. The World Bank's report emphasizes the need for policymakers to protect the most vulnerable households and restore productive capacities.
The World Bank's report also notes that the region is expected to experience a rebound in growth in 2027, driven by a recovery in hydrocarbon production and exports. However, the report also cautions that this rebound is not guaranteed and will require continued policy efforts. According to Osama Dione, World Bank Vice President for the Middle East and North Africa region, protecting the most vulnerable households and investing in more resilient infrastructure are critical to ensuring that the region's growth prospects are not permanently damaged.
The report highlights the importance of regional cooperation in the development of AI. According to Roberta Gatti, World Bank Chief Economist for the Middle East and North Africa region, the region's diversity is a significant advantage, with countries such as Saudi Arabia and the UAE able to share their expertise in AI development and governance with other countries in the region. The report also notes that countries with more advanced economies can help to develop AI systems that are tailored to the region's specific needs.
The World Bank report emphasizes the need for policymakers to prioritize investments in human capital and infrastructure to support the development of AI. According to the report, this will require significant investments in education and training programs, as well as the development of more robust data systems. The report also notes that the region's private sector will need to play a more active role in driving AI adoption and innovation.
The World Bank's report concludes that the Middle East and North Africa region has a significant opportunity to harness the potential of AI to drive growth and development. However, realizing this potential will require a sustained effort from policymakers, the private sector, and civil society to address the structural gaps and challenges that currently limit the region's ability to benefit from AI.
Key points
- The World Bank report highlights the potential of AI to increase productivity by up to 20% in certain sectors in the Middle East and North Africa region.
