Since 2020, the MENA region has been subject to several external shocks. First, these economies have been severely affected by the pandemic that led to a global contraction of 3.6% and caused a decline in global trade by 8.1%. The COVID-19 shock also revealed the fragility of these economies, especially at the macroeconomic level. The debt ratios reached crisis-proportion levels in several major MENA countries outside the GCC, while continuing to face increasingly limited fiscal space. Second, the ensuing slowdown of oil prices exacerbated an already precarious and unsustainable macroeconomic stance, especially in populous oil-dependent economies of the region. Finally, while not fully recovered from the pandemic, the war on Ukraine led to global consequences, including sharp inflationary spikes, food shortages, disruptions of finance, trade and supply chains all over the world. In view of its heavy dependence on tourism and food imports from Russia and Ukraine, the shock has been much stronger for MENA.

Moreover, available evidence on heat waves, water scarcity and sea level rise suggest that the agenda of environmental sustainability and mitigation and adaptation to climate change are likely to be particularly challenging for the case of MENA. This coupled with the high social mobilization that continues to shape the socio-political landscape since the Arab Spring, is bound to complicate policy making and development planning in the region. However, the region has good prospect should it embrace an inclusive and creative development discourse, prioritizing SDGs, exploiting the emerging digital technology and expanding economic space through bottom up, self-reinforcing regional integration.

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