Skip to content Skip to Search
Skip navigation

Mena inflation to remain ‘uncomfortably high’

Food inflation across Mena countries rose by an average of 29% year-on-year Reuters/Ahmed Yosri
Inflation in the region was expected to be between 2.1 percent and 3.3 percent this year and fall lower in 2024
  • Inflation increased on average to 19.4% between March and December
  • IMF forecasts global GDP growth at 2.8% for 2023
  • Saudi Arabia’s annual inflation rate eased to 2.7% in March

Inflation in the Middle East and North Africa is to remain “uncomfortably high” for the foreseeable future, according to a leading banking expert.

Headline inflation across the 16 Mena economies increased on average to 19.4 percent year-on-year between March and December last year, as reported by the World Bank in its most recent economic update.

Food inflation across the countries rose by an average of 29 percent.

“My prediction would be that inflation will remain quite uncomfortably high,” said John Hardy, head of FX Strategy at Saxo Bank.

The International Monetary Fund’s World Economic Outlook, published earlier this week, predicted GDP growth in the Gulf will slow this year – as low as 0.9 percent in Kuwait – before most countries pick up the pace in 2024.

Saudi will remain at 3.1 percent, while Qatar is expected to experience a further drop to 1.8 percent.

Hardy said oil is “the currency for the Middle East” and while prices are still high, and income from exports remains high, inflation will be high in the region “just as everywhere”.

For every 10 percent rise in the price of oil, IMF models show a 0.1 percentage point reduction in global growth and a 0.3 percentage point increase in inflation, IMF chief economist Pierre-Olivier Gourinchas said on Tuesday, as quoted by Reuters.

Energy prices have declined sharply since mid-2022. The Brent crude oil spot price dropped from more than $120 per barrel in June 2022 to about $80 per barrel in February 2023 – which is still higher than before the war in Ukraine. 

Earlier this month Saudi Arabia and other Opec+ oil producers announced further oil output cuts of 1.16 million barrels per day, which will come into effect from May.

As a result, oil prices are predicted to rise higher, with $100 a barrel now looking more likely in the coming months, according to Edward Bell, senior director for market economics at Emirates NBD, Dubai’s largest bank.

The IMF raised its 2023 core inflation forecast to 5.1 percent, from a 4.5 percent prediction in January, saying it had yet to peak in many countries despite lower energy and food prices.

It forecast global real GDP growth at 2.8 percent for 2023 and 3 percent for 2024, marking a sharp slowdown from 3.4 percent growth in 2022 due to tighter monetary policy.

There was some good news this week, with Saudi Arabia reporting on Thursday that government data had showed that the kingdom’s annual inflation rate had eased to 2.7 percent in March, from 3 percent in February.

Latest articles

Nature, Outdoors, Countryside

PIF’s Salic seeks to buyout Olam’s agriculture unit

Singapore-based Olam Group has confirmed that Saudi Agricultural and Livestock Investment (Salic) has offered to acquire its remaining stake in Olam Agri Holdings. The Public Investment Fund (PIF) subsidiary acquired a 35 percent stake in Olam Agri for $1.24 billion in December 2022, valuing the company at $3.5 billion. Olam Group retains 64.6 percent of its […]

Adult, Female, Person

Tecom profit up amid rise in commercial space demand

Dubai-listed Tecom Group reported a 20 percent year-on-year increase in net profit to AED340 million ($92.6 million) in the third quarter of 2024, driven by steady demand for premium commercial and industrial properties. Revenue for the quarter rose 12 percent annually to AED611 million, supported by Dubai’s strong economic fundamentals and growing demand for commercial […]

A sheep farm in Pukekohe, North Island, New Zealand. The country exported meat worth $155m to the GCC in 2023

New Zealand agrees free-trade deal with GCC

The GCC has agreed a new free-trade deal with New Zealand. The agreement will give duty-free access to 99 percent of New Zealand exports over 10 years, according to New Zealand trade minister Todd McClay.  McClay said the agreement was the culmination of an 18-year-long ambition to agree a trade deal in the Middle East. […]

A Saudi man walks at the Tadawul Saudi Stock Exchange, in Riyadh, Saudi Arabia

Kuwaiti companies looking at Saudi exchange listings

Kuwaiti companies are eyeing up opportunities to list on Saudi Arabia’s Tadawul exchange, according to reports. It comes almost two years since deals were signed between market regulators in both Gulf states to explore collaboration around cross-listings on the Tadawul and Kuwait’s bourse. Firas Al-Salem, chairman of the Kuwaiti Business Council, said that listings could […]