Economic activity in the Middle East and Central Asian (Meca) region remains resilient so far, despite global economic geopolitical headwinds, according to the International Monetary Fund.
However, inflation has “surprised on the upside” and uncertainties are mounting amid divergent economic recovery in the region, the fund said on Monday.
The multispeed recovery is evident in economic activity in oil exporting and non-oil exporting nations of the broader region, Jihad Azour, director for Meca Department at the IMF, said at a press briefing.
“[Economic] activity in oil exporters is benefiting from still-high energy prices, while the pace of expansion in emerging market and middle-income economies appears to be slowing, as these economies face a deep terms-of-trade shock, higher sovereign spreads and eroded market access,” Mr Azour said.
The estimated $1 trillion oil windfall for crude producers, such as the UAE, in five years to the end of 2026 will allow them to invest in projects to support their future economic growth, the IMF said.
Primary non-oil fiscal balances are also set to help improve economies in the six-member economic bloc of GCC. Most Gulf nations are expected to continue to save a substantial share of their oil revenues.
The fund expects real gross domestic product of the wider Meca region to grow at 5 per cent this year, up from 4.1 per cent in 2021, and moderate to 3.6 per cent in 2023.
With robust momentum in non-oil economic activity and higher oil prices offsetting food and energy prices, the Washington-based lender expects GDP growth of 5.2 per cent for oil exporters in the region this year, up from 4.5 per cent in 2021.
Growth will be likely to soften to 3.5 per cent in 2023 amid expected decline in global crude demand and as the Opec+ super group of producers lowers production to stabilise markets.
The increase in oil and gas prices that recovered strongly last year were exacerbated by the war in Ukraine this year.
Brent, the benchmark for two-thirds of the world’s oil, rose as much as $140 per barrel in March. Though crude has given up most gains since then on waning global demand concerns, it is still trading in the $95 per barrel range, adding to the windfall of oil exporting nations.
Efforts to diversify their economies over the past five to six years, measures put in place to protect lives and livelihoods during the Covid-19 pandemic and investment in climate and technology have also built solid foundations for Gulf countries to continue growth momentum, Mr Azour told a panel discussion at the Dubai International Financial Centre.
Stronger financial muscle has also allowed oil exports to offset the impact of rising inflation, driven by food and energy prices.
However, the sharp rise in consumer prices for emerging and middle-income economies that have limited fiscal and monetary policy headroom is a major concern, Mohamad Al Ississ, Jordan’s Minister of Finance, told the panel discussion.
Efforts to curb inflation by central banks globally through increase of interest rates is likely to further slow the economic momentum, which will add to pressure on Middle Eastern economies that are already facing high food and energy price-driven inflation, he said.
Headline inflation for Mena region, excluding Sudan, is expected to remain in double digits in 2023 for the third consecutive year. The IMF expects Mena inflation to average 12.2 per cent this year, slowing marginally to 11.2 per cent in 2023.
This level reflects “the lagged effects of higher food prices and, in some cases, exchange rate depreciations with broadening inflationary pressures”, the fund said.
The IMF expects 4.9 per cent growth in emerging and middle income economies this year, up from 3.6 per cent in 2021. GDP expansion is expected to soften to 3.9 per cent in 2023.
Despite high commodity prices and the global slowdown, current account deficits of these countries are projected to remain “roughly at their 2021 levels this year, reflecting robust remittance flows and resurgent tourism in some countries”, the fund said.
However, lower foreign exchange reserves amid global financial tightening indicate an increase in their external vulnerabilities, it added.
Lower income countries that are expected to grow only 0.8 per cent in 2022, are likely to face a large deterioration in their external accounts, with “higher imports concentrated on essential food and energy items”, according to the IMF.
“They are likely to experience severe food security challenges. With limited access to financing and drought in some [geographies], these countries will need international aid to secure staple food imports,” the fund said.
Mr Azour said that global economy is facing “extraordinary challenges” and “despite performing better than what we have seen in the other parts of the world”, Mena economies have not felt the full impact of global headwinds.
However, uncertainties are mounting as the persistently high food and energy prices pose major risks to many regional economies, especially low-income countries and those facing conflicts.
“Tighter-than-expected financial conditions risk fuelling a funding crunch in the region’s emerging markets that could tip the balance towards financial instability and debt distress in weaker starting positions,” Mr Azour said.
Dubai World Cup draw
1. Gunnevera
2. Capezzano
3. North America
4. Audible
5. Seeking The Soul
6. Pavel
7. Gronkowski
8. Axelrod
9. New Trails
10. Yoshida
11. K T Brave
12. Thunder Snow
13. Dolkong
Specs
Engine: 51.5kW electric motor
Range: 400km
Power: 134bhp
Torque: 175Nm
Price: From Dh98,800
Available: Now
'The Woman in the House Across the Street from the Girl in the Window'
Director:Michael Lehmann
Stars:Kristen Bell
Rating: 1/5
Multitasking pays off for money goals
Tackling money goals one at a time cost financial literacy expert Barbara O'Neill at least $1 million.
That's how much Ms O'Neill, a distinguished professor at Rutgers University in the US, figures she lost by starting saving for retirement only after she had created an emergency fund, bought a car with cash and purchased a home.
"I tell students that eventually, 30 years later, I hit the million-dollar mark, but I could've had $2 million," Ms O'Neill says.
Too often, financial experts say, people want to attack their money goals one at a time: "As soon as I pay off my credit card debt, then I'll start saving for a home," or, "As soon as I pay off my student loan debt, then I'll start saving for retirement"."
People do not realise how costly the words "as soon as" can be. Paying off debt is a worthy goal, but it should not come at the expense of other goals, particularly saving for retirement. The sooner money is contributed, the longer it can benefit from compounded returns. Compounded returns are when your investment gains earn their own gains, which can dramatically increase your balances over time.
"By putting off saving for the future, you are really inhibiting yourself from benefiting from that wonderful magic," says Kimberly Zimmerman Rand , an accredited financial counsellor and principal at Dragonfly Financial Solutions in Boston. "If you can start saving today ... you are going to have a lot more five years from now than if you decide to pay off debt for three years and start saving in year four."
Info
What: 11th edition of the Mubadala World Tennis Championship
When: December 27-29, 2018
Confirmed: men: Novak Djokovic, Rafael Nadal, Kevin Anderson, Dominic Thiem, Hyeon Chung, Karen Khachanov; women: Venus Williams
Tickets: www.ticketmaster.ae, Virgin megastores or call 800 86 823
Three ways to get a gratitude glow
By committing to at least one of these daily, you can bring more gratitude into your life, says Ong.
- During your morning skincare routine, name five things you are thankful for about yourself.
- As you finish your skincare routine, look yourself in the eye and speak an affirmation, such as: “I am grateful for every part of me, including my ability to take care of my skin.”
- In the evening, take some deep breaths, notice how your skin feels, and listen for what your skin is grateful for.
Overview
What: The Arab Women’s Sports Tournament is a biennial multisport event exclusively for Arab women athletes.
When: From Sunday, February 2, to Wednesday, February 12.
Where: At 13 different centres across Sharjah.
Disciplines: Athletics, archery, basketball, fencing, Karate, table tennis, shooting (rifle and pistol), show jumping and volleyball.
Participating countries: Algeria, Bahrain, Comoros, Egypt, Iraq, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Palestine, Saudi Arabia, Sudan, Syria, Tunisia, Qatar and UAE.
Our legal consultant
Name: Dr Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
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Our legal advisor
Ahmad El Sayed is Senior Associate at Charles Russell Speechlys, a law firm headquartered in London with offices in the UK, Europe, the Middle East and Hong Kong.
Experience: Commercial litigator who has assisted clients with overseas judgments before UAE courts. His specialties are cases related to banking, real estate, shareholder disputes, company liquidations and criminal matters as well as employment related litigation.
Education: Sagesse University, Beirut, Lebanon, in 2005.
Timeline
2012-2015
The company offers payments/bribes to win key contracts in the Middle East
May 2017
The UK SFO officially opens investigation into Petrofac’s use of agents, corruption, and potential bribery to secure contracts
September 2021
Petrofac pleads guilty to seven counts of failing to prevent bribery under the UK Bribery Act
October 2021
Court fines Petrofac £77 million for bribery. Former executive receives a two-year suspended sentence
December 2024
Petrofac enters into comprehensive restructuring to strengthen the financial position of the group
May 2025
The High Court of England and Wales approves the company’s restructuring plan
July 2025
The Court of Appeal issues a judgment challenging parts of the restructuring plan
August 2025
Petrofac issues a business update to execute the restructuring and confirms it will appeal the Court of Appeal decision
October 2025
Petrofac loses a major TenneT offshore wind contract worth €13 billion. Holding company files for administration in the UK. Petrofac delisted from the London Stock Exchange
November 2025
180 Petrofac employees laid off in the UAE
UAE currency: the story behind the money in your pockets
Contracted list
Ashton Agar, Alex Carey, Pat Cummins, Aaron Finch, Peter Handscomb, Josh Hazlewood, Travis Head, Usman Khawaja, Nathan Lyon, Glenn Maxwell, Shaun Marsh, Mitchell Marsh, Tim Paine, Matt Renshaw, Jhye Richardson, Kane Richardson, Billy Stanlake, Mitchell Starc, Marcus Stoinis, Andrew Tye.
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Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
Essentials
The flights
Etihad (etihad.ae) and flydubai (flydubai.com) fly direct to Baku three times a week from Dh1,250 return, including taxes.
The stay
A seven-night “Fundamental Detox” programme at the Chenot Palace (chenotpalace.com/en) costs from €3,000 (Dh13,197) per person, including taxes, accommodation, 3 medical consultations, 2 nutritional consultations, a detox diet, a body composition analysis, a bio-energetic check-up, four Chenot bio-energetic treatments, six Chenot energetic massages, six hydro-aromatherapy treatments, six phyto-mud treatments, six hydro-jet treatments and access to the gym, indoor pool, sauna and steam room. Additional tests and treatments cost extra.
