Imf Sharply Lowers 2025 Growth Forecast for Middle East And North Africa

Economic

Forex

Summary:

The International Monetary Fund has slashed its growth forecast for the Middle East and North Africa this year, as trade tensions and uncertainty originating from the US spill over into the region.

Economies in the region are projected to expand at a pace of 2.6 per cent this year, 1.4 percentage points lower than the IMF's forecast in October. That comes after a weaker-than-expected growth rate of 1.9 per cent last year. Growth is forecast to pick up to 3.4 per cent in 2026.

The revisions reflect a broader trend around the world, where economic growth is expected to slow this year because of tariffs.

While spillovers from rising trade tensions and the uncertainty accompanying them account for this, the gradual resumption of oil production, lingering effects of conflicts and slower-than-expected implementation of reforms are also contributing.

IMF regional director Jihad Azour previewed the region's growth prospects during last week's bi-annual meetings. Mr Azour said at the time that greater uncertainty could erode confidence.

“These developments are adding to existing regional social uncertainty, including ongoing conflicts, pockets of political instability and climate vulnerability,” he said. Exposure from US tariffs are expected to be limited, he added.

Diverging trends for exporters

The IMF anticipates divergent paths for oil exporters this year, with members of the Gulf region expected to see greater economic growth this year and next.

The six-member bloc is projected to grow by 3 per cent this year and 4.1 per cent in 2026, both downgrades from the fund's October forecast. The IMF attributed the decrease to to extension of voluntary Opec+ cuts, their phase-out by the end of next year and lower non-oil growth.

Infrastructure projects and diversification efforts are forecast to support non-oil growth, although the IMF also lowered this due to changes in investment plans because of lower oil prices.

The UAE's economy is projected to expand at 4 per cent this year and 5 per cent in 2026. Saudi Arabia, the region's largest economy, is forecast to see its GDP increase by 3 per cent and 3.7 per cent in 2025 and 2026, respectively – both large downgrades from the fund's October projections.

Non-Gulf oil exporters are projected to see economic growth of 1.4 per cent this year, down from the 3.6 per cent forecast in October, reflecting the IMF's “significant reduction” to its oil production projections, sanctions on Iran and lower non-oil growth.

Growth rebound for importers

Uncertainty surrounding trade will add to the impact of conflict on oil importers in the Middle East and North Africa, although growth is forecast to increase to 3.4 per cent this year.

Growth rates in Lebanon, Sudan, the West Bank, Gaza and Yemen are projected to pick up this year, “reflecting a smaller negative impact of the conflict on output levels compared to 2024”, the IMF said. Growth is still expected to remain negative in some cases, while the IMF did not provide projections for Lebanon or the West Bank and Gaza.

Egypt and Jordan, whose economies have faced spillovers from conflict in the region, are to see their GDP pick up by 3.8 and 2.6 per cent this year, respectively. However the fund said sluggish implementation of reforms and the spillover effects will continue to weigh on economic growth.

Downside risks

Key downside risks remain in the region, including economic policy and trade uncertainty. However, the fund noted that trade distortions will have a greater indirect than direct effect.

Among these indirect effects are disruptions in foreign direct investment, a global slowdown, strengthening of the dollar and tighter monetary policy.

“Higher interest rates and a stronger US dollar could increase the already high gross public financing needs in several economies in the Mena region, raising concerns about debt sustainability and the stability of their banking systems,” the fund said.

This could lead to lower near and medium-term growth for highly indebted countries, its added. Some countries, however, could benefit from trade diversions.

Meanwhile, escalating geopolitical trade tensions could also unsettle commodities which could create external and fiscal pressures for both importers and exporters, the fund said.

Source: THENATIONALNEWS

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Grace Montgomery

Economic

Political

Russia-Ukraine Conflict

Ukraine and the United States on Wednesday signed a deal heavily promoted by U.S. President Donald Trump, opens new tab that will give the United States preferential access to new Ukrainian minerals deals and fund investment in Ukraine's reconstruction.

The following is an overview of the critical minerals, including rare earths, and other natural resources in Ukraine:

WHAT ARE RARE EARTHS AND WHAT ARE THEY USED FOR?

Rare earths are a group of 17 metals used to make magnets that turn power into motion for electric vehicles, cell phones, missile systems, and other electronics. There are no viable substitutes.

The U.S. Geological Survey considers 50 minerals to be critical, including rare earths, nickel and lithium.

Critical minerals are essential for industries such as defence, high-tech appliances, aerospace and green energy.

WHAT MINERAL RESOURCES DOES UKRAINE HAVE?

Ukraine has deposits of 22 of the 34 minerals identified by the European Union as critical, according to Ukrainian data. They include industrial and construction materials, ferro alloy, precious and non-ferrous metals, and some rare earth elements.

According to Ukraine's Institute of Geology, the country possesses rare earths such as lanthanum and cerium, used in TVs and lighting; neodymium, used in wind turbines and EV batteries; and erbium and yttrium, whose applications range from nuclear power to lasers. EU-funded research also indicates that Ukraine has scandium reserves. Detailed data is classified.

The World Economic Forum has said Ukraine is also a key potential supplier of lithium, beryllium, manganese, gallium, zirconium, graphite, apatite, fluorite and nickel.

The State Geological Service said Ukraine has one of Europe's largest confirmed reserves, estimated at 500,000 metric tons, of lithium - vital for batteries, ceramics, and glass.

The country has titanium reserves, mostly located in its northwestern and central regions, while lithium is found in the centre, east and southeast.

Ukraine's reserves of graphite, a key component in electric vehicle batteries and nuclear reactors, represent 20% of global resources. The deposits are in the centre and west.

Ukraine also has significant coal reserves, though most are now under the control of Russia in occupied territory.

Mining analysts and economists say Ukraine currently has no commercially operational rare earth mines.

China is the world's largest producer of rare earths and many other critical minerals.

WHAT DO WE KNOW ABOUT THE DEAL?

The two countries signed the accord in Washington after months of sometimes fraught negotiations, with uncertainty persisting until the last moment with word of an eleventh-hour snag.

The accord establishes a joint investment fund for Ukraine's reconstruction as Trump tries to secure a peace settlement in Russia's three-year-old war in Ukraine.

U.S. Treasury Secretary Scott Bessent and Ukrainian First Deputy Prime Minister Yulia Svyrydenko were shown signing the agreement in a photo posted on X by the Treasury, which said the deal "clearly signals the Trump Administration's commitment to a free, sovereign, prosperous Ukraine."

Svyrydenko wrote on X that the accord provides for Washington to contribute to the fund. She also said the accord provides for new assistance, for example air defense systems for Ukraine. The U.S. did not directly address that suggestion.

Svyrydenko said the accord allowed Ukraine to "determine what and where to extract" and that its subsoil remains owned by Ukraine.

Svyrydenko said Ukraine has no debt obligations to the United States under the agreement, a key point in the lengthy negotiations between the two countries. It also complied with Ukraine's constitution and Ukraine's campaign to join the European Union, she said.

The draft did not provide any concrete U.S. security guarantees for Ukraine, one of its initial goals.

WHICH UKRAINIAN RESOURCES ARE UNDER KYIV'S CONTROL?

The war has caused widespread damage across Ukraine, and Russia now controls around a fifth of its territory.

The bulk of Ukraine’s coal deposits, which powered its steel industry before the war, are concentrated in the east and have been lost.

About 40% of Ukraine's metal resources are now under Russian occupation, according to estimates by Ukrainian think-tanks We Build Ukraine and the National Institute of Strategic Studies, citing data up to the first half of 2024. They provided no detailed breakdown.

Since then, Russian troops have continued to advance steadily in the eastern Donetsk region. In January, Ukraine closed its only coking coal mine outside the city of Pokrovsk, which Moscow's forces are trying to capture.

Russia has occupied at least two Ukrainian lithium deposits during the war - one in Donetsk and another in the Zaporizhzhia region in the southeast. Kyiv still controls lithium deposits in the central Kyrovohrad region.

WHAT OPPORTUNITIES DOES UKRAINE OFFER?

Oleksiy Sobolev, first deputy economy minister, said in January that the government was working on deals with Western allies including the United States, Britain, France and Italy on projects related to exploiting critical materials. The government estimates the sector's total investment potential at about $12-15 billion by 2033.

The State Geological Service said the government was preparing about 100 sites to be jointly licensed and developed but provided no further details.

Although Ukraine has a highly qualified and relatively inexpensive labour force and developed infrastructure, investors highlight a number of barriers to investment. These include inefficient and complex regulatory processes as well as difficulty accessing geological data and obtaining land plots.

Such projects would take years to develop and require considerable up-front investment, they said.

Source: Reuters

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Michelle

Economic

Forex

UK factories were hit by the biggest plunge in overseas orders in five years as a global trade war outbreak sapped demand from the US, Europe and China, according to a closely watched survey.

S&P Global’s purchasing managers’ index showed the manufacturing sector remaining deep in contractionary territory despite a slight improvement to a reading of 45.4 in April, above the flash estimate of 44 and up from 44.9 in March.

The survey revealed the pressure mounting on factories from Donald Trump’s sweeping tariffs, a stagnant domestic backdrop and higher employment costs following a hike in payroll taxes. Business optimism tumbled to the lowest in almost 2 ½ years, jobs were cut at the second-sharpest pace since the pandemic and cost pressures jumped.

“Surveyed manufacturers noted that US tariff announcements were having a noticeable impact on global markets as trading partners adapt to increased trade volatility,” said Rob Dobson, director at S&P Global Market Intelligence. “Manufacturers are also seeing an increasingly harsh cost environment.”

Economists expect the US tariffs to be disinflationary for the UK by dampening global demand and redirecting trade, as exporters that previously sold in the US, particularly in China, seek alternative markets at a discount. However, the PMI survey suggested that the tariffs may be contributing to price pressures in the manufacturing sector.

High energy prices, increased staff costs and supply-chain uncertainty caused by the tariffs were blamed for the sharpest jump in purchase prices since December 2022. Factories raised their own prices at the steepest pace in over two years.

Bank of England rate-setters have been wary of predicting that tariffs will push down inflation, partly because it could cause supply chain disruptions if US importers rush to find substitutes for goods from countries facing the highest tariffs. Firms could also stockpile goods in case a higher tariff is introduced in future.

Source: Bloomberg Europe

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Gerik

Economic

Historical Growth Sets the Foundation

Vietnam’s economic expansion has been remarkably steady since the Đổi Mới reforms. In 1986, its GDP stood at just $43 billion. By 2008, this figure had grown nearly threefold to $125 billion. The pace accelerated significantly thereafter: in just 15 years, Vietnam scaled from a $100 billion economy to $408 billion by 2022 and $433.7 billion in 2023.

In 2024, Vietnam's nominal GDP reached $476.3 billion, making it the fourth-largest economy in Southeast Asia—ahead of the Philippines ($462 billion) and Malaysia ($422 billion)—and the 34th largest globally.

Forecast Trajectory Through 2030: Steady Climb but Not Exponential

According to the International Monetary Fund (IMF), Vietnam’s GDP is expected to hit $491 billion in 2025. Despite moving into fifth place regionally behind Indonesia, Singapore, Thailand, and the Philippines, Vietnam remains on an upward path. By 2029, the IMF projects GDP at $627 billion, overtaking Thailand ($616 billion) and moving up to 32nd place globally. That rank is expected to hold in 2030 when Vietnam's GDP reaches $666.5 billion.

Meanwhile, the UK-based Centre for Economics and Business Research (CEBR) is more bullish. It forecasts Vietnam will reach $676 billion in 2029—surpassing Thailand, Singapore ($656 billion), and Malaysia ($594 billion)—and ascend to 33rd globally.

Targeting the $1 Trillion Milestone: When and How?

The CEBR anticipates that by 2039, Vietnam’s GDP could hit $1.41 trillion. This would mark a near-tripling of the country’s current economic size in just 15 years. If realized, Vietnam would rank as the world’s 25th largest economy—leapfrogging ASEAN peers such as Thailand ($1.059 trillion), Malaysia ($1.055 trillion), and Singapore ($982 billion).

This would represent a compound annual growth rate (CAGR) of approximately 5.2% from 2024 to 2039. Such a pace, while demanding, is consistent with Vietnam’s performance over the past two decades, suggesting the target is plausible if growth drivers remain intact.

Structural Dynamics Behind Growth

The climb to $1 trillion will not simply be a function of momentum but will require deepening industrial capacity, upgrading infrastructure, and attracting sustained foreign direct investment (FDI). Furthermore, Vietnam’s growing integration into global supply chains—especially in electronics, textiles, and manufacturing—is likely to play a central role. Demographics also remain favorable, with a young workforce and increasing urbanization.

Yet risks persist. Global macroeconomic instability, trade tensions, and internal structural bottlenecks (e.g., logistics constraints, slow judicial reform, low labor productivity) could slow progress. Vietnam’s ability to continue reforming, particularly in public governance and innovation, will determine whether it hits the $1 trillion mark by the late 2030s or later.

Comparative Perspective: Outpacing ASEAN Peers

By 2039, Vietnam is expected to surpass major ASEAN economies in nominal GDP. CEBR data suggests Vietnam will top Singapore by $428 billion, Malaysia by $355 billion, and Thailand by $351 billion. This shift will have both symbolic and strategic significance. It will reflect a realignment of economic power within Southeast Asia, with Vietnam becoming a key player not only in regional affairs but also in global trade and investment discussions.

Vietnam’s journey from a $43 billion economy in 1986 to a projected $1.41 trillion by 2039 illustrates one of Asia’s most resilient growth stories. While not guaranteed, surpassing the $1 trillion threshold within the next 15 years appears achievable—provided the country maintains reform momentum, navigates global uncertainties wisely, and harnesses its comparative advantages in manufacturing and demographics.

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Patricia Franklin

Economic

What to Know:

● Trump seeks patience from Wall Street as US economy weakens.

● Tariff policies affect inflation and interest rates.

● Federal Reserve monitors inflation expectations amid uncertainty.

Trump Requests Patience from Wall Street Amid Economic Concerns

Trump has requested Wall Street leaders for patience amidst a weakening U.S. economy, influenced by his tariff policies, seeking time to stabilize financial markets.

This request sends signals of uncertainty in the economy, with potential impacts on interest rates and market stability. Federal Reserve officials closely watch inflation expectations.

Trump's Tariff Policy Dominates Economic Concerns

Donald Trump is reportedly seeking more time from Wall Street leaders amid growing economic concerns. His tariff policies, particularly on non-USMCA goods, have sparked debate over financial implications and market stability.

Trump reiterated his tariff stance, asking for patience among financial leaders. Federal Reserve officials have noted the temporary inflationary impact of these tariffs, highlighting complexities in economic forecasting.

Neel Kashkari, President, Minneapolis Federal Reserve, “Trump’s tariff policies may make rate cuts less likely in the current year.”

Varied Industry Reactions to Economic Uncertainty

Industry reactions vary, with some expressing concerns about prolonged economic uncertainty. The tariffs have contributed to fluctuating market conditions and increased scrutiny of trade policies.

Financial and political landscapes face potential shifts as Trump's economic policies unfold. Federal Reserve's cautious approach reflects the broader implications for interest rates and strategic economic adjustments.

Tariffs: Historical Patterns and Economic Predictions

Comparing to previous tariff implementations, economists see parallels in economic responses and market volatility. Historical trends suggest potential for temporary inflation shifts and strategic tariff adaptations.

Experts suggest outcomes may hinge on policy adjustments and global trade dynamics. Continued analysis will require monitoring of economic indicators and strategic responses from key financial institutions.

Source: bitcoininfonews

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Gerik

Economic

Strong Semiconductor Demand Drives April Export Surprise

South Korea’s April export data offered a rare upside surprise amid ongoing global trade tensions, with outbound shipments rising 3.7% year-on-year to $58.21 billion. This marked the strongest growth in four months and sharply outpaced the Reuters consensus forecast of a 2.0% contraction. The surge was primarily fueled by a 17.2% increase in semiconductor exports, underpinned by rising memory prices and renewed global demand for high-performance chips. This reflects a direct relationship between global tech demand and South Korea’s export resilience—where improved conditions in the semiconductor market significantly support national trade performance.

While the semiconductor sector was a clear bright spot, other industries painted a more mixed picture. Wireless communication device exports jumped 26.5%, but this was offset by declines in computers (-15.3%) and display panels (-7.6%). In the automotive sector, overall car exports fell 3.8% due to U.S. tariffs imposed in early April, though auto parts managed a 3.5% increase, suggesting some supply chain adjustments or resilience in component demand. Steel and biopharmaceutical products also showed notable gains, rising 5.4% and 21.8% respectively, adding to the diversity of South Korea’s trade recovery in the face of tariff disruptions.

Tariff Pause Offers Temporary Relief but No Certainty

President Donald Trump’s 25% tariffs on auto and steel imports have clearly impacted South Korean exports, particularly to the U.S., where shipments declined by 6.8%. In contrast, exports to China rose 3.9%, and those to the European Union surged by 18.4% to a record $6.7 billion. These directional changes hint at a partial reallocation of trade flows, where exporters pivot away from constrained markets and toward more accessible regions. However, the currently paused 10–25% reciprocal tariffs on South Korea are scheduled to resume in July, unless ongoing trade talks produce a bilateral resolution. This looming risk casts doubt over the sustainability of April’s strong performance.

Economists remain cautious despite the upbeat April data. Park Sang-hyun of iM Securities warned that early shipping—where firms front-load exports to beat tariff deadlines—could have inflated the numbers. ING economist Kang Min Joo echoed this concern, suggesting that second-quarter exports may still contract even as high-end chip demand provides partial support. Thus, while April’s figures are directionally positive, they may not reflect a durable trend, especially given the volatile policy environment and ongoing U.S.-China friction.

Trade Surplus Narrows Marginally as Imports Dip

South Korea recorded a trade surplus of $4.88 billion in April, slightly below the $4.92 billion seen in March. Imports fell 2.7% to $53.32 billion, reversing a 2.3% increase the previous month. This reduction could be interpreted either as a sign of weakening domestic demand or as firms completing their pre-tariff inventory builds. The moderate surplus reinforces the country’s continued export reliance, with the balance vulnerable to future shifts in global demand or protectionist measures.

Temporary Resilience Amid Structural Risk

South Korea’s April trade performance underscores the complexity of its export-dependent economy in an era of tariff uncertainty. Strong chip sales and diversified sector gains have allowed the country to outperform expectations, but these gains are potentially fragile. The upcoming expiration of the U.S. tariff pause in July remains a critical pressure point. While trade talks continue, the long-term trajectory of South Korea’s exports will depend on sustained semiconductor demand, effective policy negotiation, and the global economy’s ability to absorb new protectionist shocks.

Source: Reuters

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Gerik

Forex

Dollar Recovery Gains Momentum Despite Weak Data

On Thursday, the U.S. dollar regained some footing despite recent disappointing economic figures, as investor sentiment pivoted toward optimism over a potential easing in global trade tensions. President Donald Trump's recent suspension of some tariffs and signals of possible trade deals with major economies, including China, India, and Japan, provided a window of relief for the dollar, which had suffered its worst monthly decline in two and a half years through April. This improvement in trade sentiment appears to have helped offset the drag from first-quarter GDP contraction, which was largely driven by an unprecedented surge in imports.

In contrast, the Japanese yen declined by around 0.5% to 143.73 per dollar following the Bank of Japan’s policy decision. While the central bank's unanimous vote to hold interest rates was expected, the market was more sensitive to the BOJ’s downward revisions to its economic and inflation forecasts. The projected real GDP growth for fiscal year 2025–2026 was cut to 0.5% from 1.1%, reinforcing the perception that further monetary tightening is unlikely in the near term. This shift prompted investors to pull back from the yen, aligning with broader expectations of an extended pause in Japan’s normalization efforts.

Currency Movements Reflect Diverging Central Bank Trajectories

The divergence in central bank policy outlooks helped shape movements across major currency pairs. The euro fell to a two-week low of $1.13, and the British pound also dipped to $1.3294, both down approximately 0.2% against the dollar. These adjustments suggest that, despite domestic headwinds, the U.S. currency may benefit in the short term from improving trade headlines and relative policy stability. In contrast, Japan’s cautious stance and economic downgrades weighed directly on its currency.

Markets are now bracing for the release of U.S. employment data, with April nonfarm payrolls expected to show a hiring slowdown to 130,000 jobs. Alongside jobless claims and the ISM manufacturing survey, these data points will offer further clarity on the extent of economic resilience following a quarter marked by trade-induced volatility. If labor market data shows signs of softening, the narrative around recession risk could intensify, complicating monetary policy decisions for the Federal Reserve.

Commodity Currencies Hold Steady

Meanwhile, the Australian and New Zealand dollars remained relatively stable. The Aussie hovered around $0.6405, buoyed slightly by an inflation report that came in marginally above expectations, which tempered dovish bets on future rate cuts. The New Zealand dollar maintained its position near $0.5940, trading in the upper range of its recent channel. Both currencies showed resilience, supported by domestic data and a less direct exposure to U.S.-China tariff dynamics compared to export-heavy economies like Japan.

The interplay between global trade developments, central bank policies, and economic data continues to produce divergent currency trends. The dollar’s recent recovery reflects a cautious optimism that tariff-related disruptions may ease, while the yen’s decline underscores the challenges facing Japan’s economy and monetary strategy. With April’s jobs report set to arrive shortly, investor focus is narrowing on the labor market as a key indicator of underlying U.S. economic strength. In the absence of consistent signals, the foreign exchange market remains reactive, moving in tandem with political developments and shifting central bank tones.