The Middle East faces deep economic crises, with high unemployment, inflation, debt, and food shortages exacerbated by conflict and poor governance. The World Bank warns the region lags behind, struggling with instability, limited job creation, and worsening humanitarian conditions amid mounting reconstruction costs.
The Middle East is “not catching up with the rest of the world,” the World Bank warned in late 2024.
The Middle East—long the world’s most volatile region—has been consumed by massive economic problems. The Middle East is “not catching up with the rest of the world,” the World Bank warned in late 2024. “The region is strained by fragility, conflict, and uncertainty.” The challenges in 2025 overlapped—and in turn complicated the ability of governments to solve them.
The problems ranged from daily problems for individuals who could no longer afford food and other staples to governments unable to deal with high domestic deficits and foreign debt. Unemployment was a crisis for millions of the young Gen Z. Inflation has raged in the region and billions of dollars were needed to reconstruct amid conflict. “This region faces the pressing need to create jobs, enhance social safety nets, build resilience to more frequent natural disasters, and support economic diversification,” Kristalina Georgieva, managing director of the International Monetary Fund, said in February 2025.
Tens of millions were “acutely food insecure,” the World Food Program warned in late 2024. Several countries—including Lebanon, Egypt, Tunisia, and Yemen—had chronic problems getting staples, such as milk, cereal, grains, and meat. Malnutrition became an existential crisis. The Middle East “is confronting an increasingly complex triple burden of malnutrition that is undermining the growth, development and future potential of its children,” Adele Khodr, the Middle East UNICEF director, reported in August 2024.
Almost half the populations in Yemen (17 million out of 40 million) and Syria (13 million out of 25 million) were “acutely food-insecure,” the World Food Program warned in late 2024. In Gaza, 91% of the 2 million Palestinians had acute shortages. The climate crisis fueled food insecurity, ”with prolonged droughts and extreme weather crippling agricultural production,” the World Food Program noted in November 2024.
Price hikes were also rampant, as inflation rose to 119% in Sudan, 29% in Iran, 21% in Egypt, and 20% in Yemen, the International Monetary Fund reported in late 2024. Consumer spending plunged due to high prices. Syria’s new government, still under US and some international sanctions, struggled to cope with 79% inflation in early 2025. Amid the ongoing conflict between Israel and Hamas, inflation hit 140% in Gaza, the World Food Program warned. In Turkey, inflation was down from 75% in May 2024 but still high at 39% in February 2025.
Since the Yemen war erupted in 2015, Gross Domestic Product per capita (GDP) has more than halved, UN Special Envoy Hans Grundberg told the Security Council on March 6, 2025. Civil servants in areas controlled by Houthi rebels, who rule from Sanaa, have not been paid regularly since 2018. And Yemenis working for the UN-recognized government, which is based in Aden, have also faced salary deferments. The value of Yemen’s rial currency plummeted by 50 percent in 2024. “As a consequence, poverty has surged across the country,” Grundberg said.
“Governments have the difficult task of containing high debt levels in the face of rising spending needs,” Georgieva, from the IMF, said in February 2025. The World Bank had already acted. It “substantially downgraded” forecasts on the growth of GDP across the Middle East in late 2024. Several Arab countries had debts that exceeded 70% of their GDP. Governments risked being “trapped in a low-growth, high-debt scenario,” the IMF also reported. Egypt’s finance ministry said in June 2024 that public debt had reached 91% of its GDP. In Tunisia, public debt was 82% of its GDP in November 2024.
Unemployment was the highest in the world— and above pre-pandemic levels. Many young people have felt marginalized on issues ranging from political participation to climate change.
Joblessness among the young—aged between 15 and 29—was as high as 25% across the Middle East and North Africa, the International Labor Organization reported in August 2024. Unemployment was the highest in the world—and above pre-pandemic levels, despite more people completing higher education. In the region, women had the lowest participation in the work force globally. “While schooling has improved, employment has stagnated, primarily because of low female labor force participation,” the World Bank said in January 2025.
Many young people have felt marginalized on issues ranging from political participation to climate change. More than one-third of the young in Tunisia, Morocco, Jordan and Lebanon wanted to emigrate because of limited employment prospects at home, according to an Arab Barometer report in August 2024. Sentiment among the young has been critical in domestic stability, with potential long-term impact. In 2011, the Arab Uprisings were triggered by angry youth who toppled four heads of state who had ruled for a combined 123 years. In 2025, the problem was most acute among the fastest growing sector of Middle East societies; the young are roughly a third of the population in the region.
In Morocco, youth unemployment rose to nearly 40%, according to the government in August 2024. At least 20% of the young were jobless even in oil-rich countries, such as Saudi Arabia. Women faced significant job shortages too in male-dominated countries. In Jordan, unemployment among women hit 33% in late 2024, compared to 22% for the general population.
In Iran, the biggest complaints about the government were economic issues, notably inflation, unemployment, and corruption. The value of Iran’s currency plummeted from 600,000 rials to the dollar in August 2024 to 920,000 rials to the dollar in March 2025. Amid the public fury, Parliament impeached Minister of Finance Abdolnaser Hemmati in March 2025. “The Iranian regime’s domestic vulnerabilities have continued to grow as it has doubled down on a risky regional and global strategy that has produced more economic hardship and isolation," the Middle East Institute reported in January 2025.
Recent conflicts, both domestic and regional, have spawned new destruction; they’ve sabotaged growth.
Recent conflicts, both domestic and regional, have spawned new destruction; they’ve sabotaged growth. “The region is strained by fragility, conflict, and uncertainty,” the World Bank warned in late 2024. The cost of conflict “transcends what common economic indicators can measure.”
The “perception” that conflicts could “worsen or spread” is the chief concern in the near future, Saadia Zahidi, a managing director at the World Economic Forum, reported in January 2025.” Fear and uncertainty cloud the outlook.” The Middle East has several “fragile theaters,” notably Yemen, Lebanon, and the Palestinian territories, where the challenges are "exacerbated by poor leadership, weak governance, and endemic corruption,” the Middle East Institute warned in January 2025.
Other factors from conflict included limits on long-term development, obstacles in advancing human capital, resettling displaced people, supply chain disruptions, and economic disorganization. Over seven years, for example, per capita income, on average, was 45% higher in countries without conflict, the World Bank reported. “This loss is equivalent to 35 years’ worth of progress in the region.”
Syria’s new leadership struggled with economic recovery after a 14-year civil war that decimated parts of major cities, notably Aleppo, Damascus, Homs and Raqqa, as well as towns and villages nationwide. The challenge in Syria “is the sheer scale of needs. Ravaged by this dreadful conflict, its infrastructure destroyed,” which left 90% of its 25 million people living in poverty, UN Special Envoy Geir Pedersen told the UN Security Council after the ouster of the Assad regime in December 2024. International support “will have to go beyond the humanitarian in terms of economic development, reconstruction, and a process to address and ultimately end sanctions.”
The views represented in this piece are those of the author and do not express the official position of the Wilson Center.
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