DUBAI: Middle East economies are recovering from the coronavirus pandemic faster than anticipated, largely due to the acceleration of mass inoculation campaigns and an increase in oil prices. But the International Monetary Fund warned Sunday that an uneven vaccine distribution would derail the region’s rebound, as the prospects of rich and poor countries diverge.
In its latest report, the IMF again revised upward its 2020 economic outlook for the Mideast and North Africa, now outlining just a 3.4 percent contraction last year, with growth for the region’s oil exporters buoyed by a boom for commodities and rise in oil price, which hit $67 a barrel in March. Even with an expected dip to $57 a barrel by the end of 2021, the surge from last year’s all-time lows is boosting the oil-rich nations of the Gulf, such as the United Arab Emirates and Saudi Arabia, which also have moved swiftly toward widespread vaccination.
But elsewhere in the region, from Yemen and Sudan to Libya and Lebanon, where inflation soars, instability prevails and wars have left lasting scars, the damaging effects of the pandemic will drag on and cause economic harm, the IMF said — possibly for years to come.
“We are a year into the crisis and recovery is back, but it is a divergent recovery,” Jihad Azour, director of the Middle East and Central Asia department at the IMF, told The Associated Press. “We are at turning point. ... Vaccination policy is economic policy.”
The IMF expects economic growth to reach 4 percent for the Middle East this year. But that rosy outlook papers over the region’s deep economic divides.
For oil-rich economies, yawning deficits are expected to halve this year as revenues climb, more arms get jabbed and lockdown measures recede, said Azour. Thanks to strong government management of the virus’ successive waves and the jolt in oil prices, Saudi Arabia’s economy will expand 2.9 percent — compared to last year’s contraction of 4.1 percent. Higher oil prices come as the Organization of the Petroleum Exporting Countries (OPEC) and its allies keep a lid on production and it seems unlikely that the US will quickly lift sanctions on Iran’s critical oil sector.
The IMF expects the UAE’s economy to grow this year by 3.2 percent, with Dubai’s World Expo, now rescheduled for October 2021, key to the nation’s recovery. Dubai hopes the massive event will draw 25 million visitors and a series of deals, heralding a bright post-pandemic future.
The UAE has launched among the world’s fastest inoculation campaigns, with over 90 doses administered per 100 residents as of this week. Still, the collapse of hospitality, tourism and retail presents challenges for Dubai, where a cascade of layoffs hit foreign workers and slashed the emirate’s population by 8.4 percent, according to ratings agency S&P Global.
The outlook is bleaker for fragile and developing economies, many with lagging vaccination campaigns, few resources for fiscal stimulus and revenues drawn heavily from sectors like tourism that have been slowest to recover from the pandemic.
Whereas rich countries plan to vaccinate most of their population in a few months, swaths of the region — from Afghanistan and Gaza to Iraq and Iran — likely won’t inoculate a significant portion of their populations until mid-2022, the IMF said.
Even that estimate may be optimistic. The region’s lowest-income countries could end up waiting until 2023 at the earliest for mass vaccination, according to the report. Meanwhile, many countries’ beleaguered health systems are straining under resurgent waves of infections, prompting authorities to impose new restrictions and inflict more economic pain.
The IMF expects a sluggish 2021 recovery for Egypt and Pakistan, oil importers reliant on tourism that saw an exodus of foreign investors last year. The fund revised down its growth estimate for Jordan, where the youth unemployment rate has skyrocketed to 55 percent. Sudan remains mired in debt and threatened by instability, but its economy could grow for the first time in years as it gains new access to international financial networks.
Lebanon, in the midst of its worst financial crisis ever, remains the only Mideast economy at risk of further contraction. The country has defaulted on its foreign debt and failed to implement economic reforms, let alone form a government. A giant explosion at the Beirut port last year wreaked havoc on the capital. Discussions with the IMF led nowhere after the Cabinet quit.
Azour declined to even offer a specific economic forecast for Lebanon this year, citing “all the uncertainties.”
In Iran, the IMF found reason to praise economic growth after years of decline, noting that the government’s resistance to virus-induced lockdowns that would have devastated its sanctions-hit economy had saved it from the worst of the pandemic’s fallout. The country’s economy is expected to grow 2.5 percent in 2021, Azour said, building on slight gains last year.
But Iran’s recovery remains far off as its vaccinations lag, inflation eliminates people’s savings and economic policies overlook the most vulnerable. The IMF continues to consider Iran’s $5 billion assistance request, which would be its first loan since 1962. Meanwhile, American sanctions remain in force as torturous discussions begin over a return to Tehran’s tattered 2015 nuclear deal with world powers.
“A removal of the recently implemented sanctions will of course allow the Iranian economy to export more, trade more, and this will have a positive impact,” said Azour, while urging the government to tame inflation and better incorporate the private sector.
Despite the worsening inequality, the pandemic has shown the fortunes of the Mideast’s richest and poorest countries to be increasingly intertwined. Surging infections and foundering inoculation anywhere in the region could spread new variants that threaten overall economic and public health, the IMF reported.
“Therefore, any regional cooperation would be welcome going forward,” said Azour.
IMF: Vaccine inequity threatens Mideast’s economic recovery
https://arab.news/bxv85
IMF: Vaccine inequity threatens Mideast’s economic recovery
- IMF expects economic growth to reach 4 percent for the Middle East this year
- Outlook bleaker for developing countries says IMF
What MENA’s wild 2025 funding cycle really revealed
RIYADH: The Middle East and North Africa startup funding story in 2025 was less a smooth arc than a sequence of sharp gears: debt-led surges, equity-led recoveries, and periodic quiet spells that revealed what investors were really underwriting.
By November, the region had logged repeated bursts of activity — culminating in September’s $3.5 billion spike across 74 deals — yet the year’s defining feature was not just the size of the peaks, but the way capital repeatedly clustered around a handful of markets, instruments, and business models.
Across the year’s first eleven months, funding totals swung dramatically: January opened at $863 million across 63 rounds but was overwhelmingly debt-driven; June fell to just $52 million across 37 deals; and September reset expectations entirely with a record month powered by Saudi fintech mega facilities.
The net result was a market that looked expansive in headline value while behaving conservatively in underlying risk posture — often choosing structured financing, revenue-linked models, and geographic familiarity over broad-based, late-stage equity appetite.
Debt becomes the ecosystem’s shock absorber
If 2024 was about proving demand, 2025 was about choosing capital structure. Debt financing repeatedly dictated monthly outcomes and, in practice, became the mechanism that let large platforms keep scaling while equity investors stayed selective.
January’s apparent boom was the clearest example: $863 million raised, but $768 million came through debt financing, making the equity picture almost similar to January 2024.
The same pattern returned at larger scale in September, when $3.5 billion was recorded, but $2.6 billion of that total was debt financing — dominated by Tamara’s $2.4 billion debt facility alongside Lendo’s $50 million debt and Erad’s $33 million debt financing.
October then reinforced the playbook: four debt deals accounted for 72 percent of the month’s $784.9 million, led by Property Finder’s $525 million debt round.
By November, more than half the month’s $227.8 million total again hinged on a single debt-backed transaction from Erad.
This isn’t simply ‘debt replacing equity.’ It is debt acting as a stabilizer in a valuation-reset environment: late-stage businesses with predictable cash flows or asset-heavy models can keep expanding without reopening price discovery through equity rounds.
A two-speed geography consolidates around the Gulf
The regional map of venture capital in 2025 narrowed, widened, then narrowed again — but the center of gravity stayed stubbornly Gulf-led.
Saudi Arabia and the UAE alternated at the top depending on where mega deals landed, while Egypt’s position fluctuated between brief rebounds and extended softness.
In the first half alone, total investment reached $2.1 billion across 334 deals, with Saudi Arabia accounting for roughly 64 percent of capital deployed.
Saudi Arabia’s rise was described as ‘policy-driven,’ supported by sovereign wealth fund-backed VC activity and government incentives, with domestic firms such as STV, Wa’ed Ventures, and Raed Ventures repeatedly cited as drivers.
The UAE still posted steady growth in the first half — $541 million across 114 startups, up 18 percent year-on-year — but it increasingly competed in a market where the largest single cheques were landing elsewhere unless the Emirates hosted the region’s next debt mega round.
The concentration became stark in late-year snapshots. In November, funding was ‘tightly concentrated in just five countries,’ with Saudi Arabia taking $176.3 million across 14 deals and the UAE $49 million across 14 deals, while Egypt and Morocco each sat near $1 million and Oman had one undisclosed deal.
Even in September’s record month, the top two markets — Saudi with $2.7 billion across 25 startups and the UAE with $704.3 million across 26 startups — absorbed the overwhelming majority of capital.
A smaller but notable subplot was the emergence of ‘surprise’ markets when a single deal was large enough to change rank order.
Iraq briefly climbed to third place in July on InstaBank’s $15 million deal, while Tunisia entered the top three in June entirely via Kumulus’ $3.5 million seed round.
These moments mattered less for the totals than for what they suggested: capital can travel, but it still needs an anchor deal to justify attention.
Events, narrative cycles, and the ‘conference effect’
2025 also showed how regional deal flow can bunch around events that create permission structures for announcements.
February’s surge — $494 million across 58 deals — was explicitly linked to LEAP 2025, where ‘many startups announced their closed deals,’ helping push Saudi Arabia to $250.3 million across 25 deals.
September’s leap similarly leaned on Money20/20, where 15 deals were announced and Saudi fintechs dominated the headlines.
This ‘conference effect’ does not mean deals are created at conferences, but it does change the timing and visibility of closes.
Sector leadership rotates, but utility wins
Fintech retained structural dominance even when it temporarily lost the top spot by value.
It led January on the back of Saudi debt deals; dominated February with $274 million across 15 deals; remained first in March with $82.5 million across 10 deals; topped the second quarter by capital raised; and reclaimed leadership in November with $142.9 million across nine deals — again driven by a debt-heavy transaction.
Even when fintech fell to ninth place by value in October with $12.5 million across seven rounds, it still remained ‘the most active sector by deal count,’ a sign of persistent baseline demand.
Proptech was the year’s other headline sector, but its peaks were deal-specific. Nawy’s $75 million round in May helped propel Egypt to the top that month and pushed proptech up the rankings.
Property Finder’s debt round in October made proptech the month’s top-funded sector at $526 million. In August, proptech led with $96 million across four deals, suggesting sustained investor appetite for real-estate innovation even beyond the megadeal.
Outside fintech and proptech, the year offered signals rather than dominance. July saw deeptech top the sector charts with $250.3 million across four deals, reflecting a moment of investor appetite for IP-heavy ventures.
AI repeatedly appeared as a strategic narrative — especially after a high-profile visit by US President Donald Trump alongside Silicon Valley investors and subsequent GCC AI initiatives — yet funding didn’t fully match the rhetoric in May, when AI secured just $25 million across two deals.
By late year, however, expectations were already shifting toward mega rounds in AI and the industries built around it, positioning 2025 as a runway-building year rather than a breakout year for AI funding in the region.
Stage discipline returns as valuations reset
In 2025, MENA’s funding landscape tried to balance two priorities: sustaining early-stage momentum while selectively backing proven scale. Early-stage rounds dominated deal flow. October saw 32 early-stage deals worth $95.2 million, with just one series B at $50 million. November recorded no later-stage rounds at all, while even September’s record month relied on 55 early-stage startups raising $129.4 million.
When investors did commit to later stages, the cheques were decisive. February featured Tabby’s $160 million series E alongside two $28 million series B rounds, while August leaned toward scale with $112 million across three series B deals. Late-stage equity was not absent — it was episodic, appearing only when scale economics were defensible.
B2B models remained the default. In the first half, B2B startups raised $1.5 billion, or 70 percent of total funding, driven by clearer monetisation and revenue visibility.
The gender gap remained structural. Despite isolated spikes, capital allocation continued to overwhelmingly favour male-led startups.
What 2025 actually said about 2026
Taken together, 2025 looked like a year of capital market pragmatism. The region demonstrated capacity for outsized rounds, but much of that capacity ran through debt, a handful of megadeals, and a narrow set of markets — primarily Saudi Arabia and the UAE.
Early-stage deal flow stayed active enough to keep the pipeline moving, even as growth-stage equity became intermittent and increasingly selective.
By year-end, the slowdown seen in November read less like a breakdown than a deliberate pause: a market in consolidation mode preserving firepower, waiting for clearer valuation anchors and the next wave of platform-scale opportunities.
If 2025 was about proving the region can absorb large cheques, 2026 is shaping up to test where those cheques will go — especially as expectations build around AI-led mega rounds and the industries that will form around them.
