Unlocking Sustainable Private Sector Growth in the Middle East and North Africa: Evidence from the Enterprise Survey

Section 1
Introduction: Economic performance and
the business environment 
MENA countries face a challenging macroeconomic context, characterised by persistently low GDP 
per capita growth. Figure 1.1 presents evidence on GDP per capita growth since the global financial crisis 
of 2007-09. On average, GDP per capita grew by only 0.3% a year in the six economies that are the focus 
of this report: Egypt, Jordan, Lebanon, Morocco, Tunisia, and the West Bank and Gaza. That compares 
with 1.7% in the average middle-income country and 2.4% in the developing economies of Europe and 
Central Asia. In the 13 years since the crisis, the accumulated growth in GDP per capita in benchmark 
countries is 20 percentage points higher than in the average MENA economy. But this observation is
subject to several caveats. Firstly, the average masks significant heterogeneity across countries. At 2.1% 
a year, GDP per capita growth in Egypt is high and the performance of Morocco compares favourably to 
the benchmarks. Secondly, negative per capita growth in Jordan and Lebanon is at least partly related 
to high population growth, which reflects the large number of refugees from Syria that both countries 
host. To the extent that the refugee populations are supported by the international community, the GDP 
figures may not fully reflect the experience of the native populations. 

Public debt in MENA countries has increased considerably over the last decade. Almost all countries 
have seen a substantial increase in the debt-to-GDP ratio following the global financial crisis and the Arab 
Spring (see Figure 1.2). Subsequent consolidation efforts were aided by International Monetary Fund (IMF) 
programmes. But only in Egypt did the authorities manage to achieve a reversal in the debt-to-GDP ratio

Lebanon benefited from strong nominal growth in the aftermath of the crisis, but a lack of willingness 
on the part of the political class to tackle longstanding structural weaknesses led to the country’s first 
default on sovereign debt in 2020. The fiscal policy response to contain the economic damage of the 
coronavirus pandemic has further increased already high debt-to-GDP ratios. Overall, debt-to-GDP ratios 
in 2020 were on average 24 percentage points higher than in 2008.

Unlocking Sustainable Private Sector Growth in the Middle East and North Africa: Evidence from the Enterprise Survey