Middle East Socioeconomic Overview

Report: March 2025

With the restart of the war in Gaza, deaths by the hundreds resume. Photo credit: BBC.com

1. Table of Acronyms

2. Introduction

During this month, the war in Gaza restarted and accordingly, tension in the region reignited. Now, rumors of further escalation in the coming months are impacting the general economic wellbeing of the region and investors are a bit cautious whether to proceed further or not. Analysts warn that the region is heading toward a boiling point in which either regional powers will clash heavily or one will bend to the will of the other through compromise or diplomacy. Either way, we are nearing a critical period in global politics, and the period ahead will probably have all the answers.

3. The Socio-Economic Situation

Egypt

During the month of March, the International Monetary Fund approved the disbursement of a $1.2 billion tranche to Egypt following the completion of the fourth review of its economic reform program under an $8 billion agreement with the fund, after allowing Egypt to waive its primary budget surplus target. The IMF statement said the Executive Board also approved Egypt's request for an arrangement under the Resilience and Sustainability Facility, enabling it to access approximately $1.3 billion. The IMF showed flexibility with Egypt by dropping the primary budget surplus target from 4.5% to 4%, allowing additional fiscal space to expand social protection programs. The fund noted that inflation fell to 12.5% in February 2025, according to the Central Agency for Public Mobilization and Statistics, and core inflation fell to 10%, which supports the Central Bank's Monetary Policy Committee's decision to reduce interest rates. The IMF also pointed the stability of the Egyptian pound's exchange rate against the dollar, the significant increase in the Central Bank's foreign exchange reserves, which reached $47.4 billion in February 2025, and the rise in net foreign assets to $8.7 billion in January 2025. Analysts also weighed in on what is happening in Egypt. According to them, a downward trend in interest rates will support the revitalization of the Egyptian economy by stimulating demand for credit, which will positively impact investment and production rates and contribute to the creation of new job opportunities, leading to a decline in the unemployment rate, an increase in the size of the gross domestic product, and the achievement of targeted growth rates.

The IMF rallying to help Egypt is the result of the Economic challenges which have increased following a sharp decline in Suez Canal revenues due to regional tensions in the Gaza Strip and a decline in natural gas production. Also, data from the Central Agency for Public Mobilization and Statistics showed that annual urban consumer price inflation in Egypt fell by nearly half in February, as a result of the financial reforms undertaken as part of the financial support agreement with the IMF. Annual urban consumer price inflation fell to 12.8 percent in February from 24 percent in January. Thanks to the IMF's approval of the fourth tranche and an arrangement under the Resilience and Sustainability Facility, analysts and bankers expect foreign investors to significantly renew their holdings in approximately $20 billion of Egyptian treasury bills maturing this month. Many of these bills were purchased by foreign investors, which is an indicator that Egypt can still attract money into the country.

Jordan

According to S&P Global, Jordan’s economy is forecast to grow by 2.7 percent in 2025 as tourism recovers and trade with Syria and Iraq starts to rise gradually. Also, growth is forecast to gradually strengthen towards 3 percent by 2026-2027 as the economy readjusts from the shocks suffered due to regional geopolitical developments. However, this number is determined by whether or not there will be a new conflict in the area. A stabilizing factor that may buffer Jordan from unforseen events is the US disbursement of $845 million in direct budgetary support to Jordan which equates to about 1.5 percent of Jordan’s GDP. Another factor which will protect the country is the fact that it retains access to a $1.2 billion loan from the International Monetary Fund and a $5.7 billion assistance from the World Bank. The European Union has also announced a €3 billion aid package for 2025-2027. From his end, Central Bank Governor Adel Sharkas noted the growth is due to the partnership between the government and the banking sector which constitutes a fundamental pillar for building a more flexible economy capable of adapting to regional and international changes. It is also a key supporter of the royal vision, which seeks to enhance the investment environment, raise Jordan's competitiveness, and consolidate its position as a leading financial and banking hub in the region. He pointed out the growth is also the result of the inflation rate reaching 2.2 percent during the first two months of the current year, with expectations that it will stabilize at 2 percent in 2025, ensuring the stability of purchasing power and the competitiveness of the national economy. Meanwhile, the dollarization rate decreased to 18.4 percent, indicating increased confidence in the Jordanian dinar and the banking sector, as well as a stable macroeconomic environment.

Iraq

Iraq agreed to double its electricity imports from Turkey via the interconnection line to 600 megawatts, according to the Iraqi News Agency. This move coincides with the US administration's decision in recent days to end the waiver granted to Iraq to import electricity from Iran. Ministry spokesman Ahmed Moussa said that Iraq continues to import 54 megawatts from Jordan, noting that there are plans to increase the amount to 150 megawatts to cover various regions of the country. He added that the ministry is also seeking to complete the electrical connection with the Gulf before summer, which will enable the transfer of 500 megawatts from Kuwait to the Iraqi city of Basra. He also noted that the Iraqi Ministry of Electricity is working to reduce pressure on the national grid through plans to convert 543 government buildings to solar energy systems. As for the Turkish, The Iraqi Ministry of Oil reported that Deputy Prime Minister for Energy Affairs and Minister of Oil Hayan Abdul-Ghani al-Sawad received Turkish Minister of Energy and Natural Resources Alparslan Bayraktar and his accompanying delegation. In a statement, the ministry explained that the meeting discussed bilateral relations between the two countries in the fields of oil, gas, and energy. The meeting was attended by the Undersecretary for Extraction Affairs, the General Managers of the Oil Marketing Company, the North Oil Company, and the Economic and Legal Departments. Another bilateral relationship which seems to be growing is that with Germany. The German Embassy in Baghdad announced that the volume of trade between Iraq and Germany in 2024 reached approximately 1.7 billion euros. Roland Westbe, Deputy Head of Mission of the German Embassy in Iraq, explained that Germany is keen to increase its trade with Iraq in the coming period.

Lebanon

So far, the newly appointed government has yet to demonstrate any tangible success in what its PM has promised a new start. Even the IMF has admitted the country still have not formulated a comprehensive transparency-based strategy that can allow it to pull Lebanon from the stagnation Lebanon is in. In other words, up until now, there no plans for fiscal and debt sustainability as well as a restructuring of the financial sector, reforms to governance and state-owned enterprises. Nevertheless, the government made its first step in that direction by appointing banker and wealth management expert Karim Saïd as the new governor of the Central Bank on the 27th of March. The governorship of the Central Bank of Lebanon is a sensitive position in a country that needs to implement important reforms demanded by the international community. Saied is expected to contribute to restructuring the commercial banking sector and addressing losses estimated at $72 billion resulting from Lebanon's financial collapse, which has impoverished most Lebanese and devastated the local currency. The Lebanese press published some information about the new governor of the bank, stating that he is a prominent figure in the field of banking and financial investments, with a professional career that combines academic experience with practical achievements. His experience spans banking and investment activities, and he has contributed significantly to privatization and financing processes in the Middle East. He also played a key role in developing economic solutions to crises in Lebanon. Lebanese President Joseph Aoun, who swore an oath that he will put an end to the corruption in the country, said earlier in March that discussions with the IMF emphasized the need to finalize a loan program before the summer of 2025. Therefore, this may be an attempt by the President to shake things up, as not much has been done so far.

Palestine

A woman reacts over the body of a person killed during overnight [Israeli] army airstrikes across the Gaza Strip, at the Al-Ahli hospital in Gaza City, Tuesday, March 18, 2025. (AP Photo/Jehad Alshrafi)

During this month, the world faced the terrible news of the Gaza war restarting after a period of a promising ceasefire. As such, previous forecasts of the Palestinian economy contracting by 20% are once being taken into consideration with the ongoing war of extermination in the Gaza Strip and the attacks and measures carried out by the occupation army and settlers in the West Bank. According to official Palestinian estimates and others issued by the World Bank, the Palestinian Authority's financial revenues have deteriorated due to increased [Israeli] deductions from Palestinian tax revenues (clearance), which have been the most important source of financial revenue for decades. However, for years, the occupier has been deducting tens of millions of dollars a month from the revenues, equivalent to what the Palestinian Authority pays to the families of prisoners and martyrs. It also periodically suspends financial transfers to the Palestinian Authority as a means of political pressure or punishment. In this context, the director of the Jenin Chamber of Commerce, Muhammad Kamil, confirmed that the governorate is experiencing a difficult economic situation, exacerbated by the ongoing invasion since the beginning of 2025. Kamil added that the occupation has used closures as a recurring form of collective punishment, starting with intermittent closures of the checkpoint since 2020, followed by a prolonged closure lasting 15 months, and finally a complete closure on October 7. This has resulted in daily losses estimated at approximately 30 million shekels, a massive increase in unemployment rates exceeding 60%, and the closure of dozens of shops, particularly in Jenin camp, where not a single shop is operating. Kamil emphasized that the city is suffering from "economic paralysis," with no means to revive the economy, and government interventions or international aid are almost nonexistent. He noted that the Chamber of Commerce has called on the government to provide economic relief, such as extending property tax and professional license discounts for the private sector, but the response has been partial so far.

Syria

A recent UN report stated that Syria has lost approximately $800 billion in GDP over the course of 14 years of conflict. The report indicated the need to rapidly increase the rate of economic growth over the next decade to ensure recovery. According to the report, the 14-year conflict in Syria has set back economic and social progress in the country by about 40 years. He explained that during the war years, Syria's GDP declined by 50 percent, the poverty rate rose from 33 percent before the war to 90 percent today, while the extreme poverty rate reached 66 percent. The report noted that 75 percent of the population needs humanitarian assistance, including healthcare, education, jobs, food security, water, energy, and shelter. It noted that energy production in the country has declined by 80 percent, and 70 percent of power plants have been damaged, reducing the national grid's capacity by 75 percent. According to the report, the Syrian economy will need 55 years to reach its pre-war levels if the current growth rate of 1.3 percent continues. Another development which may not be in Syria’s best, is the fact that the Brussels conference held on March 17, witnessed a decline in financial pledges to Syria compared to previous years. Last year, the conference provided pledges worth 7.5 billion euros worldwide ($8.15 billion), while this year the European Union pledged approximately 5 billion euros ($5.43 billion). Although some commentators had a negative outlook on this, many believe that things are still positive for Syria given that Syria's decreased share amounts to approximately $2.5 billion in aid, which will be overseen by international organizations and the Syrian government. In other words, there is no doubt that the support provided by the Brussels Conference will aid in rebuilding the health and sanitation infrastructure, restructuring state institutions, and attracting refugees.

The new government still faces several priorities for rebuilding the economy, ranging from building confidence and political and security stability to comprehensive reconstruction of war-damaged infrastructure. Despite these priorities, concerns remain about how to overcome economic obstacles, such as the impact of sanctions on the Syrian economy and the ability to attract investment under current circumstances. Luckily, Syria is attracting a drizzle of further foreign help that can aid in its recovery process. Qatar announced plans to supply Syria with two million cubic metres of natural gas per day (cbmd) via the Arab Gas Pipeline that passes through Jordan, marking the first major initiative aimed at temporarily improving the country’s electricity supply following the ouster of the Syrian regime. This is sufficient to generate 400 megawatts (MW) of electricity daily at the Deir Ali power plant, increasing total production by around 27 percent from 1500 MW to 1900 MW. This should at least benefit Syria which has been suffering from an energy crisis during the past years, and may be factor to attract foreign companies willing to invest or expand in Syria.

Cyprus

According to the Central Bank of Cyprus (CBC), Cyprus’ GDP is expected to grow by 3.2 per cent in 2025, slightly lower than what was reported back in 2024. Beyond the current year, the CBC reported that the Cypriot economy is projected to grow by 3.1 per cent annually during the period from 2026 to 2027. This assumption is due to expected increase in domestic demand, with a smaller contribution from external demand, considering the heightened uncertainty in the global geopolitical and trade environment. As for private consumption which will support domestic demand as a result of rise in real disposable income and the continued resilience of the labour market. Unemployment decreased to below 5 per cent of the labour force in 2024, compared to 5.8 per cent in 2023. Unemployment is forecasted to decrease further to 4.7 per cent in 2025-2026 and to 4.6 per cent by 2027, reaching conditions of full employment. However, the CBC did caution the growth rate of private consumption is projected to slow down in the coming years. Nevertheless, it will continue it will remain a key driver of economic growth, especially when significant contributions to domestic demand are expected from ongoing large non-residential private investments, infrastructure projects supporting the digital and green transition, and other reform projects under the Recovery and Resilience Plan. The construction sector, technology sector, and increased exports of intellectual property services are also expected to support this growth. Furthermore, the growth rate is bolstered by the rise in turnover in the financial and professional services sector, partly due to the diversification of relevant export markets, as well as the ongoing positive contribution of the shipping sector. Another thing the CBC noted, is the decline of Core inflation, which excludes energy and food, compared to 2024 (2.6 per cent), reaching 2.2 per cent in 2025 and 2.0 per cent during 2026-2027.

4. The Humanitarian Situation

Egypt

· The United Nations refugee agency declared the lack of funding was forcing it to suspend vital aid to refugees in Egypt, including medical care for many fleeing war-torn Sudan.[1]

· According to the report in the Lebanese Al-Akhbar newspaper, Egyptian President Abdel-Fattah el-Sissi has informed other Arab leaders that he is willing to temporarily relocate half a million residents from Gaza to northern Sinai in a designated city as part of the reconstruction of the Gaza Strip. [2]

Jordan

The UNHCR states that there are currently 589,159 registered refugees in Jordan up until March 25.

The proportion of Syrian displaced people registered within the UNHCR for March, are distributed as follows:

-167,005 in Amman Governorate (29.9%)

-143,337 in Mafraq Governorate (25.7%)

-107,477 in Irbid Governorate (19.2%)

-84,082 in Zarqa Governorate (15.1%)

-14,364 in Balqa Governorate (2.6%)

-10,948 in Madaba Governorate (2%)

-7,015 in Jarash Governorate (1.3%)

-7,005 in Karak Governorate (1.3%)

-8,265 in Maan Governorate (1.4%)

-4,617 in Ajlun Governorate (0.8%)

-3,633 in Aqaba Governorate (0.7%)

-1,149 in Tafilah Governorate (0.2%)

-277 in other (0.0%)

The Embassy of Japan, the Royal Medical Services (RMS) and UNOPS came together at the King Hussein Medical Centre to mark the completion of the project which provided critical medical equipment to the RMS hospitals and to announce a new assistance in support of Jordan’s healthcare system.[3]

Iraq

The UNHCR states that there are currently 340,358 registered refugees in Iraq. Of those, 90,800 live in camps.

The proportion of refugee people (non-camp 249239) registered within the UNHCR up until the beginning of March, are distributed as follows:

-120,881 in Erbil (48.5%)

-40,906 in Dahuk (16.4%)

-32,219 in Sulaymaniyah (12.9%)

-2,473 in Ninewa (1%)

-13,206 in Baghdad (13.7%)

-4,006 in Kerbala (1.6%)

-3,707 in Najaf (1.5%)

-2,677 in Kirkuk (1.1%)

-2,292 in Anbar (0.9%)

-5,981 in other areas (2.4%)[4]

UN Women and United Nations Population Fund (UNFPA) announced a Turkish Cooperation and Coordination Agency (TİKA) distributed food parcels to 300 families living in refugee camps in the Amiriyah al-Sumud district of Iraq’s Anbar province.[5]
UNAMI (United Nations Assistance Mission for Iraq) expresses concern at reports of attacks on Syrian workers in Iraq, and welcomed the Iraqi Government’s immediate and urgent actions. [6]
Germany/KfW and UNOPS sign a new agreement in support of local communities in Sinjar, Iraq.[7]

Lebanon

{UNHCR Lebanon did not update its data for March}

Since the beginning of January the number of registered Syrian refugees in Lebanon is 755,426.

Refugees in Lebanon are distributed as follows:

-282,744 in Bekaa (37.4%)

-216,781 in North Lebanon (28.7%)

-172,096 in Beirut (22.8%)

-83,805 in South Lebanon (11.1%)[8]

Norway is now entering into a new partnership with the LEGO Foundation and UNICEF to get children in Lebanon back into the classroom. Norway will be providing NOK 20 million to the program over a four-year period.[9]
The UN UNIFIL Indian peacekeepers launched a major vaccination campaign to inoculate tens of thousands of livestock animals against foot and mouth disease in 15 villages within their area of responsibility in south-eastern Lebanon.[10]
A new project worth 500,000 USD titled “Preventing Maternal and Reproductive Health Morbidities and Mortalities Among Crisis-Affected Populations, IDPs, Syrian Refugees, and Host Communities in Lebanon” has officially launched. Funded by the Government of Japan and implemented by IPPF Member Association, SALAMA (The Lebanese Association for Family Health), this project aims to enhance and sustain high-quality sexual and reproductive health (SRH) services for Lebanon’s crisis-affected populations.[11]
The Honourable Mélanie Joly, Canadian Minister of Foreign Affairs and International Development, announced $29.7 million in funding to provide critical assistance in Lebanon, including food, medical and health services, shelter and clean water.[12]

Syria

The Syria Recovery Trust Fund (SRTF) in collaboration with Near East Foundation (NEF), have commenced loan disbursements under the "Revolving Credit Fund to Support Livelihoods Recovery in Northwest Syria – Phase II". Also it has signed with UNDP a Financing Agreement to Boost Sustainable Livestock Farming. [13]
Norway will contribute at least NOK 400 million (approximately € 35 million) to Syria this year. The funds will finance humanitarian aid and the reconstruction of infrastructure, including water supply, electricity, and healthcare.[14]
The UK pledged 160 million Euros in critical aid the humanitarian conference in Brussels.[15]
In a demonstration of the EU ongoing support, Commission President Ursula von der Leyen announced that the EU is committing nearly €2.5 billion for 2025 and 2026 to aid Syria's transition process and the country's socio-economic recovery.[16]
Save the Children is providing aid to 4,000 displaced families in Latakia, including 12,000 blankets and 4,000 ready-to-eat rations, such as canned tuna and meat, biscuits, and energy bars, through local partners, including Syria Relief and Action for Humanity.[17]

Cyprus

Cyprus’s state broadcaster claimed that the bodies of at least seven people have been recovered off Cyprus after authorities mounted a major search and rescue operation following the capsizing of a boat carrying refugees.[18]

[1] New Arab, March 26, 2025, https://www.newarab.com/news/unhcr-suspends-aid-refugees-egypt-over-lack-funding

[2] www.al-akhbar.com

[3] OCHA, March 5, 2025, https://reliefweb.int/report/jordan/japan-and-unops-strengthen-operational-capacity-royal-medical-services-jordan-enar

[4] https://data2.unhcr.org/en/situations/syria/location/5

[5] OCHA, March 21, 2025, https://reliefweb.int/report/iraq/tika-supports-families-refugee-camps-iraq

[6] OCHA, Mar 13, 2025, https://reliefweb.int/report/iraq/unami-expresses-concern-reports-attacks-syrian-workers-iraq-welcomes-iraqi-governments-immediate-and-urgent-actions-enarku

[7] OCHA, Mar 18, 2025, https://reliefweb.int/report/iraq/germanykfw-and-unops-sign-new-agreement-support-local-communities-sinjar-iraq-enar

[8] UNHCR, Oct 28, 2024, https://data2.unhcr.org/en/situations/syria/location/71

[9] OCHA, March 2, 2025,https://reliefweb.int/report/lebanon/norway-strengthen-educational-support-children-lebanon

[10] UNIFIL, March 15, 2025, https://reliefweb.int/report/lebanon/peacekeepers-launch-animal-vaccination-campaign-boosting-local-shepherds-livelihoods-enar

[11] OCHA, Mar 13, 2025, https://reliefweb.int/report/lebanon/ippf-lebanon-project-receives-500000-japan-protect-maternal-and-reproductive-health

[12] OCHA, March 21, 2025, https://reliefweb.int/report/lebanon/canada-provides-funding-humanitarian-needs-lebanon-0

[13] OCHA, Mar 18, 2025, https://reliefweb.int/report/syrian-arab-republic/syria-irc-urges-increased-support-brussels-conference-fails-close-humanitarian-funding-gap

[14]OCHA, Mar 17, 2025, https://reliefweb.int/report/syrian-arab-republic/norway-contributes-nok-400-million-syria

[15] OCHA, Mar 17, 2025, https://reliefweb.int/report/syrian-arab-republic/uk-pledges-ps160-million-support-syrias-recovery-and-stability-post-assad-era-enar

[16] OCHA, March 17, 2025, https://reliefweb.int/report/syrian-arab-republic/eu-pledges-eu25-billion-support-syria-and-region

[17] OCHA, Mar 17, 2025, https://reliefweb.int/report/syrian-arab-republic/syria-nearly-4000-displaced-families-receive-food-and-blankets-following-deadly-clashes-latakia

[18] Alzajeera, Mar 17, 2025,https://www.aljazeera.com/news/2025/3/17/cyprus-recovers-at-least-seven-bodies-after-refugee-boat-capsizes

A New Sykes–Picot in the Making

Middle East Socioeconomic Overview

Report: March 2025

1. Table of Acronyms

2. Introduction

3. The Socio-Economic Situation

Egypt

Jordan

Iraq

Lebanon

Palestine

Syria

Cyprus

4. The Humanitarian Situation

Egypt

Jordan

Iraq

Lebanon

Syria

Cyprus

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