The World Bank has lifted its growth outlook for the region encompassing the Middle East, North Africa, Afghanistan and Pakistan for 2025, though it has trimmed its forecast for next year, citing global economic challenges and political instability, Reuters reported.

The Washington-based lender said it now expected regional GDP growth across Middle East, North Africa, Afghanistan, and Pakistan (MENAAP) economies to average 2.8 percent this year, up from 2.6 percent forecast in its April growth outlook, driven by Gulf states seeing a boost in economic activity following a faster-than-anticipated phasing out of oil production cuts and growth from the non-oil sector.

The report revealed that developing oil exporters are expected to suffer a significant slowdown in the wake of conflict disruptions and downward adjustments in oil production.

Iran's economy was expected to contract 1.7 percent this year and shrink 2.8 percent next year, a sharp reversal from the 0.7 percent expansion the bank had predicted for 2026 in April.