Generation "Z" Leads Economic Transformation in the Arab World

SadaNews - After fifteen years since the onset of the "Arab Spring" revolutions in 2010 and 2011, a new generation in the Middle East and North Africa emerges with renewed ambitions and expectations. Generation "Z", the most educated, digitally connected, and globally engaged compared to any previous generation, is advocating for a growth model that provides opportunities, justice, and dignity. This engagement reflects a belief that economic transformation can, and must, serve everyone.

The aspirations and priorities of Generation "Z" in the Middle East and North Africa are being shaped amidst rapidly changing economies, expanding digital cultures, and ongoing structural challenges. More precisely, this generation seeks economic security, meaningful work, education aligned with available opportunities, digital empowerment, social inclusion, and social mobility. The generation is striving to realize its aspirations for a better future, such as independence and finding meaning in work, amidst local challenges that include unemployment, weak inclusion, and demands for reform.

Demographic Gap and Economic Pressures

The magnitude of the challenge is well-known. The potential demographic dividend in the Middle East and North Africa remains unfulfilled due to weak job creation. Youth unemployment is among the highest globally, nearing 25% in 2024, nearly double the global average. For young women, unemployment approaches 40%, often higher among university graduates. These figures highlight the urgent need for reform and explain the strong demand for solutions and the growing momentum for inclusive growth agendas across the region.

In October 2023, as the annual meetings of the International Monetary Fund and World Bank concluded in Marrakech, IMF Managing Director Kristalina Georgieva issued a "call to action" that outlined a comprehensive economic and social agenda to promote inclusive growth in the region.

The call targeted five key areas as critical dimensions requiring policy actions to ensure a more resilient and inclusive development model in the Middle East and North Africa: developing a more vibrant private sector, reforming social protection systems, addressing youth unemployment, reducing barriers to women's economic participation, and advancing the path to carbon neutrality.

From Call to Implementation

It is encouraging that inclusive growth is gradually transitioning from being an aspiration to a policy priority. Governments in the region are working to translate these principles into specific reform efforts, reflected in national vision documents and reform plans that outline future roadmaps to enhance opportunities, resilience, and cohesion among various social strata. These initiatives indicate a shared recognition that sustainable growth must be broad-based, led by private sector institutions, and grounded in strong institutional frameworks.

Efforts to promote private sector growth have yielded uneven results, mostly concentrated in the Gulf Cooperation Council countries. In 2024, Saudi Arabia streamlined its investment system and updated public-private partnership regulations to ensure a level playing field between local and foreign investors. Meanwhile, the United Arab Emirates reduced regulatory burdens, enhanced legal clarity and efficiency, and strengthened intellectual property rights protection.

The realm of social protection has seen the most notable progress. Drawing lessons from the Corona pandemic, several countries have invested in more robust social safety nets: Morocco, Saudi Arabia, and Egypt improved the targeting of support for vulnerable groups through unified social registries, while Bahrain, Morocco, and Egypt expanded health coverage to previously excluded groups. Oman launched a comprehensive social protection system that includes benefits for children, individuals with disabilities, and the elderly, whereas the UAE introduced mandatory unemployment insurance and enacted new pension and social security laws for citizens. As emphasized by the IMF, these systems are not merely social policy tools but also macroeconomic stabilizers that support resilience and inclusive growth.

Artificial Intelligence and Economic Transformation

Artificial intelligence presents a powerful opportunity for the Middle East and North Africa. Analysis from the IMF indicates that AI could enhance productivity, transform labor markets, and drive inclusive growth, particularly among the digitally empowered "Z" generation. With the right policies in place, AI can lower barriers for entrepreneurs, improve public services, and create new sectors ranging from fintech to health tech. Additionally, investing in digital infrastructure governance will enable countries to reap the benefits of AI while managing its risks. Governments should also intensify investments in talent and skills, recognizing that human capital is the region's most valuable asset, through strategies focusing on digital culture, technical training, and close alignment with labor market needs.

Furthermore, women's economic participation has progressed through labor market reforms, support for child care, and enhancing workplace flexibility. For example, in 2024, Saudi Arabia equalized the retirement age for men and women and extended maternity leave. Conversely, Oman enacted new labor laws that grant women greater flexibility and protection in the workplace, along with support for child care. Although these reforms remain inadequate to achieve true gender equality in the labor market for women in the Middle East and North Africa, as consistently highlighted by IMF research, bridging gender gaps could yield significant and sustainable gains in productivity, economic growth, and resilience.

A New Generation's Opportunity

The engagement of Generation "Z" should be viewed as a strong asset. This generation does not call for disruption but for inclusion, seeking contribution, innovation, and full participation in the economy. Its aspirations closely intersect with reform priorities already embraced by many governments and supported by the IMF and other partners.

Sustainable progress and stability are built through opportunities. Inclusive growth, driven by reform and investment in emerging technologies such as artificial intelligence, is no longer an abstract concept but has become an increasingly shared national project across the region. If this trajectory continues, supported by political commitment, institutional depth, and regional cooperation, today’s reforms can transform demographic pressure into demographic opportunity. For the youth in the Middle East and North Africa, and for the region as a whole, the path to shared prosperity is closer than ever. The time to act is now.