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The Middle East and North Africa (MENA) region is entering a period of profound transformation, driven by three powerful global megatrends: population ageing, climate change, and technological disruption. These forces are reshaping economies and societies worldwide¡ªbut in MENA, their impact is unfolding amongst important structural challenges, including anemic economic growth, debt distress, fragility and rising income inequality.

MENA countries see themselves as young, yet the region will undergo a demographic transition more rapidly than any other over the next three decades, due to rising life expectancy and declining fertility rates. At the same time, MENA is one of the most climate-vulnerable regions in the world¡ªfacing rising temperatures, water scarcity, sea-level rise, and disaster risk. Finally, there remains much uncertainty on how technological change, including the rise of AI, could disrupt labor markets, education systems, and social contracts, or bypass countries with limited digital readiness.

ľ¹ÏÓ°Ôº¡¯s new flagship report examines these megatrends, and argues that their impacts are not fixed destinies¡ªthey can be shaped through smart, inclusive, and future-ready policy choices, including in the health, education and social protection.

Through the lens of strengthening healthy, productive, and secure lives, the report offers a policy framework on how governments can prepare for megatrends, through forward-looking programs, better coverage of foundational human development services, institutional reforms, and improved financing of HD sectors.

Human Development reforms, explored in-depth in the , can:

• Shape the impact of demographic ageing through better management of noncommunicable disease, lifelong learning, pension reforms and well-managed migration.
• Smooth the pace of demographic change, while creating jobs, through early childhood development, long term care, women¡¯s economic empowerment and population services.
• Mitigate and adapt to impacts of climate shocks through adaptive social protection and smart infrastructure, while harnessing opportunities from the green transition through development and technology adoption; and
• Harness the benefits of digitalization and AI, including via platform work and AI-enabled service delivery, by investing in , appropriate labor market regulations, and digital readiness.

To deliver on this vision, human development agencies will need to strengthen their capacity, accountability and resilience. The explores in-depth the current governance gaps and proposes a number of incremental reforms to achieve effective coverage.

Finally, MENA countries need to reverse declining or stagnant financing for HD sectors across most of the Region. The report proposes several practical solutions to improve spending efficiency, coordination of financing sources, and greater revenue collection that can be reinvested in people¡¯s capabilities and avoid greater future costs. These are explored in depth in the .

Together, these components offer a policy roadmap to support inclusive, sustainable development in a region where global trends meet local complexities. By anticipating and preparing for what lies ahead, MENA countries can turn the risks of today into the opportunities of tomorrow.

• Human capital development in countries across the Middle East and North Africa (MENA) region lags behind other regions with similar income levels, both causing and reflecting slower economic growth.

• The region faces three major transitions¡ªrapid ageing, climate change, and technological advancement¡ªthat pose risks to future human capital and economic resilience.

• Ageing populations, low retirement ages, and unhealthy ageing increase pressure on pension systems and healthcare, requiring reforms to support longer, healthier working lives.

• Countries in the Middle East and North Africa are also highly vulnerable to climate stress, which threatens human capital through extreme weather, water scarcity, and coastal erosion, but the green transition offers opportunities if the workforce develops relevant skills.

• Labor markets are less exposed to automation and AI due to high informality and uneven digital readiness, risking missed productivity gains and job displacement for low-skilled workers.

• These megatrends risk worsening the challenges faced by countries experiencing protracted conflicts and fiscal distress, unless future-fit human development policies are adopted.

• Investing in early childhood, care economies, and green and digital skills is essential to raise youth and women¡¯s employment and adapt to evolving labor markets.

• As the report lays out, governments in the region can take further action to reform fiscal systems, prioritize productive human development investments, and redesign tax-benefit systems to address rising inequality and support long-term progress.

• Moreover, effective coordination of aid, expansion of social registries, and inclusive partnerships with private and non-governmental sectors are vital for resilient service delivery, especially in fragile contexts.

• Given the heterogeneous nature of countries in the region, the report concludes that prioritization is key with reforms tailored to country needs. For instance, GCC countries can focus on ageing and digitalization while middle income countries may want to prioritize fiscal management and proactive investment. For lower income countries or countries facing conflict and fragility, priority should be given to preserving human capital and institutional capacity.

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