Growth in the Middle East and North Africa is projected to remain subdued in 2019, at 1.3 percent, the World Bank said in its latest June report.

Regional growth is projected to pick up to around 3 percent a year in 2020-21, supported by capital investment and policy reforms. Risks to the outlook are tilted to the downside, including geopolitical tensions, reform setbacks, and a further escalation of global trade tensions.

Growth in the region is projected to decrease to 1.3 percent in 2019 and to pick up to about 3 percent in 2020-21, according to the report.

"The projected pickup over the next two years is largely driven by an assumed rebound in activity in Iran as the impact of recent U.S. sanctions wanes, and by an expected ramping up of infrastructure investment in GCC economies," the World Bank said.

"Growth in the rest of the region is projected to remain stable, with broadly resilient domestic demand in key economies partly offset by slowing external demand growth. Medium term growth prospects are contingent on geopolitical tensions remaining contained and regional spillovers from conflict-ridden economies remaining limited."

For oil exporters, growth in 2019 is expected to decrease slightly to 0.7 percent, with strengthening non oil activity only partly offsetting constraints on oil sector activity.

Growth is projected to pick up to 2.9 percent in 2020 before tapering slightly in 2021. The rebound in 2020 is partly driven by rising growth in Iraq as oil production increases.

Growth in oil importers is expected to rise steadily from 3.9 percent in 2018 to 4.7 percent in 2021, led by expansions in the larger economies.

Growth prospects in smaller oil importers (Jordan, Lebanon, West Bank and Gaza) are highly uncertain, however, as business and consumer confidences are contingent on anticipated reforms or foreign financial assistance. Banking sector weakness and high public debt form significant constraints on growth in smaller oil importers.

Risks remain tilted to the downside for both oil exporters and importers, but for different reasons. Geopolitical risks are elevated in some oil exporters, while political challenges remain high in oil importers. Peace remains fragile in conflict affected economies (e.g., uncertainty over the UN coordinated truce in the Yemen war), and economic and social mobility of refugees (e.g.,Syria) are still highly constrained.

Further amplification of U.S.-Iran tensions would pose risks for the region’s economies other than Iran, the report warned.

Concerning Lebanon, economic prospects are contingent upon successful policy resolution in the newly-formed government, with a slight growth increase in 2019 from 0.2 to 0.9 percent.

Growth in Lebanon is expected to rise to 1.3 and 1.5 percent in 2020 and 2021, respectively.