The International Monetary Fund’s (IMF) Regional Economic Outlook Update released Tuesday projects 3.5% growth in the Middle East and North Africa region next year.

IMF’s Middle East and Central Asia Department Director Masood Ahmed told journalists today, "Although the region’s countries have made progress in reforms, there is still more to be done." Conflicts in the region are undermining economic activity and dampening confidence, he said.

According to the IMF, the region’s oil-exporting countries’ growth reached around 2.5% in 2014, and will remain at this level in 2015.

IMF expects 3.5% growth next year, assuming security stabilises and oil production gains from exports outside the GCC.

Even though oil prices halved between July 2014 and April 2015, oil-exporting countries have managed to keep growth steady by using the financial cushions that they have built up over the past decade, Ahmed said.

The report suggests the region’s countries should continue to use gains from lower oil prices to strengthen cushions for dealing with future unexpected shocks and to reduce public debt.