Strong economic performance in the Middle East and Central Asia region is examined against the background of high oil and other commodity prices. Common economic trends and policies among countries in the region are presented, while prospects and policies are reviewed for the coming year in light of the global economic environment. The report looks at the challenges high oil prices create for the authorities and their policy responses. It also discusses the challenges large external inflows create for monetary policy, both for those countries with flexible exchange rate regimes and for those with pegged exchange rates.While the report's outlook for the region is positive, it also identifies several risks reflecting both regional and global factors. Economic policies that would help the region absorb potential shocks and help exploit its potential are highlighted.Readers will find boxes treating specific regional topics, such as financial sector reforms and integration in Maghreb countries, sensitivity of economic developments in oil exporters to oil price changes, and the growth boom in the Caucasus and Central Asia. The report also includes charts, tables, and diagrams pertinent to the discussion, and a statistical appendix.