Activity rebounding as economies re-open

The region’s economies have continued to rebound strongly over the past month as virus outbreaks have largely been contained and restrictions have been lifted. Surveys of sentiment in the services sector have surged and high-frequency mobility data have risen far above pre-pandemic levels. Turkey’s recovery seems to have been particularly rapid since the end of its lockdown in May. Admittedly, there are reasons to be cautious. Israel’s re-opening boost seems to be fading, the Czech auto sector has been hampered by shortages of inputs and the highly transmissible Delta variant has now become the dominant strain in most places. But vaccine coverage is generally high and we think recoveries will make further headway in Q3.
William Jackson Chief Emerging Markets Economist
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Strong COVID-19 vaccine rollouts in most of the Gulf and Morocco mean that remaining virus restrictions should be lifted by the end of this year, providing a boost to recoveries that, in the Gulf, will be turbo-charged by the recent OPEC+ deal to raise oil output. Elsewhere, though, vaccination programmes are progressing more slowly and fresh virus outbreaks will remain a key threat to the outlook. At the same time, many of these economies will suffer as international tourists return only slowly and officials turn back to fiscal consolidation in order to address high public debt-to-GDP ratios.

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