Middle East

Middle East Economics Weekly

Qatar gas, Morocco FX purchases, Tunisian turmoil

The continued rise in global gas prices will provide a substantial boost to Qatar's export revenues and provide scope for policymakers to loosen the purse strings to support the economic recovery. Elsewhere, moves by Morocco’s central bank suggest that the currency could appreciate further. Finally, Tunisia’s President Kais Saied's moves on Wednesday add to signs that his power grab is leading to a one-man rule. This will reinforce concerns about the future of Tunisia’s democracy and the government’s capacity to service its debts.

23 September 2021

Middle East Economics Update

Dubai World Expo: near-term boost, debt risks linger

The long-awaited World Expo in Dubai will get underway next Friday and while there is likely to be some boost to the economy, this will be short lived. What’s more, as we have long warned, the Expo could leave high rates of overcapacity in Dubai’s real estate and hospitality sectors in its wake that could ultimately re-ignite concerns about the debts of the Emirate’s government-related entities.

23 September 2021

Middle East Economics Update

Central Bank of Egypt keeps rates on hold for now

The Central Bank of Egypt (CBE) kept interest rates unchanged at Thursday’s MPC meeting amid rising price pressures. However, we still think that inflation will slow in the final months of this year and re-open the door for the CBE to resume its easing cycle.

17 September 2021

Key Forecasts

Table 3: GDP & Consumer Prices (% y/y)

Share of

World 1

2010-19

Ave.

GDP

Consumer Prices

2019

2020e

2021

2022

2023

2019

2020

2021

2022

2023

Saudi Arabia

1.2

3.5

0.3

-4.1

4.8

6.3

3.0

-2.1

3.4

3.3

1.5

1.3

Egypt

0.9

3.9

5.7

1.5

5.0

5.8

5.8

9.2

5.2

4.8

5.0

5.0

UAE

0.5

2.8

3.4

-6.3

2.3

5.5

1.0

-1.9

-2.1

0.0

1.5

1.3

Algeria

0.4

2.8

0.8

-4.9

-0.5

3.8

1.8

2.0

2.4

5.0

6.0

5.5

Morocco

0.2

3.8

2.6

-6.3

9.0

4.0

3.8

0.3

0.7

1.5

2.0

1.3

Qatar

0.2

7.4

-0.4

-3.9

1.5

4.0

2.3

-0.6

-2.6

2.3

3.3

2.5

Kuwait

0.1

1.1

0.4

-8.9

2.5

8.8

1.0

1.1

2.1

3.3

2.3

2.3

Oman

0.1

4.1

-0.8

-6.0

0.3

4.8

3.3

0.1

-0.8

1.8

1.3

0.8

Tunisia

0.1

2.3

1.0

-8.6

3.5

4.3

3.8

6.7

5.6

5.5

6.3

5.8

Jordan

0.1

3.2

2.5

-1.6

2.5

4.0

3.5

0.8

0.3

2.3

1.5

1.3

Lebanon

0.1

3.4

-6.7

-40.0

-20.0

12.0

2.5

2.9

84.9

185.0

140.0

65.0

Bahrain

0.1

3.8

1.8

-5.1

2.8

3.8

2.5

1.0

-2.3

-0.5

1.8

1.5

Mid. East & North Africa2

4.0

3.7

1.8

-4.4

3.3

5.7

3.3

1.5

2.2

3.1

3.0

2.8

Sources: Refinitiv, Capital Economics. 1) % of GDP, 2020, PPP terms (IMF estimates). 2) Regional inflation aggregate excludes Lebanon.


Qatar gas, Morocco FX purchases, Tunisian turmoil

Middle East Economics Weekly

26 September 2021

Our view

COVID-19 vaccination programmes in the Gulf continue to lead the way in the region and most containment measures have now been lifted. This, combined with the decision by OPEC+ to further raise oil output quotas, will strengthen recoveries in the Gulf and our GDP growth forecasts are generally above the consensus. The UAE will be also supported by the start of the World Expo in October, although we remain concerned that overcapacity in the hospitality sector will be exacerbated once the event rolls out of town. This could make it more difficult for Dubai’s government-related entities to service their large debts. Outside of the Gulf, Morocco’s strong vaccine rollout and a rebound in agricultural production will support robust growth over the next couple of years. But this will be an exception among economies outside of the Gulf, where slow vaccine programmes mean that restrictions will remain in place for longer and hold back recoveries.

Latest Outlook

Middle East Economic Outlook

A two-speed recovery

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.

21 July 2021