Political conditions in Egypt have continued to improve in recent months, but the real economy is still struggling. Industrial production has stagnated and strains in the balance of payments persist. Fortunately, the new government is making progress on agreeing financial assistance from the IMF. Elsewhere in the region, the latest data suggest that after a stimulus-fuelled boom over the past year, the Gulf economies are now starting to slow. All told, softer growth in the Gulf and continued weakness in North Africa, mean that Middle East GDP will probably grow by around 3.8% this year – down from 5.0% in 2011. Looking ahead, we expect growth to slow further to around 3.5% or so in 2013.
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