Middle East

Middle East Economic Outlook

Middle East Economic Outlook

Gulf to outperform

Economic recoveries in the Gulf will continue to gather pace over the coming year on the back of successful vaccine rollouts and higher oil output, and our GDP growth forecasts lie above the consensus. Outside the Gulf, though, recoveries are likely to be slower, particularly in the more tourism-dependent economies. We think a sovereign default in Tunisia is more likely than not, and we have long-standing worries about public debt in Bahrain and Oman as well as Dubai’s corporate debts.

19 October 2021

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

Middle East Economic Outlook

Gulf leads the way in unbalanced recovery

A strong vaccine rollout in the Gulf, particularly in the UAE and Bahrain, and Morocco should mean that containment measures are eased soon, paving the way for sustained economic recoveries. But the rest of the region will lag behind, particularly tourism-dependent economies such as Egypt and Tunisia. Fiscal tightening will also act as a key headwind over the coming years and, overall, we expect that regional GDP will still be around 2% below its pre-virus trend by end-2023.

27 April 2021
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Middle East Economic Outlook

Gulf to lead the recovery

A rapid roll-out of COVID-19 vaccines, combined with rising oil production and higher oil prices, will support a quick recovery this year in the Gulf economies. But other parts of the Middle East and North Africa are likely to take longer to recover their lost ground amid a slower roll-out of vaccines and tight fiscal policy.

20 January 2021

Middle East Economic Outlook

Recovery faces strong headwinds

The economies of the Middle East and North Africa have continued to recover in recent months but, while the Gulf countries seem to have the virus under control, low oil prices mean that fiscal consolidation will continue to hold back growth. In the rest of the region, worsening virus outbreaks will further delay the recovery in key tourism sectors.

21 October 2020

Middle East Economic Outlook

Austerity and tourism to hinder recovery

Oil production cuts, fiscal austerity, the continued spread of the virus, and weakness in key tourism sectors will hold back economic recoveries across the Middle East and North Africa. It will be one of the worst performing EM regions over the next few years. We expect dollar pegs in the Gulf to remain intact, but currencies in North Africa are likely to weaken. Lebanon’s crisis is becoming increasingly disorderly and its economy is likely to shrink by close to a third this year. Elsewhere, we harbour longer-term concerns about debts in Dubai and Tunisia.

28 July 2020

Middle East Economic Outlook

Steepest downturn since the 1980s

Efforts to contain the coronavirus mean that the economies of the Middle East and North Africa will suffer their steepest downturn this year since the early 1980s. Draconian social distancing measures and travel restrictions are likely to have the biggest impact in Egypt, Tunisia, Morocco and Dubai. In the latter, this may cause fresh debt problems. Meanwhile, lower oil production and the collapse in oil prices will push the Gulf economies into recession. We expect dollar pegs to remain intact but there is limited scope for a fiscal response. Once the virus is brought under control, recoveries are likely to be slow going.

Middle East Economic Outlook

Recovery to disappoint even if oil price recovers

Fears about the coronavirus outbreak have weighed on oil prices and clouded the near-term outlook for the Gulf countries. Lower oil prices and a possible deepening of oil production cuts will act as a headwind to growth in early 2020. But even if the virus is brought under control soon, we think that tight fiscal policy means any subsequent economic recovery will disappoint. Outside the Gulf, painful balance of payments adjustments lie in store in several countries. In Lebanon, this will come alongside a debt restructuring. Egypt will remain the region’s bright spot as fiscal and monetary policy are loosened.

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