The combination of deepening problems in advanced economies and the legacy of political unrest earlier this year has heightened the risk of fiscal and balance of payments crises in the resource-poor Arab economies. As a result, we think that these countries, and Egypt in particular, are likely to need financial assistance next year. In contrast, this years’ high oil price coupled with increased production will ensure healthy revenues in the oil-rich Gulf Cooperation Council (GCC) States. Therefore, government spending should cushion these economies from the negative impact of the global slowdown on oil demand and prices. Overall, we expect the Middle East and North Africa (MENA) region’s GDP to slow to 3.3% in 2012, from 3.8% this year.
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