Growth across the Middle East and North Africa has slowed further this year, but it should recover in 2018 and 2019. In the Gulf, the drag on GDP growth from this year’s oil production cuts will fade. Nonetheless, the recovery will be slow-going. Fiscal austerity looks set to continue and dollar pegs mean that local interest rates will need to rise in line with those in the US. Meanwhile, the diplomatic crisis between Qatar and regional powers looks set to drag on. The early evidence suggests that Qatar’s economy has taken a hit, but the worst of the impact may have already passed and economic spillovers into the rest of the region are likely to be limited. Elsewhere, Egypt’s economy should strengthen as inflation and interest rates fall back more quickly than most expect. For the MENA region as a whole, we expect growth to pick up from an eight-year low of 1.3% in 2017 to 2.3-2.5% in 2018-19.
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