Oil output cuts driving Gulf slowdown

Economic growth across the region will be much weaker this year than last and our forecasts are generally below the consensus. We think regional growth will come in at just 1.4%, one of the weakest rates in the past two decades. The latest round of agreed OPEC+ oil output cuts will drive a sharp economic slowdown in the Gulf states. In the rest of the region, ongoing balance of payments strains will add to downward pressure on currencies and result in tighter policy. Although we think a sovereign default in Egypt is unlikely, it is a very real risk in Tunisia.