Headline GDP growth in the Gulf looks is likely to slow to an eight-year low of 1.5% in 2017. However, this will be entirely the result of oil production cuts as countries comply with last year’s OPEC deal. The good news is that the region’s non-oil sectors should strengthen. Fiscal austerity looks set to ease, which should more than offset the impact of tightening monetary policy as local interest rates rise in line with the Fed. Dollar pegs will remain intact. Having (correctly) been below consensus on growth last year, our forecasts for 2017 are now a bit stronger than the consensus.
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