This year looks set to be the toughest for the economies of the Middle East and North Africa in almost three decades. The Gulf countries will continue to tighten fiscal policy in response to low oil prices. While this should ensure that dollar pegs remain intact, it will cause economic growth to slow sharply this year. And, in contrast to the consensus, we expect growth to remain weak from 2017 onwards. The outlook is poor in the rest of the region too. In Egypt, depressed tourism revenues, as well as tighter fiscal and monetary policy, will result in extremely sluggish growth this year. And Morocco’s economy, whose medium-term prospects are the brightest in the region, will also see growth weaken, due to a drought. Overall, we forecast the MENA region as a whole to expand by just 1.3% this year which would mark the weakest growth since the late-1980s.
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