National accounts figures released this week showed that Saudi Arabia’s economy officially entered recession in Q2 and Qatar’s economy shrunk too, all of which supports our below-consensus 2019 GDP growth forecasts for the Gulf economies. Meanwhile, pressure is mounting on Lebanon’s dollar peg and while there are reasons to think that the immediate risk of devaluation is small, failure to tighten policy will keep macro imbalances large and leave the currency vulnerable to a shock.
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