Data released this week confirmed that higher oil prices have prompted Saudi Arabia’s government to loosen fiscal policy further and we expect this to continue over the next few quarters, boosting growth in the non-oil sector. But fiscal loosening will leave the public finances in a weaker position to withstand a renewed drop in oil prices. Meanwhile, this week’s rejection by Tunisia’s Nidaa Tounes party to form a new unity government with Ennahda means that economic reform will remain on the backburner.
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