April 30, 2018//-Growth in the Middle East and North Africa (MENA) economies are set to accelerate sharply this year on the back of higher oil prices and more expansionary fiscal policies among key oil exporters such as Saudi Arabi and the UAE, marking a reversal from several years of harsh austerity measures.
FocusEconomics FocusEconomics, a leading provider of economic analysis and forecasts for 127 countries in Africa, Asia, Europe and the Americas which made this disclosure in its May 2018 estimate has disclosed.
The report added: “Strong global growth will provide further impetus to the recovery and strengthen the region’s external sector. However, the implementation of VAT will hamper private consumption in Saudi Arabia and the UAE, while potential subsidy rises in Egypt later this year could temporarily dent household purchasing power”.
“Tightening financial conditions, as many countries look to protect their dollar pegs, will also limit credit provision. In addition, oil production will be constrained by ongoing OPEC production cuts, and a lack of progress with economic diversification will limit the scope for the non-oil sector to drive growth in most oil-exporting countries.
Political risks are also apparent, particularly the ongoing rivalry between Saudi Arabia and Iran, and the potential collapse of the Iranian nuclear deal. The prospect of greater global protectionism—with a possible knock-on effect on financial market volatility and oil prices—also looms large”.
MENA region is seen expanding 2.8%
The MENA region is seen expanding 2.8% in 2018, which is down 0.1 percentage points from last month’s estimate. Our panel projects regional growth of 3.3% in 2019.
This month’s downward revision to the 2018 economic outlook reflects weaker growth prospects for Algeria, Iran, Iraq, Lebanon, Morocco and Tunisia. FocusEconomics panelists upgraded their view of the economies of Israel, Kuwait and the UAE, while forecasts for other countries were left unchanged.
Egypt’s economy is expected to be the best performer in 2018, followed by Iran’s. At the other end of the spectrum, Yemen, which is embroiled in an unending civil war, is expected to be the region’s worst performer.
Among other major economies, Saudi Arabia will see a mild economic rebound on higher oil prices—although continuing OPEC production cuts will hamper growth—while Israel should continue to expand at a robust pace.
African Eye Report
