MENA Quarterly: Q3 2021

Oil market outlook OPEC+ is reportedly nearing an agreement to break the impasse on production levels and baselines that stymied a deal earlier this month.

GCC

UAE: Green shoots There are signs of recovery in the non-oil sectors as private consumption expenditure recovers.  However, ongoing travel restrictions in key tourism markets remain a headwind to growth.

Saudi Arabia The kingdom has started to unwind the exceptional oil production cuts from February this year, and we have revised up our oil sector GDP forecast as a result. Risks to our non-oil sector growth estimates are also skewed to the upside.

Oman The IMF is optimistic about deficit reduction this year, although Covid-19 is likely to remain a headwind to growth.

Kuwait The economy contracted by at least -8.9% in 2020 and we forecast headline GDP growth at 0% this year.  Political deadlock between the government and parliament continues to hinder fiscal reform, including passage of a debt law.

GCC projects revving up? The data in Q1 of this year is looking decisively healthier, especially in contrast to last year.  The question is whether this pick-up in spending will be more persistent or is otherwise a blip from a low base that will slow, as has been the case over the last few years.

Non-GCC MENA

Egypt Egypt’s headline PMI reading came in just short of the neutral level in June, hitting 49.9, compared with the previous month’s 48.6. This was the strongest reading since November last year, which was the last time the index was in expansionary territory. 

Iran The outlook for the Iranian economy this year hinges strongly on two variables: the negotiations around reinstating the JCPOA nuclear deal, which could provide a boost to the oil economy, and the ongoing struggle against the Covid-19 pandemic. 

Lebanon The situation in Lebanon has continued to deteriorate through the first half of the year and the prospect for H2 is little better, barring a significant shift in direction. 

Morocco We have left our Moroccan real GDP growth forecast for 2021 on hold at 4.9% but acknowledge that the risk to this outlook is starting to tilt to the upside, and the Bank al-Maghrib holds a more bullish projection of 5.3%. 

Click here for forecast tables