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Khatija Haque - Head of Research & Chief Economist
Edward Bell - Senior Director, Market Economics
Daniel Richards - MENA Economist
Published Date: 07 October 2022
The MENA region has to some extent been a tale of two parts this year. GCC countries have benefitted from sharply higher oil prices, turning budget deficits into surpluses, and increased oil production which has bumped up GDP growth. Non-oil sectors have continued their recovery from the pandemic as borders have reopened and the GDP statistics show a sharp rebound in transport and hospitality sectors as well as manufacturing and trade. However, the outlook for 2023 is more challenging, given the strength of the US dollar and the currency pegs in the GCC. Nevertheless, we expect the region to grow next year even as global recession risks have increased.
Outside of the GCC, oil exporters Iraq and Algeria will also benefit from the rise in oil production and prices, but political constraints will hamper efforts to translate this into higher non-oil sector growth. For the regional oil importers, the outlook is even less sanguine, with Egypt, Tunisia, and Lebanon all actively pursuing new IMF deals as their economies come under increasing pressure from global and domestic factors. Surging import bills have impacted external balances, while rising inflation has weighed on households as they recover from the pandemic.
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