Entries for 'Middle East North Africa'

The MENA region has weathered the economic storm from the health crisis. The economic recovery continues to gain momentum. Higher energy prices will improve the fiscal and current account positions in oil exporters. In oil importers, deficits, government debt, and unemployment will remain high. 

The pandemic combined with the current political paralysis have exacerbated vulnerabilities in the economy. Tunisian policymakers face difficult choices in stimulating growth while reducing macroeconomic imbalances. 

The IMF and World Bank approved Sudan’s eligibility for debt relief under the HIPC Initiative in recognition of the significant reforms implemented by authorities. We expect growth to pick up and fiscal and external imbalances to reduce as the country reintegrates into the international community.

We expect a 50% chance that the new cabinet will carry out the reforms needed to achieve macroeconomic stability and arrest further deterioration, which would lead to an agreement with the IMF and unlock financial support from the international community.

Higher oil prices will lead to modest growth, shift the CA to a surplus, and narrow the fiscal deficit. The resurgence of COVID-19 has set the recovery back, but progress on vaccination has improved resiliency. Key reforms to reduce oil dependency and promote private sector growth are needed. 

While the election of Ebrahim Raisi as the new president will not derail the nuclear negotiations, the U.S. may not be able to extract concessions on critical issues. The likely outcome for the JCPOA negotiations is a return to the 2015 agreement, which would keep many sanctions in place. 

The vaccine program and higher oil prices will support the recovery. Speakers agreed that significant progress has been made in implementing the kingdom’s economic and social reform agenda. However, they underscored the need for deeper structural reforms to support diversification and growth. 

The vaccine program, strengthening of energy prices, and end of the rift with other GCC countries will support the recovery in Qatar. We expect the current account and fiscal balances to shift to sizeable surpluses in 2021 and 2022. 

The COVID-19-induced collapse in international tourism was unprecedented. Even in an optimistic scenario, tourism revenues will remain subdued in 2021. As a result, the economic recovery in countries such as Thailand will be slower. Furthermore, external pressures are set to rise as imports rebound strongly.

Our baseline projections do not envisage recovery in tourism to pre-pandemic levels before 2023. Faster recovery in tourism hinges on rapid advancements in vaccine distribution.

We compare the cases of 12 countries that have attempted to unify their FX markets. Unified exchange rate systems eliminate distortions, reduce rent-seeking, and boost fiscal revenues. However, successful unification hinges on consistent underlying credit and fiscal policies and broad reforms. 

Higher oil prices so far this year have been supported by the partial recovery in demand and temporary production cuts. We expect oil prices to average $60/b in 2021. 

GCC authorities took forceful steps to mitigate the fallout from COVID-19, and we expect a modest recovery in 2021 supported by higher oil prices. However, the region confronts an ongoing exodus of expats and decelerating growth of capital stock, underscoring the need for broad structural reforms.

While the pandemic hit the economy hard, timely measures have limited the health and economic effects. Uzbekistan entered the pandemic with strong fundamentals and policy buffers. We expect real GDP to pick up to 4.5% in 2021 from 1.6% in 2020.

Measures to contain the pandemic combined with the drop in oil prices triggered a deep recession. The large twin deficits will narrow significantly in 2021 supported by higher oil and gas prices. We see foreign reserves declining further to levels well below conventional adequacy metrics by 2023.

The kingdom has seen a limited impact of the pandemic due to its low share of services and young population. Non-oil real GDP will grow by 3% in 2021 following a contraction of 2.7% in 2020. The fiscal deficit will narrow to 4% of GDP in 2021, supported by fiscal consolidation and higher oil prices.

Improved market sentiment will allow African sovereigns to return to the market in ‘21. We expect Egypt, Nigeria, Ghana, and South Africa, among others, to issue Eurobonds. However, debt sustainability and liquidity concerns are rising in the context of COVID-19. African countries face Eurobond repayments of close to $100 bn in the coming years. An end to the current low-interest rate environment could make rolling over of debt costly.

The Egyptian economy has weathered the COVID-19 pandemic relatively well. Monetary policy was appropriately eased and has some scope for additional support to underpin the recovery. Reining in fiscal deficits and debt will require a commitment to fiscal discipline once the COVID-19 crisis abates. 

The UAE has seen limited health impacts from the pandemic. The vaccine rollout, partial oil price recovery, and progress in digital transformation offer hope for the UAE economy. Technological progress will develop new growth drivers and raise potential growth over the medium-term. 

The economy has been hit hard by the pandemic, unstable political situation, and the decline in oil prices and production. The devaluation combined with a modest recovery in oil prices could put the fiscal stance on a more sustainable footing. Improved governance is also needed to implement reforms.