Entries for 'Middle East North Africa'

We look into the issue of exchange rate misalignment in Egypt. We find that the current real effective exchange rate is overvalued by around 10%. The results support our view that Egypt's currency must be allowed to float, and that this must also be accompanied by tighter structural policies.

Capital inflows are set to rebound in 2023 as sovereigns, particularly Saudi Arabia, issue more debt to finance fiscal deficits. However, resident outflows, largely GCC transfers to sovereign wealth funds, will continue to far exceed nonresident inflows.

This note is the third installment of our series of reports focusing on Egypt. We look at the composition of privatization proceeds in FY 2022/23 and then analyze potential prospects for privatization in FY 2023/24.

We continue our series of reports focusing on Egypt by analyzing the fiscal outlook for the next fiscal year.

This note kicks off a series of reports focusing on Egypt, which we plan to release over the coming months. Today’s note will discuss Egypt’s external financing picture for FY23 and FY24.

The real estate prices will continue to rise in the UAE and Saudi Arabia, albeit at lower pace.

The magnitude and multiplicity of the challenges facing Lebanon require close collaboration with the IMF, including undertaking a comprehensive reform program.

• We expect average oil prices to decline from $100 a barrel in 2022 to $85 in 2023 and $80 in 2024. • The main downside risk to the oil price forecast is weaker than-expected global growth. • Growth accelerated to 7.9% in 2022, driven by a substantial increase in hydrocarbon output and elevated oil prices.

MENAP non-oil countries are facing unprecedented challenges. We expect growth to slow sharply, and the current account and fiscal deficits to remain large.

CCA countries have successfully managed to avoid any negative spillovers from Russian sanctions. Higher remittances and energy prices led to strong growth. However, risks of secondary sanctions remain, as Western officials begin to clamp down on countries potentially aiding sanction evasion.

Authorities’ reluctance to implement the needed reforms has aggravated Tunisia’s preexisting debt problems. In the absence of an IMF program, persistent fiscal and balance of payments financing shortfalls will jeopardize macroeconomic stability.

Although vulnerabilities have increased, Egypt’s challenges are not insurmountable. The government’s ambitious and comprehensive program with the IMF could bring fundamental policy changes, transforming Egypt into a more open, market-oriented, economy.

Overall growth is set to decelerate, dragged down by stagnant oil production while non-oil real GDP growth will remain robust. The current account and fiscal surpluses will narrow in 2023 due to moderation in oil prices. The authorities have made significant progress in implementing crucial reforms.

The short-term macroeconomic outlook remains favorable, supported by elevated oil prices. Structural reforms are needed to help diversify the economy.

Investor sentiment towards oil exporters in the region will remain favorable due to elevated energy prices. Total capital inflows will remain modest in 2023, as sovereigns’ issue less debt due to continued fiscal surpluses. FDI will become the main conduit for nonresident capital inflows.

Growth in the nine MENA oil exporters will accelerate. The impact of tighter global financial conditions is expected to be limited. The combined current account and fiscal balances will remain in large surpluses. Risks to the outlook are well contained given the ample public foreign assets.

Potential IMF financial support would help meet the large financing needs and strengthen confidence in the economy more broadly.

Prolonged inaction by the authorities has worsened economic conditions and deepened the financial crisis.