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MENA Quarterly Q1 2019

Khatija Haque - Head of Research & Chief Economist
Edward Bell - Senior Director, Market Economics
Daniel Richards - MENA Economist
Published Date: 20 January 2019


  • GCC growth rebounded last year, primarily on the back of higher oil production.  In the largest economies, survey data suggests that non-oil sector growth was weaker than we had expected at the start of 2018.  Fiscal deficits narrowed on higher oil revenues, even as government spending increased.
  • The outlook for 2019 is cautiously optimistic, against a backdrop of slowing global growth and heightened geo-political risks globally.  We expect average growth of 2.5% in the GCC this year, with the UAE and Qatar likely to see faster growth than in 2018.  We expect Saudi Arabia’s economy to expand 2.0% this year, slower than the government’s estimate of 2.3% growth in 2018. 
  • We have revised our oil forecasts for 2019 lower to an average of USD 65/b for Brent (compared with more than USD 70/b previously). Softening global demand conditions and unrelenting supply growth from producers in the US, among elsewhere, are compounding pressure on OPEC countries to respond.
  • Following flat growth of 5.5% in 2018/19, we anticipate that economic activity will pick up in Egypt in 2019/20, projecting real GDP growth of 6.1%. The nascent offshore gas sector will bolster both investment and net exports, the outlook for tourism remains fairly upbeat and the private sector should benefit from an anticipated easing of monetary policy.
  • The key impediment to economic growth in MENA this year is domestic political risk. Whether it be elections held in 2018 which have yet to result in a fully functioning government (Iraq, Lebanon), elections coming up in 2019 which could disrupt policy making (Algeria, Tunisia), or newly elected governments struggling to implement their essential reform agendas (Jordan), states across the region are struggling to maintain stability.

Oil production leads growth again

Source: Bloomberg, Emirates NBD Research

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