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MENA Quarterly: Q1 2021

Khatija Haque - Head of Research & Chief Economist
Edward Bell - Senior Director, Market Economics
Daniel Richards - MENA Economist
Published Date: 28 January 2021


Here is a round-up of our key articles on the MENA region and the latest forecasts.

Oil market outlook  Oil inventories rose dramatically in 2020, but our models indicated that they should draw down this year, supporting our view that Brent oil prices should average USD 50/b in 2021


Saudi Arabia Inceased domestic investment by the Public Investment Fund will offset budget cuts in 2021.  We expect growth to rebound to 2.5% this year.

UAE There were some green shoots in key sectors such as tourism and international trade towards the end of 2020, but data points to relatively subdued domestic demand.

Dubai  Dubai’s 2021 budget makes provision for only a modest 1.7% increase in spending from 2020, while the deficit is set to narrow as revenues recover in line with activity.  We expect Dubai’s growth to reach 3.0% this year.

Kuwait A bigger draft budget for FY 2021/22 will be difficult to execute unless a public debt law is passed to allow borrowing.  Political gridlock remains a risk.

Oman and Bahrain tap bond markets early in 2021 Both countries have taken advantage of the low interest rate environment to lock-in financing towards this year’s expected budget deficits.   


Egyptian growth outperforming globally Egypt has maintained economic growth despite the Covid-19 pandemic, one of the few countries globally to do so. We expect the economy to continue to outperform in the current fiscal year.

Iraqi finances will remain under pressure With oil prices set to remain relatively low, and ongoing production curbs through the start of 2021, Iraq’s finances will remain under pressure, although the devaluation to the dinar enacted in late 2020 will offer some respite.

Jordan set to return to growth Having come through 2020 comparatively less scathed than some of its MENA peers, we expect a modest ongoing improvement in Jordan’s economy in 2021, provided the Covid-19 pandemic begins to abate.

Lebanon continues to face multiple challenges Lebanon will likely have a better year in 2021 than it had in 2020, when it was already dealing with crises on multiple fronts even before the coronavirus pandemic and then the Beirut blast in August dealt further blows. However, that is not to say that we expect a resounding rebound, and the 1.4% real GDP growth we project will do little to make up for the -27.3% contraction we estimate last year.

Moroccan growth will outperform MENA oil importer peers in 2021 We hold a fairly bullish view on Moroccan real GDP growth in 2021, projecting an expansion of 5.2%. If realised this would represent the strongest expansion amongst MENA oil importers this year.

Tunisian economy facing manifold challenges Tunisia’s economy was hard-hit by the coronavirus pandemic in 2020, with a real GDP contraction of -8.7%, according to our estimates. In 2021 we project a fairly robust recovery to the tune of 4.5%, but the risks are weighted to the downside.


Click here to download the forecast tables