MENA Quarterly: Q1 2022

Khatija Haque - Head of Research & Chief Economist
Edward Bell - Senior Director, Market Economics
Shady Elborno - Head of Macro Strategy
Daniel Richards - MENA Economist
Published Date: 27 January 2022


As 2022 begins, the outlook for the MENA region is for the most part more positive than seen over the past two years. For the GCC countries and other regional oil exporters, economies look set to enjoy both higher oil prices and increasing oil production that will both help balance the government books and drive real GDP growth. We expect the focus to remain firmly on reform and diversification and as such a marked increase in government spending is unlikely despite this boon as the authorities look to decouple their growth cycles from oil’s ups and downs.

The whole region will continue to benefit from the ongoing recovery from the Covid-19 pandemic. Despite many countries in the region seeing rising case numbers as the year begins, which will weigh on activity in the first quarter, the sense remains that the pandemic is starting to play itself out. As such we anticipate that those economies with significant tourism sectors should see visitor numbers rise once more, in a positive development for employment and FX inflows. There are two major events in the GCC this year – Dubai’s Expo 2020 (Q1) and the FIFA World Cup in Qatar (Q4) – which should further support the tourism recovery in the region.

While the outlook is broadly constructive, tighter monetary policy and slower global growth are potential headwinds to growth in the MENA region, and the Covid-19 pandemic still poses a key downside risk. 


Oil market update Energy shortages to keep oil prices high.


UAE The UAE has enjoyed a strong finish to 2021, with Expo 2020 and rebounding tourism boosting domestic demand.

Dubai The property market performed well in 2021, with apartment and villa sales prices showing their first yearly increase since 2014.

Saudi Arabia Stronger oil sector growth this year will drive headline GDP to 5.7% from an estimated 2.5% in 2021. 

Qatar In 2022 we expect the non-hydrocarbon sectors to see faster growth of 6%, boosted by hosting the FIFA World Cup in Q2 2022, with the oil & gas sector also expected to expand for the first time in almost a decade. We forecast headline GDP growth of 4.5% in 2022.  

Bahrain Bahrain pushes ahead with fiscal reforms, while higher VAT and oil revenue will help to narrow the budget deficit to under 4% of GDP this year. 

Oman Oman’s budget deficit narrowed sharply to just -4.0% GDP in 2021, down from -15.8% GDP in 2020. The main driver was the improvement in oil and gas revenues last year. 

Kuwait We estimate real GDP for Kuwait to have reached 1.4% for 2021 and forecast that to accelerate to 4.6% in 2022 largely on the back of higher oil output.


Egypt As the first MPC meeting of the year approaches, Egyptian policy makers should be able to maintain the status quo for now, despite a global trend towards tighter monetary policy that has been accelerating over the past several months. 

Iran We anticipate an acceleration in Iran’s real GDP growth this year, forecasting 3.5% in 2022 compared with an estimated 3.0% last year.

Iraq Iraq looks set to enjoy a marked rebound in 2022, benefiting not only from higher oil prices and increasing production, but also the gradual easing of the Covid-19 pandemic. 

Jordan The outlook is brightening in Jordan, following the past several years of pandemic-affected growth. While there remain significant challenges, not least from the ongoing threat of Covid-19 itself, for the time being it appears the worst has passed.

Lebanon We expect that Lebanon’s economy will return to growth in 2022, though this will in large part be attributable simply to base effects following a parlous four years of contraction rather than due to any marked improvement in the outlook. 

Morocco We have downgraded our real GDP growth forecast for Morocco in 2022 as the country contends with the Omicron variant of Covid-19 and its effects on the tourism sector in particular.

Tunisia We have revised our growth forecast for Tunisia substantially lower as the country is hit by another wave of Covid-19 which has led to renewed restrictions on activity at the start of the year. 

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