Middle East & North Africa Economic Forecast

Economic Snapshot for MENA

November 29, 2019

Economic growth is set to accelerate notably in 2020 

Although economic growth is projected to gain steam next year, risks to the economic outlook are skewed to the downside. Particularly, if OPEC+ decides to extend the oil cut deal at the December meeting, this would limit the expected recovery among those countries dependent on oil exports. Moreover, rising domestic political unrest could hit regional growth in 2020.

 

MENA Monetary & Financial Sector News

Inflation in the Middle East and North Africa slowed further in October to 4.8% from 6.0% in September, according to preliminary data. The decline mostly reflected falling inflation in Iran as well as in Algeria, Egypt and Kuwait. Overall, regional inflation will decline in 2020 compared to this year on the back of softer price gains in Egypt, Iran and Tunisia. 

In recent weeks, the Central Bank of Egypt sharply cut its main policy rates in order to bring inflation back to the Bank’s target, while Israel’s Central Bank left the key rate unchanged. That said, most central banks in MENA manage currency pegs, mostly against the USD or a basket of currencies including the USD or the EUR, and thus lack independent monetary policies.

The EGP and the ILS both appreciated against the USD in recent weeks. That said, most remaining countries in the region maintain a de jure or de facto currency peg against the U.S. dollar or a basket of currencies mostly composed of the USD and the EUR.

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