Middle East & North Africa Economic Forecast

Economic Snapshot for MENA

January 13, 2020

Economic growth is set to accelerate notably in 2020 

MENA’s regional growth is expected to recover this year, following a poor performance in 2019, due to a much smaller contraction in Iran and an expected recovery in oil output. That said, risks to the economic outlook are skewed to the downside, including a potential extension of the OPEC+ oil cut deal beyond the March deadline and widespread geopolitical risks.

MENA Monetary & Financial Sector News

Inflation in the Middle East and North Africa fell from October’s 4.8% to 4.7% in November. The reading was the lowest since June 2018 and mostly reflected declining inflation in Algeria, Israel and Iran. Despite resurfacing price pressures in GCC countries, inflation will moderate slightly this year on falling inflation in Egypt and Iran.

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. That said, the central banks of Egypt and Israel left their main policy rates unchanged in recent weeks.

The EGP continued to strengthen against the USD in recent weeks on solid economic fundamentals. The Israeli shekel, in turn, was broadly unchanged. 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/or the EUR.

 

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