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Country Forecast Middle East and Africa

  • ID: 2654559
  • Country Profile
  • Region: Africa, Middle East
  • 55 Pages
  • The Economist Intelligence Unit
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Background: The Middle East is of global strategic importance given its geographic location, oil reserves and religious significance. Its recent history has been driven by, among other things, the Arab-Israeli dispute and political tensions between authoritarianism, democracy and political Islam. In 2011 a wave of unrest swept the region, threatening-and in some cases toppling-a host of long-standing leaders. However, the post-revolution governments struggled to restore economic and political stability, and a swing back towards authoritarianism has since occurred. The instability that followed the Arab Spring-including civil wars in Syria, Libya and Yemen and the emergence of Islamic State (IS) and other jihadi groups-has deepened regional and sectarian-based rivalry between Saudi Arabia (and its allies) and Iran. This enmity has been heightened by the 2015 international nuclear deal with Iran-now placed in jeopardy by the US decision to withdraw from the agreement. These tensions, along with the rise of a new generation in the Gulf ruling families, have led to further fissures, such as the boycott of Qatar by four other Arab states. Jihadi groups remain a threat, despite the retreat of IS.

Political structure: Traditional sheikhdoms and absolute monarchies have held sway in the Gulf, but the rest of the region has been dominated by military and other autocratic regimes, mostly claiming allegiance to socialist or Arab nationalist ideologies. Some states have taken tentative steps towards multiparty democracy, but widespread economic underperformance and a lack of opportunity for political expression contributed to mass protests in 2011. In the wake of the Arab Spring, several largely free and fair multiparty elections were held, with the Muslim Brotherhood usually the victor. However, its inexperience undermined its efforts, prompting a backlash against the movement and its removal from power.

Policy issues: The collapse in oil prices in 2014-16 forced countries across the region to cut back on subsidies, control other expenditure and boost non-oil revenue. Although oil prices subsequently rebounded, a renewed forecast dip in 2019-20 means that diversification efforts are set to continue, together with initiatives to harness private-sector financing. Non-oil exporters have also been affected adversely, given their dependence on flows of remittances, investment and aid from the Gulf. Many have turned to bilateral partners and multilateral institutions for financial support.
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Country Forecast Middle East and Africa

Fact sheet: Middle East and North Africa

Fact sheet: Sub-Saharan Africa

Summary
Middle East and North Africa
Sub-Saharan Africa

Political outlook: Introduction
US influence on regional political and security dynamics will gradually wane
SSA has a heightened risk of political instability and social unrest.

Political outlook: Political stability: Middle East and North Africa

Political outlook: Arabian Peninsula and the Gulf
The Khashoggi murder has provoked a backlash against Saudi Arabia
Pressures continue to mount on Iran's moderate president
Popular protests in Iran underline deep-seated frustrations
Hopes pinned on peace talks to end the conflict in Yemen
Nervousness over threat from jihadi groups will persist
Saudi Arabia's human rights record comes under renewed scrutiny

Political outlook: Eastern Mediterranean
Mr Trump appears to have modified his plans for a US troop withdrawal
Lebanon will be unable to escape the impact of regional power struggles
Focus in Israel is on the forthcoming parliamentary election

Political outlook: North Africa
Libya will continue to be plagued by major security problems
The government's "transition" plan is unlikely to appease protesters in Algeria

Political outlook: Political stability: Sub-Saharan Africa
SSA faces a busy and potentially disruptive election schedule
Major security issues to remain unresolved.

Political outlook: Central and West Africa
Incumbents to retain power while grappling with security threats
Gabonese political stability threatened by president's absence
Strong democratic traditions will underpin Ghana's stability
Tensions over political succession and post-conflict reconciliation
Kabila steps down but retains control

Political outlook: East Africa
Incumbent increasingly blurs lines between party and state
Tensions within the ruling party threaten unity
Political establishment resists economic and political reform
Political continuity is well-entrenched in Rwanda

Political outlook: Southern Africa
Election outcome will shape the reform agenda
Angolan president carefully pursues reform agenda
Zimbabwe's new leader beset by economic woes

Economic forecast: Middle East and North Africa: The subregions, 2018 (a)
Middle East and North Africa (b)
Oil exporters ©
Non-oil exporters (d)
Gulf Co-operation Council (GCC)

Economic forecast: Middle East and North Africa: Economic policy
Push for economic transformation will gather pace
A return to partial isolation for Iran
Oil exporters cut back fuel subsidies
Non-oil exporters have also been obliged to expedite subsidy reform

Economic forecast: Middle East and North Africa: Global outlook

Economic forecast: Middle East and North Africa: Economic growth
Saudi Arabia's growth will be sluggish, despite rising non-oil activity
Capital expenditure will support economic growth in the Gulf
War-torn countries will seek to restore investor confidence
Growth in non-oil-exporting states will remain uneven

Economic forecast: Middle East and North Africa: Inflation
Inflationary pressures among non-oil exporters will gradually ease

Economic forecast: Middle East and North Africa: Exchange rates
Dollar pegs will remain in place in the Gulf
Egypt's currency should appreciate after being floated in 2016

Economic forecast: Middle East and North Africa: Current account
Algeria will remain heavily reliant on capital inflows
Non-oil exporters will see their current-account positions improve

Economic forecast: Middle East and North Africa: External debt
The IMF is providing support to a number of MENA countries
Sukuk issuance will continue to expand
China will play a growing role in bankrolling projects

Economic forecast: Sub-Saharan Africa: The subregions, 2018 (a)
Southern Africa
Franc Zone
East Africa
Central and West Africa
Sub-Saharan Africa

Economic forecast: Sub-Saharan Africa: Economic policy
Pro-business reforms aim to attract foreign investors

Economic forecast: Sub-Saharan Africa: Economic growth
GDP growth in SSA will gain some momentum
Further fiscal consolidation is needed, but spending pressures remain high
Structural constraints will curtail faster growth across SSA
External factors pose major challenges and risks for SSA
Pan-African trade deal is a distant prospect
Major global players are evolving their engagement with SSA
East Africa remains at the vanguard of regional economic growth
Economic policy will stimulate growth in Uganda
Nigeria is mired in a low growth cycle
Election-related uncertainty and power shortages subdue South African growth
Investment in Angola outside the hydrocarbons sector will disappoint
Zimbabwe will rely heavily on external support
Growth in the Franc Zone will remain relatively brisk
Côte d'Ivoire will benefit from infrastructure investment and trade
Gabon's non-oil sector will help to support growth
LNG expansion will boost growth in Cameroon

Economic forecast: Sub-Saharan Africa: Inflation
Higher electricity tariffs will underpin price pressures in South Africa
Inflation remains fairly low across most of East Africa
West Africa remains vulnerable to rising import costs
Inflation in the Franc Zone will remain low and stable

Economic forecast: Sub-Saharan Africa: Current account

Economic forecast: Sub-Saharan Africa: External debt

Business environment rankings
Conflict and low oil prices weigh on the business environment
MEA remains rooted near the bottom of the business environment rankings
GCC member states and Israel lead the way

Data summary: Middle East and North Africa

Data summary: Gulf Co-operation Council

Data summary: Oil exporters

Data summary: Non-oil exporters

Data summary: Sub-Saharan Africa

Data summary: Sub-Saharan Africa: Forecast data

Guide to the business rankings model
Outline of the model
Calculating the rankings
Measurement and grading issues

List of indicators in the business rankings model
Political environment
Macroeconomic environment
Market opportunities
Policy towards private enterprise and competition
Policy towards foreign investment
Foreign trade and exchange controls
Taxes
Financing
The labour market
Infrastructure
Technological readiness
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