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Country Forecast Middle East and Africa

  • ID: 2654559
  • Country Profile
  • June 2021
  • Region: Middle East, Africa
  • 41 Pages
  • The Economist Intelligence Unit
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 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 jihadi groups-has deepened sectarian-based rivalry between Saudi Arabia (and its allies) and Iran. These tensions, along with the rise of a new generation in the Gulf ruling families, have led to further fissures and a fresh wave of protests. Relations between the US and Saudi Arabia will be less harmonious than before. The US president, Joe Biden, has criticised the kingdom's human rights record and is seeking a revived nuclear deal with Iran. Nevertheless, the strategic partnership between the US and Saudi Arabia will remain intact.

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. 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. New anti-government protests will occur as the coronavirus (Covid-19) pandemic fades, encouraging more protesters to take to the streets over issues such as corruption, high unemployment and a lack of political freedom.

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. The coronavirus pandemic and a renewed drop in oil prices obliged oil-exporting countries to adopt a fresh round of austerity measures. With oil prices now rebounding, oil exporters will have more scope to reinstate their delayed capital spending plans, while non-oil exporters will gain from a renewed upturn in remittances, investment and aid from the Gulf countries.
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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
Political outlook
Economic outlook
Sub-Saharan Africa
Political outlook
Economic outlook

Political outlook: Middle East and North Africa
The Middle East will continue to be an epicentre of geopolitical tensions
The US will seek to revive the 2015 nuclear deal with Iran
Instability in Palestine is set to continue
An unstable coalition assumes office in Israel
Anti-government protests will persist in a number of countries
Iran's 2021 presidential election will act as a catalyst for more protests
Inter-factional violence will remain at a high level in Iraq
The ruling coalition is set to lose ground in Morocco's forthcoming election
Still a rocky road ahead for Libya

Political outlook: Sub-Saharan Africa
Covid-19 is still a significant threat
The rollout of vaccines in the region will continue to be slow
Legitimacy concerns are a common feature of African elections
The next key test for democracy in the region will take place in Ethiopia
Tensions will rise in Zambia, ahead of elections in August
Municipal elections in South Africa will provide some important political pointers
High jobless rate, particularly among the young, boosts the risk of social unrest

Economic forecast: Middle East and North Africa: Economic policy

Economic forecast: Middle East and North Africa: The rollout of vaccines: global and regional assumptions

Economic forecast: Middle East and North Africa: Global outlook

Economic forecast: Middle East and North Africa: Economic growth
A strengthening oil market will lead to a recovery in growth in the GCC
High vaccination rates will help to spur economic recovery in the UAE
Iranian growth will recover, albeit from a low base
Growth in Algeria will be held back by an unhelpful business environment
Non-oil exporters will benefit from the regional and global economic rebound
Growth will return to Morocco and Tunisia in 2021-22, but from a low base
Infrastructural spending will support growth in Egypt
High-tech manufacturing will help to drive Israeli growth
Headline growth could surge (from a low base) in some conflict-ridden countries

Economic forecast: Middle East and North Africa: Inflation
Rapidly rising global food prices will place an added burden on consumers

Economic forecast: Middle East and North Africa: Exchange rates
Dollar pegs will remain in place in the Gulf

Economic forecast: Middle East and North Africa: Current account

Economic forecast: Middle East and North Africa: External debt
Global bond issuance by GCC sovereigns and corporates will continue in 2021-22
A number of MENA countries have IMF programmes

Economic forecast: Sub-Saharan Africa: Economic policy
Fiscal policy is set to become less expansionary
Some countries have greater fiscal room for manoeuvre
Monetary policy will remain loose, at least in the near term
A boost for pan-African trade

Economic forecast: Sub-Saharan Africa: Economic growth
East Africa will remain the most dynamic subregion
A return to steady growth in the Franc Zone
Oil exporters will help to boost growth in Central and West Africa
Southern Africa will register the worst subregional growth performance

Economic forecast: Sub-Saharan Africa: Inflation

Economic forecast: Sub-Saharan Africa: Current account

Economic forecast: Sub-Saharan Africa: External debt

Business environment rankings
Conflict and the pandemic have disrupted the business environment
MEA remains at the bottom of the BER
GCC member states and Israel lead the way in the BER

Data summary: Middle East and North Africa

Data summary: Oil exporters

Data summary: Non-oil exporters

Data summary: Gulf Co-operation Council

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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