DUBAI, UAE – Media OutReach – October 18, 2023 –
Having discovereda global leader in commercial insurance, today released its
Regional economic outlook 2023 report which presents
Growth forecasts for key Middle East and North Africa marketsincluding differentiated outlooks for oil-exporting and energy-importing countries, and detailed expectations regarding
commercial activity and the impact of
global energy transition.
“Oil price fluctuations have prevented the MENA region from sustaining the 5%+ GDP growth rate seen in 2021 and 2022,” said Rupa Jagannathan, managing director for the Middle East at Atradius. “However, while growth will be weak this year, a rebound is likely in 2024, fueled by investment and economic diversification, as well as stronger trade partnerships with Asian markets and other African economies.”
Here are the main takeaways from
Niels de Hoog, Senior Economist, Atradius. The full report is available for download
Overall macroeconomic outlook for the MENA region
After a strong performance in 2022, the MENA region will see its growth weaken in 2023 in agreement with the overall global economic slowdown, with falling oil prices having had a negative effect on oil-exporting countries in the region.
Several favorable factorsincluding a probable stabilization of oil prices,
should cause a rebound from 2024 – although oil price fluctuations and climate change pose significant risks.
Oil exporting countries – Saudi Arabia, the United Arab Emirates, Bahrain, Oman, Kuwait and Qatar will see a decline in GDP growth of 7.6% in 2022 to
only 1.4% this yearbut
growth will accelerate thanks to
the development of diversified, non-oil sectors, and the rise in oil prices.
Oil importing countries – Morocco, Jordan, Lebanon, Tunisia and Egypt will grow slower than oil exporters as they struggle
high inflation and interest rates, low public spending and the influence of
overall global economic weakness.
Liquidity will make the difference
Assuming oil prices remain high,
Gulf Cooperation Council (GCC) growth in areas other than oil will see only a slight slowdowngovernments using petrodollars to support household consumption and investment projects.
Saudi Arabia and the United Arab Emirates, in particular, recorded
impressive growth in real gross fixed investmentwith a focus on the balance between financing fossil fuels and
achieve sustainable development goals and diversify their economies.
At the same time, energy-importing countries face a more gloomy outlook, as
inflationary pressures remain, aggravated by currency depreciation and monetary policy missteps. Any of them
the rise in oil prices could sabotage the recovery process.
Robust trade with Asia will benefit
All MENA countriesparticularly those from the GCC,
will benefit from trade and strong relationships with
major Asian markets, particularly China and India.
In addition to energy trading,
GCC countries perform well in non-fuel exportsmainly chemicals, manufactured goods and machinery, as well as services, in accordance with
strategic decisions to diversify away from the hydrocarbon trade.
Oil importing countries
main export partner is slower growing Europemeaning it will benefit to a lesser extent from trade.
The energy transition will influence commercial strategies
increased focus on sustainabilitya number of MENA markets are moving towards African countries for import
critical metalswhich serve as inputs to renewable energy technologies.
China remains a major supplier of solar panels and other technologies supporting the region’s energy transition.
The global energy transition will lead to a
rising demand for natural gas as a transition fuel from countries like China and Europe, while
oil exports will see a gradual decline. To capitalize on the opportunity,
gas producers like Qatar are investing in expanding their capacities.
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