Qatar  | عربي

MENA’s economic outlook remains strong, according to QNB Group. Notwithstanding significant headwinds from the global economy and domestic political uncertainty in a number of MENA countries, the region is expected to grow in the range of 3.5%-4% this year and 4.5%-5% in 2014. GCC countries will continue to invest heavily in infrastructure and diversify their economies, thus boosting non-oil GDP growth. Most oil importing countries will continue on their path to recovery, although with significant downside risks associated with their dependency on global demand and domestic political uncertainty. Overall, the MENA region remains one of the contributors to global economic growth, which is expected to be in the range of 2.5%-3.0% this year and 3.5%-4.0% in 2014.
MENA Real GDP Growth
(% change)
en-Economic Outlook 
Source: IMF estimates and QNB Group forecast 
In 2012, the MENA region continued to experience a two-speed economic performance. According to IMF estimates, GCC countries sprinted ahead (6% real GDP growth), led by Qatar and Saudi Arabia, while oil importers lagged behind (1.9 % real GDP growth), reflecting low global demand for their exports and political uncertainty. The GCC countries also experienced low inflation (2.4%), while the rest of MENA region faced significant price increases (8.9%). In addition, the GCC fiscal and current account balances continued to register large surpluses, driven by higher oil and gas prices. Meanwhile, oil importing countries maintained relatively loose fiscal policies, which weakened their balance of payments position and increased their public debt vulnerabilities.
This divergence between oil exporters and importers is likely to narrow in 2013-14. According to QNB Group, weaker oil and gas prices and flat production levels are likely to drive down the contribution to growth of the hydrocarbon sector in GCC countries, while the non-oil sector will continue to expand at a brisk pace driven by strong private sector demand and higher public investment. The rest of the MENA region is expected to strengthen its economic performance over the next two years, driven by a gradual improvement of the global economy, higher investment, and a recovery of domestic demand. Significant downside risks, however, remain to this growth outlook, arising from a possible downturn to the global economy and domestic political uncertainty.
This strong growth outlook in the MENA region is likely to be associated with lower inflation and improved fiscal positions in the oil importing countries. Lower oil and gas prices should also reduce the current account imbalances in the region on average.
Overall, this MENA growth scenario suggests good investment opportunities for global investors in the region, according to QNB Group. On the 12th of June, Qatar and the UAE were upgraded to the MSCI Emerging Market Index, thus increasing their prominence in global asset allocations. In addition, the financial sector in MENA is likely to continue to benefit from the strong non-oil growth in selected countries.

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