MENA ECONOMIC OUTLOOK

Transcription

1 Q MENA ECONOMIC OUTLOOK Region to mount a recovery Growth in the Middle East and North Africa slowed to its weakest pace since the global financial crisis in, but the region is set for a recovery over the next twelve months. The rebound in growth is likely to be driven by the Gulf, where the drag from last year s oil output cuts will fade. And even though oil prices are likely to come off recent highs, governments look set to slow the pace of fiscal austerity this year. These should more than offset the headwinds from rising interest rates and geopolitical tensions, including Saudi Arabia s recent anti-corruption purge. Outside the Gulf, Egypt s economy should pick up as inflation and interest rates fall sharply and the government eases up on austerity. For the MENA region as a whole, we forecast growth of.% this year, up from.% in. However, in contrast to the consensus which expects the recovery to strengthen in 9, we think a resumption of austerity in the Gulf and a weaker global backdrop will cause regional growth to plateau next year. Saudi Arabia s economy should pull out of recession this year as the drag from the oil sector fades and fiscal policy is loosened. But there are good reasons to think that growth will slow again in 9. (Page.) The UAE s economy is likely strengthen this year on the back of a fading drag from the oil sector, an easing of austerity, and a step-up in preparations for the World Expo. The country s relatively diversified economy should also benefit from strong global growth. (Page.) Kuwait s balance sheet is the strongest in the GCC, but the economy is still likely to be among the region s weaker performers in -9. (Page.) Qatar has weathered the diplomatic crisis with Saudi Arabia and its allies well. However, the crisis looks set to drag on and we expect growth to be weaker than most anticipate in -9. (Page.) Weak balance sheets in Bahrain and Oman mean that fiscal consolidation is likely to become more aggressive, keeping growth there subdued. (Page.) Egypt s economy will pick up as inflation falls back, interest rates are cut and the pace of fiscal consolidation slows. (Page 9.) March s presidential election is unlikely to herald a major shift in policy. The fading conflict in Syria means that the outlook for Lebanon and Jordan is improving. But a fresh bout of geopolitical tensions would undermine Lebanon s dollar peg. (Page.) Fresh falls in the dinar, coupled with an ongoing fiscal squeeze, mean that Algeria is likely to record sluggish growth. (Page.) Morocco s economy is likely to slow as last year s boost from the agricultural sector fades. (Page.) Tunisia s recovery should continue but the risks are skewed to the downside, particularly if recent protests drag on or even escalate. (Page.) In Financial Markets, we think the recent rally in equity markets will lose steam over the rest of this year. Dollar bond yields are likely to rise and spreads will probably widen. (Page.) Neil Shearing, Chief Emerging Markets Economist, + 9, neil.shearing@capitaleconomics.com William Jackson, Senior Emerging Markets Economist, + (), william.jackson@capitaleconomics.com Jason Tuvey, Middle East Economist, + (), jason.tuvey@capitaleconomics.com MENA Economic Outlook Page

2 Key Forecasts Table : Real GDP Growth and Inflation Share of Share of GDP (% y/y) Inflation (% y/y) MENA World e f 9f e f 9f Saudi Arabia Egypt UAE Algeria Qatar Kuwait Morocco Oman Tunisia Jordan Lebanon Bahrain MENA Oil Producing Economies Non-oil Producing Economies US Euro-zone China Official CAP Sources: IC, Thomson Reuters, Capital Economics, IMF Chart : Middle East and North Africa GDP (% y/y) Chart : Middle East and North Africa Consumer Prices (% y/y) 9 e 9 9 e 9 Sources: IC, Thomson Reuters, Capital Economics Sources: IC, Thomson Reuters, Capital Economics MENA Economic Outlook Page

3 Overview The region slowed further last year, recording its weakest growth since 9. But a recovery is likely in. Middle East and North Africa GDP (% y/y) In the Gulf, the drag from last year s OPEC-agreed oil production cuts will fade. - Gulf Oil Production (% y/y) Assuming oil output is in line with OPEC deal - 9 e - - Higher oil prices have prompted a shift towards slower austerity. Saudi Arabia will loosen fiscal policy this year Change in Saudi Augmented Non-oil Budget Balance (% of Non-oil GDP) Fiscal policy loosened Fiscal policy tightened estimate for This should more than offset the headwinds from recent political upheaval and rising interest rates. Gulf & US Interest Rates (%) Gulf m Interbank Rate US m Interbank Rate Fed Funds Target Rate Elsewhere, Egypt s economy will pick up as inflation and interest rates fall by more than most anticipate. Egypt Consumer Prices & Interest Rates An improving budget position means that austerity is likely to be eased and growth will also be boosted by the start of production at the Zohr gas field Consumer Prices (% y/y) Overnight Deposit Rate (%) Egypt Primary Budget Balance (Q Sum, % of GDP) In contrast to the consensus, we don t expect the regional recovery to gather pace in 9. We expect oil prices to fall back over the next couple of years. 9 Oil Price (Brent, $pb) Forecasts 9 9 In Saudi, the government is likely to respond by resuming austerity. As such, we expect growth to slow in 9, whereas the consensus thinks that it will strengthen. - Saudi Arabia GDP (% y/y) Capital Economics Consensus e 9 Sources: IC, Thomson Reuters, Capital Economics Forecasts - MENA Economic Outlook Page

4 Saudi Arabia Recovery on the way but relief to be short-lived Saudi Arabia s economy should pull out of recession this year as the drag from the oil sector fades and fiscal policy is loosened. But there are good reasons to think that growth Chart : Saudi Oil Production (% y/y) Assuming level of oil output is in line with OPEC deal will slow again in 9. Saudi Arabia s economy contracted last year, by.%, for the first time since the 9 global financial crisis. The good news is that the economy should return to growth this year. Crucially, despite the recent extension of the OPEC agreement, the drag from the oil sector will fade. (See Chart.) - - Chart : Consumer Prices (% y/y) F'cast - - Meanwhile, the direction of fiscal policy has shifted and it looks like policy will be loosened in, boosting growth in the non-oil sector. This stimulus will come in various forms, but a key component will be a rise in infrastructure spending. Public sector workers will receive bonuses this year, but the broader impact on consumer spending will be blunted by a roll back of subsidies. This will cause a sharp but short-lived jump in inflation. (See Chart.) Admittedly, the Kingdom will have to contend with the potential fallout from the recent anticorruption purge. And interest rates will rise in line with those in the US a result of the dollar peg keeping credit growth subdued. But these won t prevent a rebound in growth this year. We expect GDP to expand by.%. However, we think that the relief will be shortlived. (See Chart.) If we are right in expecting oil prices to fall back over the next twelve to eighteen months, the government will probably resume its fiscal consolidation efforts. The upshot is that GDP growth is likely to slow in 9, whereas the consensus view is that growth will strengthen Chart : GDP (% y/y) Capital Economics Consensus Forecasts 9 e f 9f GDP Oil GDP Non-oil GDP..... CPI Inflation Gen l Gov t Bal () Gen l Gov t Debt ()..... Current Account () Sources: IC, Thomson Reuters, Capital Economics. () % of GDP. - - MENA Economic Outlook Page

5 United Arab Emirates Growth to strengthen in The UAE s economy should strengthen this year as the drag from the oil sector fades. But in 9, lower oil prices and weaker global growth mean that a slowdown is likely. Chart : Oil Production (% y/y) Assuming level of oil output is in line with OPEC deal We estimate that growth in the UAE weakened to.% in on the back of OPEC-agreed oil production cuts. The good news is that the drag on growth from lower oil output will fade this year. (See Chart.) Meanwhile, the recovery in the non-oil sector should strengthen. Fiscal policy is likely to be less restrictive than it has been over the past couple of years. In addition, the construction sector will benefit from a step-up in preparations for the World Expo. The relatively diversified non-oil economy should also benefit from robust global growth. - - Chart : Consumer Prices (% y/y) Forecast There are a couple of factors which will keep a lid on growth. For one thing, the dollar peg means that local interest rates will need to rise in line with those in the US, keeping credit growth subdued. The recent introduction of a value-added tax will push up inflation (see Chart ) and weigh on consumer-facing sectors Chart : GDP (% y/y) F'cast - - We think the economy will lose a bit of momentum in 9. If we are right in expecting oil prices to fall, fiscal tightening is likely to be stepped up. At the same time, a slowdown in the global economy will weigh on Dubai s key tourism, transport and real estate sectors. All told, we expect GDP growth of.% this year and.% in 9. (See Chart.) Our forecasts lie below the consensus. - 9 e 9 e f 9f GDP..... Oil GDP Non-oil GDP..... CPI Inflation..... Gen l Gov t Bal () Current Account ()..... Sources: IC, Thomson Reuters, Capital Economics. () % of GDP. - MENA Economic Outlook Page

6 Kuwait Strong balance sheet, weak growth Kuwait s economy should recover this year as the drag from the oil output cuts fades, but slow implementation of the latest development plan, rising interest rates and further austerity mean that growth will remain sluggish. Chart : Oil Production (% y/y) Assuming level of oil output is in line with the OPEC deal The OPEC oil output deal was recently extended to the end of, but the year-onyear drop in output which is what matters for GDP growth will ease. (See Chart.) We expect oil prices to fall back from $9pb at the time of writing to $pb by the end of this year. Kuwait will not be unduly troubled by this. Budget and current account positions are likely to remain in surplus. (See Chart.) And the country s balance sheet is strong. At less than % of GDP, public debt is low and FX savings are equal to more than % of GDP. Even so, the authorities look set to keep fiscal policy tight over the coming years. The public sector wage bill will be kept in check. Further subsidy cuts are also likely, while a new valueadded tax is to be introduced. As a result, inflation will rise, dampening real incomes and weighing on consumer-facing sectors. In addition, a bloated bureaucracy and resistance from the National Assembly Kuwait s elected parliament means that the government will struggle to push through its latest development plan. And local interest rates will need to increase in line with those in the US, keeping credit growth subdued. All told, we expect GDP growth to strengthen to.% in -9. However, our forecasts lie below the consensus. (See Chart.) Chart : Budget & Current Account Balances (% of GDP) Current Account Budget e 9 Chart : GDP (% y/y) Forecasts f f 9f GDP..... Oil GDP Non-oil GDP..... CPI Inflation..... Gen l Gov t Bal ()..... Current Account () Sources: IC, Thomson Reuters, Capital Economics. () % of GDP. -. Capital Economics Consensus. 9 e MENA Economic Outlook Page

7 Qatar Economy weathers blockade, but growth to be sluggish Qatar s economy has weathered the diplomatic crisis with Saudi Arabia and its allies. However, the crisis looks set to drag on and we expect growth in -9 to be weaker than most anticipate. 9 Chart : Imports (QARbn) Blockade imposed 9 The latest evidence suggests that the worst of the economic hit from the blockade imposed by Saudi Arabia and its allies has now passed. Oil and gas shipments have continued to flow freely, imports have been re-routed and now recovered their lost ground (see Chart ), and strains in the banking sector have eased. Qatar is in a strong financial position to withstand the headwinds arising from the blockade. The current account position is back in surplus. (See Chart.) Moreover, large FX savings equal to % of GDP mean that Qatar is well-placed to withstand a period of capital flight. That said, a resolution to the crisis is nowhere in sight and, while a sharp and sustained downturn has been avoided, we expect growth to be sluggish by past standards. A sharp drop in tourist arrivals will continue to weigh on the tourism sector and political uncertainty is likely to hit investment. In addition, a period of deleveraging, rising interest rates and a tougher external financing environment, mean that credit growth a key driver of the economy in recent years is likely to remain subdued. And the government looks set to tighten fiscal policy further. Bringing all of this together, we expect GDP growth of.-.% in -9. Our forecasts lie below the consensus, which expects growth of closer to.% in both years. (See Chart.) Chart : Budget & Current Account Balances (% of GDP) - - Current Account Budget 9 e 9 Chart : GDP (% y/y) Capital Economics Consensus Forecasts e 9 e f 9f GDP..... Oil GDP Non-oil GDP..... CPI Inflation..... Gen l Gov t Bal () Current Account () Sources: IC, Thomson Reuters, Capital Economics. () % of GDP. - - MENA Economic Outlook Page

8 Bahrain and Oman Fiscal squeeze to be stepped up Balance sheets in Bahrain and Oman remain precarious and, while financial support from the rest of the GCC mean devaluations should be avoided, this will be conditional on governments implementing further austerity. Chart : Current Account Balances (% of GDP) The recent rally in oil prices will come as a relief for policymakers in Bahrain and Oman Bahrain Oman But we think this will be short-lived as oil prices fall back over the next year or so. - 9 e 9 - As a result, twin budget and current account deficits will remain large. (See Chart.) Financial buffers are smaller than in the rest of the GCC. Bahrain s debt-to-gdp ratio is the highest in the region and Oman s has risen sharply in recent years. (See Chart.) We estimate that FX savings could finance current account shortfalls for no more than five years. Chart : General Government Debt (% of GDP) 9 9 Saudi Oman Kuwait UAE Qatar Bahrain Accordingly, both countries still need to make a large adjustment. Official financial support is likely to be forthcoming in order to stave off devaluations. Bahrain would almost certainly receive backing from Saudi Arabia. Relations Chart : GDP (% y/y) Bahrain Oman between Saudi and Oman have warmed and we suspect that Qatar and China would also come forward with support for the Sultanate. That said, financing is likely to be conditional on further fiscal austerity being implemented. - 9 e 9 - All told, we expect growth of.% in Bahrain in -9 and.% in Oman. (See Chart.) Our forecasts are below consensus. All of this comes amid heightened political uncertainty. In Bahrain, rumbling tensions between the Shia-majority population and the Sunni leadership could deter investment. In Oman, the poor health of Sultan Qaboos may lead to a period of policy paralysis there. f f 9f Bahrain GDP CPI Inflation Gen l Gov t Bal () Oman GDP..... CPI Inflation..... Gen l Gov t Bal () Sources: IC, Thomson Reuters, Capital Economics. () % of GDP. MENA Economic Outlook Page

9 Egypt Economy to strengthen as inflation and interest rates fall Egypt s economy should pick up in -9 as inflation falls back, interest rates are cut and Chart : Consumer Prices (% y/y) the pace of fiscal consolidation slows. Egypt s economy has weathered the fallout from the pound s steep devaluation in late- well so far. Official figures show that GDP expanded by.% y/y in the first half of last year, up from.9% over as a whole. F'cast 9 9 The pound now looks fairly valued and we don t anticipate another major leg-down in the currency. Inflation, which spiked after the pound s fall, has already started to drop back and we think that it will close in on single digits by the end of. (See Chart.) Weaker price pressures will support growth in households real incomes. Moreover, it should pave the way for the central bank to embark on a monetary easing cycle. We expect the benchmark overnight deposit rate to be cut by more than the consensus anticipates over the next couple of years. (See Chart.) The previous fall in the pound will continue to support external competitiveness which, combined with a recovery in the tourism sector and the Zohr gas field coming on stream, will sustain robust export growth and help to narrow the current account deficit. The government has made good progress with fiscal consolidation over the past year the primary budget balance is on course to record a surplus for the first time in at least years and the debt-to-gdp ratio has started to drop back. Accordingly, we expect the drag from fiscal consolidation to ease this year. All told, we have pencilled in GDP growth of.% this year.% in 9. (See Chart.) Chart : Overnight Deposit Rate (%) Capital Economics Consensus Chart : GDP (% y/y) Forecasts F'cast 9 e 9 e f 9f GDP CPI Inflation Unemp. Rate (%)..... Gen l Gov t Bal (, ) Gen l Gov t Debt (, ) Current Account () Interest Rate % () EGP/USD () Sources: IC, Thomson Reuters, Capital Economics. () % of GDP. () Fiscal Year. () End period. - - MENA Economic Outlook Page 9

10 Lebanon and Jordan Outlook starting to brighten The fading conflict in neighbouring Syria means that the outlook for Jordan and Lebanon is improving. Even so, growth is likely to remain relatively sluggish in -9 and the risks in Lebanon are skewed to the downside. Chart : Jordan Tourist Arrivals (m Sum, mn) "Arab Spring" 9 9 The worst of the Syrian conflict now appears to be over. Against this backdrop, exports from Lebanon and Jordan are likely to strengthen and investment should start to pick up. Meanwhile, there are signs that an easing of security concerns is supporting a slow recovery in key tourism sectors. (See Chart.) 9 Chart : Current Account Balances (% of GDP) - - That said, balance of payments positions are likely to remain fragile. (See Chart.) For now, Jordan s IMF agreement and Lebanon s large - - FX reserves provide substantial backstops. In return for IMF support, though, Jordan will be required to tighten fiscal policy. Fiscal policy - - Lebanon Jordan 9 e will be tightened in Lebanon too, but not enough to put the public finances on a sustainable footing. Lebanon Chart : GDP (% y/y) Jordan The bigger risk for Lebanon is a fresh deterioration in relations with the Gulf. In a worst-case scenario, the country could become the centre of a new proxy conflict between Saudi Arabia and Iran. This would lead to a period of capital flight that ultimately forces the authorities to devalue the pound, in turn creating problems for the government in servicing its large foreign currency debts. Overall, we expect GDP growth of.-.% in Lebanon and.-.% in Jordan in - 9. (See Chart.) Our forecasts lie a touch below the consensus. 9 e 9 f f 9f Lebanon GDP..... CPI Inflation Gen l Gov t Bal () Jordan GDP..... CPI Inflation Gen l Gov t Bal () Sources: IC, Thomson Reuters, Capital Economics. () % of GDP. MENA Economic Outlook Page

11 Algeria Growth to remain weak, dinar to fall further Economic growth in Algeria slowed last year and we expect it to remain weak in -9 on the back of further falls in the dinar and an ongoing fiscal squeeze. Algeria s economy appears to have expanded by % last year, its weakest performance since the global financial crisis in 9. The hydrocarbon sector contracted on the back of OPEC-agreed oil output cuts, while growth in the non-hydrocarbon sector was subdued. The economy may strengthen a little in as the drag on growth from the oil output cuts fades. But there are good reasons to think that growth will remain subdued by past standards. The recent rally in oil prices is likely to fizzle out over the next year or so and, as a result, the current account deficit will remain wide (see Chart ) and we think that the authorities will allow the dinar to weaken rather than continue to burn through their FX reserves. We expect the currency to fall by % against its euro-dollar basket by end-. (See Chart.) A weaker dinar will increase the local currency value of the government s oil revenues and help to narrow the budget deficit. Even so, the authorities look set to pursue further fiscal austerity. Fresh subsidy cuts and a range of tax hikes, combined with fresh currency weakness, will push up inflation and weigh on growth in consumer-facing sectors. All told, we think GDP growth will remain sluggish at.-.% in -9. (See Chart.) A major threat to the outlook is that President Bouteflika, who has been ill for some time, passes away and this prompts a power struggle within the ruling regime. Chart : Budget & Current Account Balances (% of GDP) e 9 Chart : Algerian Dinar (vs. Euro-Dollar Basket, Index, st Jan. = ) Budget Current Account Surplus Deficit 9 9 Dinar weaker *Basket consists of approximately % US dollar and % euro Chart : GDP (% y/y) Forecast Forecast 9 e 9 e f 9f GDP..... Unemp. Rate %..... CPI Inflation..... Gen l Gov t Bal () Gen l Gov t Debt ()..... Current Account () Sources: IC, Thomson Reuters, Capital Economics. () % of GDP MENA Economic Outlook Page

12 Morocco Modest slowdown as boost from agriculture fades Morocco s economy is likely to slow this year as a rebound in the agricultural sector fades. But the rest of the economy should perform well and we are optimistic on the country s long-term prospects. - Chart : Budget Balance (% of GDP) Surplus Forecast - The economy grew by around.% last year, up from.% in. Stronger growth was supported by a rebound in the agricultural sector from a drought. Weather conditions have not been favourable recently and so the agricultural sector is unlikely to provide as much support to overall GDP growth this year Deficit - 9 e 9 Chart : Current Account Balance (% of GDP) Outside of agriculture, though, there are good reasons to think that the economy will perform well. For one thing, the government has made good progress in reining in the budget deficit. (See Chart.) Accordingly, further fiscal consolidation is likely to be less aggressive Forecast 9 e Meanwhile, investment continues to pour into the nascent manufacturing sector. This, 9 Chart : GDP (% y/y) Capital Economics 9 coupled with robust growth in the euro-zone Consensus Morocco s largest trading partner should support stronger exports and help to narrow the current account deficit. (See Chart.) The authorities have shifted to a more flexible exchange rate regime. At this stage, the move represents a tweak rather than a major change in policy. Regardless, there doesn t appear to be any need for a significant currency adjustment. As a result, inflation is likely to stay subdued, supporting households real incomes and consumer spending. All told, we expect Morocco to record GDP growth of.% this year. But the economy should pick up in 9 and we think growth will be closer to.%, which is above the consensus. (See Chart.) 9 e 9 e f 9f GDP..... Unemp. Rate % CPI Inflation..... Gen l Gov t Bal () Gen l Gov t Debt ()..... Current Account () Sources: IC, Thomson Reuters, Capital Economics. () % of GDP. MENA Economic Outlook Page

13 Tunisia Recovery to continue, but risks tilted to the downside Tunisia s economy should continue to recover in -9, but growth will remain sluggish. And the risks are skewed to the downside, especially if recent protests escalate. The economy grew by around.% last year, up from.% in. We expect growth to pick up a bit further in, supported by a continued recovery in the tourism sector as well as robust growth in the euro-zone, a key destination for exports and a vital source of remittances and investment. Chart : Budget & Current Account Balances (% of GDP) Budget Current Account 9 e 9 Chart : Tunisian Dinar (vs., Inverted) That said, growth is unlikely to break free from the sluggish rates recorded since the revolution in. The country s external position is a key source of concern. (See Chart.) An IMF financing agreement will keep strains in the balance of payments contained Dinar weaker against the euro Forecasts In return, though, the Fund will insist that the dinar is allowed to weaken further. We expect the currency to fall by % against the euro by Chart : GDP (% y/y) Forecast end-. (See Chart.) In addition, the government has outlined fresh fiscal austerity plans, including tax hikes and subsidy cuts. These, combined with a weaker currency, will keep inflation elevated, eroding real incomes and dampening consumer spending e The risks are skewed to the downside. If recent protests drag on or even escalate, this could dampen the recovery in the tourism sector and deter investment. Policymakers may respond by watering down austerity and continuing to prop up the dinar. While this would support growth in the near-term, it will simply store up a sharper adjustment for further down the line. All told, we expect Tunisia to record GDP growth of.-.% in -9. (See Chart.) e f 9f GDP..... Unemp. Rate %..... CPI Inflation..... Gen l Gov t Bal () Gen l Gov t Debt ()..... Current Account () Sources: IC, Thomson Reuters, Capital Economics. () as % of GDP. MENA Economic Outlook Page

14 Financial Markets Equity rally to lose steam, dollar bond yields to rise The recent rally in MENA equity markets will probably lose steam over the coming months as oil prices drop back and global equity markets struggle. Meanwhile, we expect dollar bond spreads to widen and yields to rise. Stock markets in the MENA region have made a strong start to, but they have continued to underperform equities in the rest of the emerging world. The MSCI Arabian Market Index has risen by just around % so far this year, compared with an % rise in the MSCI Emerging Markets Index. (See Chart.) We think that equity markets in the Gulf will struggle to make more headway, especially if oil prices fall back and the growth outlook deteriorates again, as we expect. (See Chart.) Geopolitical concerns have seen Gulf equities perform worse than might have been expected given the rise in oil prices. These concerns will linger. There s still no resolution to Qatar s crisis with regional powers and there s a threat of an internal backlash against Saudi Arabia s Crown Prince Mohammed bin Salman. Higher interest rates in the US and a widening of credit spreads will push up interbank rates and dollar bond yields in the Gulf. Local currency bond yields in Egypt have dropped in recent months (see Chart ) and there s scope for them to fall further if inflation and interest rates decline sharply as we anticipate. Chart : MSCI Arabian Markets & Emerging Markets Indices ( st Jan. = ) Jan. -Jan. -Jan. -Jan. 9-Jan. MSCI Arabian Markets MSCI Emerging Markets Chart : MSCI GCC Index & Oil Prices 9 Chart : Egypt m Local Currency Bond Yields (%) Oil Price (Brent, US$pb, LHS) MSCI GCC (Dollar Terms, RHS) Forecast Chart : Egyptian Pound (vs. US$, Inverted) Forecast 9 In currency markets, dollar pegs in the Gulf should remain intact. The Egyptian pound is likely to record only a modest depreciation. (See Chart.) We doubt that the recent move to a more flexible exchange rate will cause the Moroccan dirham to experience a sharp fall. In contrast, we think that the Tunisian and Algerian dinars have much further to fall. CBE floats the pound Egyptian pound weakens against the dollar 9 Sources: Bloomberg, Thomson Reuters, Capital Economics MENA Economic Outlook Page

15 Market Forecasts Table : FX Rates Currency End Latest ( th Jan.) End End 9 Saudi Arabia/$ SAR.... Egypt/$ EGP UAE/$ AED.... Qatar/$ QAR.... Kuwait/$ KWD.... Morocco/ MAD.... Tunisia/ TND.9... Euro-zone/$ EUR.... US USD Japan JPY 9 Source: Bloomberg, Thomson Reuters, Capital Economics Table : Equity Markets Equity Market End Latest ( th Jan.) End End 9 Saudi Arabia TASI,,,, Egypt EGX,9,9,, Abu Dhabi ADI,9,,, Dubai DFMGI,,,, Qatar QSE, 9, 9,, Kuwait KWSE,,,, Morocco MADEX,,,, Tunisia TUNINDEX,,,, Germany DAX,9,,, US S&P,,,, Japan Nikkei,,,, Source: Bloomberg, Thomson Reuters, Capital Economics Table : Government Bond Yields (%) End Latest ( th Jan.) End End 9 Saudi Arabia Dollar.... Egypt yr Local Currency.... EMBI.... UAE (Abu Dhabi) Dollar.... Qatar Dollar..9.. Kuwait Dollar.... Morocco Dollar.... Tunisia Dollar Germany yr Local Currency.... US yr Local Currency.... Japan yr Local Currency.... Source: Bloomberg, Thomson Reuters, Capital Economics MENA Economic Outlook Page

16 Background Charts Chart : GDP ($bn,, Market Exchange Rates) Chart : Population (Millions, ) 9 9 Chart : GDP Per Capita ($,, Market Exchange Rates) Chart : Share of World Output (%,, PPP) Chart : Real GDP (% y/y) Chart : Consumer Prices (% y/y) Latest Observation - - Chart : Budget Balance (% of GDP) Chart : Current Account Balance (% of GDP) Sources: IC, Thomson Reuters MENA Economic Outlook Page

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