End of lockdowns unlikely to lead to rapid recovery

Governments across MENA have taken steps to re-open economies over the past month and, after a sharp downturn in April and May, daily indicators suggest activity has started to recover. That said, activity remains well below pre-virus levels. Recoveries in economies with large tourism sectors, such as Dubai and those in North Africa, are likely to lag behind. And austerity will act as a major headwind to the Gulf economies. Balance of payments strains in the likes of Egypt, Tunisia, and Morocco have receded thanks to financial assistance from the IMF. Lebanon’s problems, however, appear to be deepening and there is a growing risk of a disorderly outcome.