Vaccine developments brighten the economic outlook

The positive news on COVID-19 vaccines in recent weeks has helped to lift the near-term outlook for the Middle East and North Africa. For the Gulf countries, oil prices have picked up with Brent crude reaching its highest level since March and we think the rebound has further to run. This will boost oil exports , narrow current account deficits and should alleviate any lingering concerns that dollar pegs will be abandoned. While the recent rise in oil prices is unlikely to prevent OPEC+ extending its current output quotas beyond the end of next year, there will at least be less pressure on policymakers to implement further aggressive fiscal austerity. Meanwhile, the growing likelihood of a resumption of international tourism next year will come as a huge relief for the likes of Dubai as well as the North African economies.