Reality bites

Growth in the Gulf economies has held up well this year, but policymakers cannot delay the adjustment to low oil prices much longer. Tighter fiscal policy looms. Large savings and low debt levels mean that this is likely to be a gradual process, and recessions and currency devaluations are likely to be avoided. Even so, we still think the consensus is too optimistic on growth in this part of the region. Elsewhere, the North African economies of Egypt, Morocco and Tunisia have had a disappointing first half to the year, although with economic reforms underway we think growth will gradually strengthen in 2016-17. Morocco looks set to be a star performer.