Regional growth to stay subdued in 2017-18

The Middle East and North African economies have slowed sharply this year and growth is likely to be much weaker than the consensus expects in 2017-18. Growth in the Gulf will remain sluggish as the adjustment to low oil prices continues. Dollar pegs will stay, and while the arguments in favour of an oil output freeze have strengthened, we think a shift in oil policy is unlikely. Instead, governments will continue to rely on fiscal consolidation. Elsewhere in the region, the outlook is also subdued. IMF financing agreements should help to shore up fragile balance of payments positions. But currencies will generally weaken and fiscal policy will tighten, leading to sluggish growth. Morocco should be an outperformer.