Slow recovery lies ahead

The region is set to record its second-lowest growth rate this decade in 2019 and, while a recovery is likely to take hold in 2020, it will be slow going. The drag on the Gulf economies from this year’s oil production cuts will fade, but this will be partially offset as the support from fiscal policy fades and major construction projects wind down. Elsewhere, many of the smaller economies in the region are likely to endure large adjustments in order to address macro imbalances. A debt restructuring in Lebanon appears inevitable. The main bright spot is likely to be Egypt, which will benefit from looser fiscal and monetary policy. Overall, though, our GDP growth forecasts for most countries lie below the consensus.