Steepest downturn since the 1980s

Efforts to contain the coronavirus mean that the economies of the Middle East and North Africa will suffer their steepest downturn this year since the early 1980s. Draconian social distancing measures and travel restrictions are likely to have the biggest impact in Egypt, Tunisia, Morocco and Dubai. In the latter, this may cause fresh debt problems. Meanwhile, lower oil production and the collapse in oil prices will push the Gulf economies into recession. We expect dollar pegs to remain intact but there is limited scope for a fiscal response. Once the virus is brought under control, recoveries are likely to be slow going.