Economic Analysis - GDP Roundup: Picking Up After 2017 Slowdown - MAR 2018
BMI View: Real GDP g rowth will pick up in the MENA region in 2018, with recovering oil prices and stabilising output in oil-exporting economies, while the positive impact of structural reforms boosts growth in several major oil importers. That said , with persist ent political risk weighing on investor sentiment and oil prices still structurally low by historical standards , a return to the economic gains seen during the mid-2000s boom years is off the cards .
We expect the macroeconomic backdrop to improve in 2018 across the MENA region, after slowing in 2017 due to the OPEC-stipulated oil production cuts, oil prices taking longer-than-expected to recover and persisting political risk. Oil exporters will benefit from robust gains in prices, with our Oil & Gas team now forecasting Brent to average USD65.0 per barrel (/bbl) in 2018, up from USD54.8/bbl in 2017. Higher oil proceeds will enable a boost in government spending which will support economic activity. Meanwhile, progress on structural reforms and overall improving political stability will drive activity in oil-importing economies.
That said, although we hold a more optimistic outlook for the region overall, we do not expect a dramatic acceleration in economic activity. We forecast real GDP growth of 3.0% for the MENA region in 2018, up from an estimated 2.6% in 2017. Structurally lower oil prices will continue to weigh on the pace of growth in oil-exporting economies, especially as diversification plans take time to yield results. Persistent political risk will also weigh on investor confidence across the region, limiting the acceleration of growth.
|Accelerating, But No Return To Boom Years|
|MENA - Average-Weighted Real GDP Growth, %|
|e/f = BMI estimate/forecast. Source: National sources, BMI|