Egypt is the star among regional oil importers, according to the IMF: Egypt is setting the trend for growth and adoption IMF-backed economic policies among oil importing countries in the Middle East, according to the oil importers chapter of IMF’s November 2018 Regional Economic Outlook: Middle East and Central Asia (pdf). “Continued strong growth in Egypt and Pakistan in FY2018 is driving the regional aggregate growth higher, masking weaker and more fragile growth in other countries, particularly those affected by conflict or its spillovers (Afghanistan, Jordan, Lebanon, Somalia),” the report says. Growth in the region is projected to reach 4.5% in 2018, up from 4.1% in 2017, before moderating to 4% in 2019, says the report.

Egypt is the frontrunner on key metrics: Egypt and Tunisia were named as among the regional countries where private investment is expected to increase as a result of improved confidence. Egypt will largely drive a projected regional surge in export growth, which is expected to grow 15.4% this year, outpacing import growth of 10.1%. Egypt’s strong performance on the export front reflects “base effects from receding macroeconomic imbalances during 2016–17 and an improved business environment. … Moreover, tourist arrivals have risen steadily following improvements in security, a weaker exchange rate, and a resumption of direct flights from Russia. More broadly, growth in Europe has supported an increase in exports across the region.”

Egypt received praise from the IMF for an improving business environment. “With new laws on bankruptcy and insolvency, Egypt and Tunisia have sought to facilitate the restructuring of failing firms. Egypt is also taking steps to make it easier to improve access to industrial land for business and will sell minority shares in five state firms this year to reduce the role of the state in the economy.” It also praised attempts at strengthening government institutions, including strengthening the competition authority, and making it easier for businesses to get credit.

Egypt has also been the biggest issuer of sovereign bonds in the Middle East, accounting for USD 6.5 bn of the USD 12 bn in issued by states in 1H2018. The report noted that that the borrowing came “amid favorable external financing conditions earlier this year. … The market anticipates issuances from other countries in the region later this year. However, this could prove challenging as emerging market financial conditions have tightened.”

As for regional oil exporters, the IMF warns them not to be complacent with the gains they have made as a result of higher oil prices. Rising oil prices are expected to narrow the GCC’s budget deficit by a collective USD 77 bn, the report said, but it sounds to us as if that statement was written well before crude recent plunge of more than 20%.

You can download the full regional report here (pdf) or visit the landing page here.