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Wednesday, 6 March 2019

MENA growth to slow in the coming months, say Focus Economics

MENA growth to slow in the coming months, says Focus Economics: Economic growth in the Middle East and North Africa is set to slow in the coming months on the back of oil supply cuts, according to Focus Economics. The economic forecasting company says in its latest MENA outlook that OPEC’s voluntary production cuts result in a “sharp reduction in GDP growth” among oil-dependent economies albeit as it increases fiscal stability. As a result Focus Economics has left its MENA GDP forecast unchanged at 1.9% in 2019 and 2.8% in 2020. Unrest is also a key downside risk,with the eruption of protests in Algeria against President Abdelaziz Bouteflika’s rule and the potential for labor unrest in Tunisia.

Everything is looking up for Egypt, though. Egypt is still expected to be the top-performing MENA country in terms of GDP, with 5.3% growth in 2019 that will accelerate to 5.4% in 2020. Focus Economics expects inflation to average 12.1% through 2019 and cool to 10.8% in 2020, which would give the Central Bank of Egypt the breathing room to make further rate cuts over the next two years. The firm projects an overnight deposit rate of 14.93% by the end of 2019 (from 15.75% currently) and 13.46% in 2020. As for exchange rates, Focus Economics sees the EGP weakening against the USD as the CBE continues to ease, finishing 2019 at EGP 18.30 per USD, and 2020 at EGP 18.79 per USD.

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