Middle East and North Africa

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EcoTV Week
14/10/2022 • By Pascal DEVAUX

The Qatari economy is dominated by the gas rent, which provides large revenues and is a buffer against external shocks. As gas production is expected to rise by 60%, Qatar will continue to benefit from the favorable prospects of the gas market in the short and the medium term. In the long term, in a context of decarbonisation of economic activities, gas should be a transition fuel. However, the Qatari dependency on hydrocarbon will remain very high.

EcoTV Week
27/05/2022 • By Pascal DEVAUX

In United Arab Emirates, economic prospects are positive in the short term thanks to higher oil prices and the recovery in the service sector. In the medium term, ongoing reforms of public finances will reinforce fiscal metrics. Nevertheless, the oil dependency should remain significant, and leveraged government related entities are vulnerable to monetary tightening.

EcoTV Week
18/03/2022 • By Pascal DEVAUX

The sharp rise in soft commodity prices entails a deepening of the current-account deficit. It should accelerate the deterioration in foreign currency liquidity. In this context, a renewed international financial support could be needed.

EcoTV Week
30/07/2021 • By Pascal DEVAUX

The year 2020 was difficult for the Saudi economy, but the outlook is positive in the short term. A twin shock hurt the economy: the Covid19 pandemic and more importantly the fall in oil prices.

We had a direct impact on fiscal revenues and on economic activity. In addition the government had to accelerate the consolidation of public finances with a negative impact on household demand. The VAT rate has tripled and some allowances have been cut.

The fiscal deficit reached a very high level at more than 11% of GDP and the economic recession has been the deepest for more than 20 years (-4.1%).

The recovery should be moderate this year (2.3%) given the rebound in oil prices and higher production in line with the OPEC+ agreement. The fiscal deficit should reach around 3% of GDP.

In the medium term, this difficult year may have had a positive consequence with the acceleration in fiscal consolidation. It is favourable to the diversification of government revenues. On the contrary, the uncertain oil outlook will continue to constrain the pace of economic reforms.

Key words: oil prices, fiscal consolidation, economic reforms

Summary: In 2020, the Saudi economy recorded a deep economic recession and a very high fiscal deficit. The economy should recover in 2021 with the rebound in oil revenues. The acceleration in fiscal consolidation will have positive consequences in the medium term, but an uncertain oil market outlook will continue to constrain economic reforms.