Increased economic diversification, coupled with higher average oil production in the Middle East and north Africa (MENA) means that the MENA region’s GDP as a whole will increase from 3.5% to 4.1% in 2014, the US-based sovereign ratings agency Fitch Ratings has predicted in its latest report for credit-rated MENA countries.
Although long-term oil production in oil exporting countries is expected to decrease, Fitch estimates that oil production levels in 2014 will be higher than in 2013, and it also expects that growth in countries such as Saudi Arabia and the United Arab Emirates (UAE) will become more diversified, with these oil exporting countries benefiting from robust growth in the non-oil sectors.
Although growth across the MENA region will be robust, Fitch maintained that there will be a marked divergence in the economic performance of oil exporters and oil importers. While oil importers, such as Egypt, have more diversified economies, Fitch noted in its report that their overall GDP growth will be from a relatively low base as their weaker fiscal and external positions will continue to weigh on their economic performance. This is in contrast to oil exporters, which are growing from a higher base.
Yet greater political stability in Egypt, coupled with the improving availability of foreign exchange in the country, is expected to offset its slower performance as an oil importer, and this led Fitch to predict that the region as a whole will continue to have a “stable” outlook for the coming year.