PANORAMA MENA

How  do  the  Middle  East and  North  Africa  (MENA) economies  perform  after the  social  and  political turmoil  caused  by  the  so called “Arab  Spring” late in 2010?  Have  social  and  economic  demands  of protesters  resulted  in  a  healthier  economic outlook in these countries?In the MENA region, there was always a dive rgence  in  economic  performance  between  oil importing and oil exporting countries, which was reflected  in  the  political  and  social  situation. These  differences  in  economic  performances seem  to  have  increased  despite  the  protests and  demand  for  revolution  since  the  start  of uprisings in the Arab world. The GDP of hydrocarbon  exporting  countries  increased  from  4 times that of the importing countries in 2010 to almost  5  times  in  2013.  The  GDP  of  Saudi Arabia,  the  highest  in  the  area  is  nearly  three times that of Egypt.The  current  situation  varies  across  the  countries.  The  Gulf  Cooperation  Council  (GCC) economies  continue  to  record  relatively  high growth rates, but still below the average growth performance  between  2000  and  2010.

The current account and fiscal surpluses remain ample. However the political and social turmoil rise in some countries like Iraq, Syria, Yemen and Libya negatively affecting the economy. The oil exporters have diversified their economies successfully into other sectors than hydrocarbon such as construction, tourism, transportation, automotive etc. However in terms of budget and exports revenues, these economies continue to depend mainly on the hydrocarbon sector. Therefore a continued decline in oil prices could weigh on non-hydrocarbon investments, funded by hydrocarbon revenues. In this sense, there are still some challenges to beaddressed in these countries. Oil importers face higher risks of geopolitical tensions and regional turmoil. Higher influx of refugees from Syria and further worsening of social and political environment in the region would affect negatively the economic environment, drain resources in the economy and reduce the trade volume.The panorama will focus on hydrocarbon sector for the GCC countries and on the textile sector for the North Africa region, especially Tunisia and Morocco as for both of the regions, these sectors are the main drivers of the economic growth and employment. Despite the ongoing efforts to support non-hydrocarbon industries, the GCC countries remain still quite dependent on the hydrocarbon sector in terms of exports and budget revenues. In the GCC region, hydrocarbon revenues accounted for an aver age 74 percent of total exports and around 83 percent of total government income in 2013. So the diversification is still a challenge. Further decline in oil prices, regional conflicts, lower demand from China seem to represent principal sources of risk in the sector.Both Tunisia and Morocco prioritize the development of the textile and clothing sector. In Morocco the textile sector is the largest employer of the industrial workforce with 40 percent and in Tunisia it is the largest exporter and provides 7 percent of the total employment. The main clients of the textile and clothing companies in these countries are European firms which create a risk in case of a sluggish recovery in Western Europe. There are also other challenges such as the need for innovation, access to finance and the political uncertainty.The panorama will also assess the latest trends in construction, tourism and automotive sectors across the MENA region to evaluate possible corporate risks.