Investor sentiment towards oil exporters in the region will remain favorable due to elevated energy prices. Total capital inflows will remain modest in 2023, as sovereigns issue less debt due to continued fiscal surpluses. FDI will become the main conduit for nonresident capital inflows.

The result of higher oil prices is a shift in purchasing power from oil consumers to producers. Oil exporters are getting a boost to their terms of trade, leading to wider CA and fiscal surpluses. Higher energy prices will hurt several EMDEs that remain heavily dependent on petroleum imports.

The MENA region has weathered the economic storm from the health crisis. The economic recovery continues to gain momentum. Higher energy prices will improve the fiscal and current account positions in oil exporters. In oil importers, deficits, government debt, and unemployment will remain high.

GCC authorities took forceful steps to mitigate the fallout from COVID-19, and we expect a modest recovery in 2021 supported by higher oil prices. However, the region confronts an ongoing exodus of expats and decelerating growth of capital stock, underscoring the need for broad structural reforms.

Sovereigns are increasingly tapping capital markets to finance fiscal deficits. Private inflows to the MENA region continue to be dominated by Saudi Arabia, the UAE and Qatar. Resident outflows are declining but still exceed inflows. FDI remains subdued and concentrated in the energy sector.

Progress is being made on fiscal adjustment and structural reforms. The sharp fall in oil revenues will exceed the cut in public spending, leading to a large fiscal deficit. Strong adjustment and partial recovery in oil prices could make the fiscal position more sustainable.

Our MENA growth forecast stands at -0.3% with additional downside risks and high uncertainty over the duration of the shutdown and an additional potential fall on oil prices. We project recession in most oil exporters, the lowest growth in oil importers since the early 1990s, and wide twin deficits.

We have lowered our average Brent oil price assumption by $10/bbl to $54/bbl for 2020 due to lower global demand for oil. Such a decline exposes significant vulnerabilities among MENA oil-exporting countries, especially Oman and Bahrain. External and fiscal positions are expected to weaken.

Non-resident capital inflows to the MENA region are projected to rise from $165bn last year to $200bn in 2019 before moderating to $173bn in 2020. With the increasing inflows, inclusion into global indices, and ongoing reforms, the MENA region is becoming more prominent on the EM investment map.

We expect growth in the MENA region to slow to 1.4% in 2019 from 1.8% in 2018, dragged down by the deep recession in Iran and the compliance with the OPEC + deal. This aggregate picture, however, hides considerable heterogeneity in economic paths across the region.

We still expect Brent oil prices to average $65/b in 2019 and $62/b in 2020. Growth in non-OPEC supply combined with deceleration in global oil demand growth in 2019 and 2020, is offsetting upward pressure on oil prices from rising geopolitical tensions that could disrupt supply.

The GCC countries followed the Fed and cut their key policy rates, given their pegged exchange rates. Lower interest rates will encourage borrowing and stimulate non-oil growth, which has been weak in recent years. We expect non-oil growth to pick up from 2.1% in 2018 to 2.8% in 2019.

While narrowing, we expect the fiscal deficit to remain large at 9.3% of GDP in 2018. Pressure on credit ratings will increase as public debt surpasse.

The Omani economy is one of the most vulnerable of the MENA countries to prolonged lower global oil prices. We expect real GDP growth to slow to less.

In spite of the oil price shock, economic activity has been robust until recently, but we expect nonoil growth to slow to about 1% in 2016.' With larg.

Government initiatives have been launched to promote financial inclusion, namely to support wage payments through the banking system and to require ba.

On our recent visit to Oman, we found the pace of economic activity decelerating as the authorities grapple with large twin deficits. Growth had been.

High oil prices and an increase in production pushed the budget surplus up to an estimated 4.2% of GDP in 2012. Expenditure has risen sharply over the.

An increase in oil and gas production and robust activity in the nonhydrocarbon sector pushed growth to an estimated 7.1% in 2012. The biggest challen.