S&P Global Market Intelligence, an independent division of Standard & Poor’s, said that the Middle East and North Africa region may continue to face difficult economic conditions in the near term, in light of the continued regional geopolitical tensions and increasing risks.
Furthermore, the agency assumes a number of scenarios that the region will be exposed to, as the baseline scenario assumes no regional escalation of the existing conflict, expecting real GDP growth in the Middle East and North Africa region to be moderate at 1.4% in 2024, before rising between 3% and 4% in 2025 and 2026, supported by the strong economic momentum of the Gulf countries, which have a significant weight in light of the trends to resume increasing oil production rates and start monetary easing and restrictions.
The agency expects economic growth in the Gulf countries to accelerate and gradually get rid of the repercussions of the conflict, noting that the GCC countries will only witness a limited impact as a result of the escalating confrontations in the Near East. This will be unless a major conflict erupts, as is evident from the purchasing managers’ indicators, which show the continued expansion of non-oil economic activity and the improvement of supply chain performance.
The report stated that the risks threatening the outlook appear mostly negative, in light of expectations that severe disruptions to shipping operations in the unlikely event of the closure of the Strait of Hormuz, will lead to cascading effects on supply chains and the global economy through higher inflation, tighter financial conditions and weaker confidence.