Following a good performance in 2022, the MENA region’s development will decrease in 2023, in accordance with the global economic slowdown, as declining oil prices harm the region’s oil-exporting countries.
Several supportive factors, including a projected stabilization in oil prices, should fuel a comeback beginning in 2024, according to Atradius’ 2023 Regional Economic Outlook report. However, oil price volatility and climate change pose substantial dangers.
The report forecasts a normalization of economic growth to around 3% in 2024, based on the central tenet that the oil price balances out between USD 80-85.
The same source did point out that inflation is only gradually subsiding in nations that import energy and that it is still suppressing private consumption. It is still possible that Tunisia, Morocco, Egypt, and Lebanon could see currency decline.
The oil-producing nations, led by Saudi Arabia and the UAE, have the best investment prospects. A variety of options are presented by ample oil-related liquidity and a balanced strategy for developing their traditional hydrocarbon businesses while also making their economies greener and more diverse.
“MENA’s enormous trade potential is bolstered by a proactive trade shift towards fast-growing regions like Asia. This move is accompanied by a geopolitical reorientation in the same direction,” said Atradius, a leading trade credit insurance group.
The countries with the largest payment risks are Egypt, Tunisia, and Lebanon as a result of the lack of political will to address balance of payments problems, which has reduced the availability of hard currency in those countries.
Macroeconomic imbalances are also getting better with the anticipated stabilization of the oil price. It enables the majority of nations that export hydrocarbons to balance their budgets or even maintain surpluses.
As the effects of increasing domestic renewable energy capacity become more pronounced, energy-importing nations will resume their downward trend in fossil fuel imports if oil prices remain stable at roughly USD 80–85 per barrel.
However, the country’s risk and predicted economic development are at risk from changes in the price of oil. Atradius pointed out that Lebanon, Tunisia, and Egypt all present significant threats. They also have large levels of public debt, high inflation, and low economic growth rates, which makes it difficult for them to absorb future shocks from the outside world.