Economic reforms and sound fiscal positions are offsetting the impact of regional conflicts and lower oil prices on the ratings of Middle East and North Africa (Mena) sovereigns, according to a new report by Fitch Ratings.

Growth is strengthening across the region, especially in oil producers supported by higher oil production and state-investment‑fuelled non-oil growth. There has also been strong growth in Egypt, due to recovering domestic demand, and Morocco, underpinned by solid investment dynamics and better weather conditions, stated the top ratings agency.

There has been no impact on ratings from the recent conflicts in the region (except for Israel), largely because they have mostly been geographically contained to unrated sovereigns. However, the evolution of the conflicts, particularly any renewal of military activity between Iran and Israel, is a significant downside risk, it warned.

According to Fitch, the oil prices have been surprisingly stable given the geopolitical turmoil.

Opec+ spare production capacity has supported the market and remains ample despite rising production. At Fitch’s forecast price of $70/bbl for 2025, all GCC sovereigns except Bahrain and Saudi Arabia are projected to record fiscal surpluses it stated.

There has been a small improvement in the average rating for the region over the past 12 months despite lower oil prices and regional conflicts. The net upgrade balance is two and the region is in its longest period without a downgrade since H1 2015, it added.

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