|07 January, 2020

Mena GDP growth seen at 2.7% in 2020: MUFG

Saudi Arabia was the Mena regional outperformer in 2019 and this trend will follow in 2020

Image used for illustrative purpose. Magnifying glass and banknote Saudi Arabia.

Image used for illustrative purpose. Magnifying glass and banknote Saudi Arabia.

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Regional real GDP growth is forecast to expand by 2.7 per cent in 2020 from a near flat 0.1 per cent in 2019, said Mitsubishi UFJ Financial Group (MUFG), a Japanese financial services company, in its first Mena Economic Weekly of the year.

Other key highlights from the Mena Economic Weekly report:

• Saudi Arabia was the Mena regional outperformer in 2019 and this trend will follow in 2020.

• Oil prices fell on average by over 10 per cent in 2019, despite registering stronger year-on-year (y/y) growth. The report expects this bearish trend to continue in 2020, notwithstanding recent geopolitical tensions.

• Attending to growing financing needs in a volatile oil price environment has driven Mena oil exporters to increasingly diversify their sources of financing over the years. The report states that most of these countries have the capacity to finance their deficits and investment programmes.

• The GCC region’s rise from an ad hoc issuer of international capital markets, to a regular and vital space for debt issuance has been remarkable in recent years. The GCC states have had a stellar performance in line with broader EMs, despite geopolitical volatility and commodity related concerns – a testament of the strength of the region.

• The report says that Saudi Arabia as well as the rest of the region will accelerate privatisation plans this year, which is in line with the economic transformation strategy wherein the state slowly withdraws and allows the private sector to lead.

• Looking ahead, the expectation is that the region will come out of deflation with prices rebounding in 2020 owing to a rebuild of pricing pressures due to a pick-up in non-oil GDP activity.

• Dubai’s economy is growing at its slowest pace since the financial crisis in 2009 with real GDP growth at only 2.1 per cent in H1 2019. Having said this, expectations are for Dubai to witness a rebound in economic growth this year along with renewed business optimism surrounding future output. – TradeArabia News Service

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