Mubasher: MENA economies are expected to grow 3.2% in 2016 and 2017, according to a report released by KAMCO Research.
“The decline in oil prices shows the volatility it can cause on state finances, especially in the case of oil exporters,” the report said.
Prices in the GCC are also projected to increase higher than historical norms 3.6% in 2016 and to decrease 2.6% in 2017.
The research firm noted that private lending in the GCC remains high as banks continue to roll out credit facilities with limited and country specific impact on their liquidity.
GCC governments tend to implement value-added tax (VAT) starting from 2018, KAMCO added saying “the initiative is seen as incrementally positive in our view.”
Official reserves of MENA oil exporters are likely to fall to $1.1 trillion in 2016, with a further decline of $44 billion in 2017, as the countries tap it to spend on key projects, according to the report.
KAMCO pinpointed that MENA countries, especially the oil exporters, are looking to plug the budget shortfall by either issuing more debt to domestic or international investors, or liquidating some of their offshore assets.
Moreover, Conventional bond issuances in the MENA region rose 10% to $102 billion from the beginning of 2016 to 12 December, compared to $92.8 billion in 2015. The growth in 2015 was slightly lower at 8.7% over the previous year.
