The macroeconomic picture in the MENA region was little changed during the second quarter of 2016. Oil-exporting countries were still trying to weather the impact of subdued oil prices on their fiscal and external positions by diversifying away from oil. Saudi Arabia announced an ambitious and saluted National Transformation Program focused primarily on strengthening the non-oil economy through the active participation of the private sector. Many projects and events were added to the United Arab Emirates’ (UAE) agenda in Q2 2016 as a try-out to attract more tourists and strengthen the real estate sector. As for Qatar, authorities tried to cut governmental expenditures in addition to raising near $9.0B in the debt markets. When it comes to oil-importing countries, low oil prices failed to boost economic performance as regional instabilities along with structural external and fiscal deficits remained sturdy. Starting with Egypt, the devaluation of the pound did not limit the development of the black market but drove upwards inflation levels and imports’ prices. Likewise, rebuilding Foreign Currency reserves was not achieved amidst worsening tourism and investment environments. In Jordan, the Central Bank of Jordan has attempted to lower interest rates to spur investment, but continues to face difficulties in translating these policy changes into results. Lebanon is still trying to recover from previous years’ low growth levels; however, with the continuing political deadlock, and without structural reforms, Lebanon is deemed to remain in the vicious cycle of low growth, low investment, high external and budget deficits, and high debt. On the Syrian battlefield, the regime and the opposition are fighting to take over the strategic town of Aleppo. On the economic front, the government was left with no choice but to up energy prices, a move that sparked a strong wave of popular outrage.
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