At the onset of 2015, movements in international oil prices remained at the center of the economic developments in gulf countries while politics and the security situation took center stage in macroeconomic developments in Syria, Jordan and Egypt. Oil production in Saudi Arabia reached around a 12-years peak in March contributing to the bearish trend in oil prices. However, the Kingdom will remain able to finance the fiscal deficit that will arise in 2015. Economic developments in Qatar displayed offsetting performances, as the state countered headwinds powered by cheaper oil with increased activity in the non-oil sector maintaining the country’s financial health. The bearish trend of international oil prices negatively impacted the UAE’s trade and fiscal balances in Q1 2015. Their ongoing diversification strategy as a buffer away from this vital commodity has never been as important as it is in today’s climate. Death tolls in Syria continued to rise while officials attempt to ease fiscal pressures, reduce inflation and crack down on tax evasion. Despite hopeful economic indicators for Jordan’s economy in January, economic performance across several fronts took a turn for the worst as Jordan found itself to be more actively involved in regional politics by contributing to airstrikes against both the Islamic State and Yemen. In spite of security concerns emerging after the turmoil in Yemen, economic recovery continued in Egypt during the first quarter of 2015 with authorities eager to attract foreign investments and boost tourism activity. Lebanon benefitted from political and economic circumstances, as improved security within the borders and cheaper oil lifted the local economy. In details, Lebanon posted a recovery of its tourism sector, however its real estate sector remained depressed. The fiscal deficit continued to narrow but economic growth projections are still at 2% for 2015.
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MENA Review and Quarterly Outlook – Q1 2015