The focus on political risk and Lebanon’s growing debt problem have meant that the sharp slowdown in growth across large parts of the region has gone unnoticed. The latest figures suggest that the economies of Saudi Arabia, Qatar and Lebanon were all contracting in the middle of the year, and growth in the UAE, Morocco, Bahrain and Oman slowed. By our estimates, regional GDP growth fell from a peak of 3.5% y/y in Q4 2018 to 1.9% y/y in Q2 and 1.6% in Q3. The impact of oil output cuts and fiscal tightening could cause regional growth to slow to just 1% y/y in Q4, which would be one of the worst outturns this decade.
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