Oil production cuts, fiscal austerity, the continued spread of the virus, and weakness in key tourism sectors will hold back economic recoveries across the Middle East and North Africa. It will be one of the worst performing EM regions over the next few years. We expect dollar pegs in the Gulf to remain intact, but currencies in North Africa are likely to weaken. Lebanon’s crisis is becoming increasingly disorderly and its economy is likely to shrink by close to a third this year. Elsewhere, we harbour longer-term concerns about debts in Dubai and Tunisia.
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