The situation in Lebanon is going from bad to worse and the chances of a combined debt, currency and banking crisis are rising. President Aoun seems to be seeking a bailout package but this would only pave the way for a smoother outcome if it is backed up by a credible plan to tighten policy and initiate reforms. Elsewhere, reports this week suggest that the blockade imposed on Qatar in mid-2017 could be coming to an end, but this won’t lead to a turnaround for the economy. And finally, infighting in Kuwait supports our view that fiscal policy won’t be loosened in the coming years.
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