The early signs from the Middle East and North Africa are that efforts to contain the coronavirus and the collapse in oil prices are dealing a heavy economic blow. Whole economy PMIs plunged to record lows in March, flight cancellations are widespread and weak external demand is leading to a sharp drop off in exports. Strains in the balance of payments have forced several countries to turn to the IMF. And the Gulf economies are drawing down their FX savings in order to protect their dollar pegs, which we expect to remain intact. Some countries have started to lift restrictions in recent days but it will take some time for a return to anything resembling normality. What’s more, the limited policy support means that economic recoveries are likely to slow going compared with other parts of the world.
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