The Economist Intelligence Unit has revised its forecasts for the Middle East and North Africa in light of the current popular uprisings in the region.
Unsurprisingly, it’s not looking so good for the countries where violence has been widespread, but it’s great for the big oil exporters.
Of course, it’s not as simple as that since some of the oil exporters are also those affected by protests and the state’s violent reaction to them. Take, for example, Bahrain, Syria and Yemen.
All three countries are oil exporters and would ostensibly benefit from the higher oil prices that this crisis has brought about. But all three have suffered the political turmoil.
Bahrain has benefited from help from its Saudi neighbour, both in terms of troops and economic activity – the majority of Bahrain’s oil revenue comes from a shared field with Saudi Arabia – but it will likely suffer from a drop in tourism, real estate investment and a decline in the financial services sector. The EIU has therefore revised growth downwards from 4.3 in 2011 to 2.9 and in 2012, from 5.2 to 3.3.
The situation in Syria has worsened since the latest revisions, so the EIU will again be revising downwards its growth predictions for this country. The government’s continued violent reaction to protestors is likely to affect oil exports, tourism and domestic spending.
Yemen continues to look unstable. While it will benefit from the start-up of liquefied natural gas (LNG) exports, as long as the president’s post looks precarious, the rest of the economy will suffer.
Perhaps surprisingly, Egypt and Tunisia are not thought to be faring as badly as one might think. The reason for this is owing mainly to the relatively peaceful nature of the revolutions and the lack of damage to the country’s infrastructure and state institutions. While both countries have suffered from a downfall in tourism and restrictions on foreign exchange transfers, the EIU is confident about continued growth in 2012.
Needless to say, the situation in Libya looks dire and the prediction is for a significant contraction.
The big winners have been Saudi Arabia, United Arab Emirates, Kuwait and Iraq, who have all benefited from higher oil prices.
Economist Intelligence Unit, Middle East: Adjusting, 21 April 2011
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