EBRD upbeat on MENAs economic outlook, Morocco best performer.

By bne IntelliNews January 22, 2013
The EBRD is optimistic on the economic outlook of the four MENA countries where it launched investments in 2012 with Morocco being the best performer, according to EBRDs latest economic outlook. MENA is reportedly on a recovery path from the political and security turmoil of the Arab Spring. Moroccos GDP growth will quicken to 5.2% in 2013 from 2.6% a year earlier while Jordans GDP growth will remain subdued at 3.0%, EBRD said. Tunisias GDP growth will speed up to 3.0% in 2013 from 2.4% the year before, the bank forecasts. Jordans economy continues to be constrained by its vulnerability to external factors which have weighed on the countrys fiscal and BoP parameters, EBRD said. The latter were dented by higher oil prices, lower foreign grants and interruption of Egyptian natural gas supplies, EBRD noted. The bank underscored that the recently approved USD 6.2bn IMF Stand-by Agreement has been complemented by macroeconomic policies aimed at reducing fiscal and external imbalances. EBRD warned that policy space has been significantly constrained, limiting the governments ability to boost GDP growth, which the bank forecast to have remained unchanged at 2.6% in 2012. Prospects for economic recovery are fragile as the external environment is expected to remain weak in the near term, EBRD said. Jordans outlook remains aggravated by a need for fiscal consolidation and mounting political tensions, denting tourism and capital inflows, EBRD warned. Moroccos economic growth remains below potential and undermined by external weakness due to the Eurozone crisis, EBRD said. Agricultural production (which accounts for 15% of GDP) remains significantly weak following severe droughts in 2012, the bank underscored. This resulted in a weaker household consumption, as the agriculture sector accounts for around 40%. But the non-farming sector has remained strong underpinned by strong performance in the telecom and energy sectors, as well as in the services sector, EBRD noted. Moroccos economy, however, remains vulnerable to external developments, especially high oil prices and a weak external environment, leading to a widening CA deficit. The latter will reach 8.0% of GDP in 2012, EBRD forecasts. The budget deficit will likely remain a concern in 2013 but the IMFs USD 6.2bn provides a safety net, EBRD said. Political instability and the longer-than-expected transition continue to weigh on Tunisias economic outlook, EBRD said. The bank underscored the deterioration of the current account in the first nine months of 2012 despite a rebound in tourism. This was due to retreating exports and higher imports of energy and consumer products. But capital inflows have started to recover despite remaining low by historical standards and not enough to offset the widening CA deficit, EBRD said. The central bank, thus, was forced to tap into its FX reserves which retreated to a critical level of just three months of imports, EBRD warned. The fiscal deficit also continues to widen, due to higher spending on development, job creation, and higher subsidy bill, the bank said. EBRD underscored Tunisias success in raising much-needed foreign loans which should also help finance the widening fiscal deficit and replenish the countrys FX reserves, it said. Renewed political turmoil and widespread protests are expected to constrain GDP growth in Egypt impacting the business activity, tourism and confidence, EBRD said. The bank sees continuous pressure on the balance of payments as a result of capital flight with foreign currency reserves standing at the critical level of three months of imports. EBRD stressed that the deterioration in the balance of payments and the macroeconomic fundamentals is contributing to a growing gap in state finances, which pushed the government to seek a USD 4.8bn Stand-by Agreement with the IMF.
GDP CPI inflation
2011 2012(F) 2013(F) 2011 2012(F)
Egypt -0.8% 3.1% 3.8% 10.1% 7.9%
Jordan 2.6% 2.6% 3.0% 4.4% 4.8%
Morocco 5.0% 2.6% 5.2% 0.9% 1.3%
Tunisia -1.5% 2.4% 3.0% 3.5% 5.4%
Source: EBRD
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