الرئيسية
ARAB NEWS
LONDON: Fitch Ratings says in its latest global Sovereign Review and
Outlook report that although growth in the Middle East and Africa (MEA)
region will slow in 2012 to 4 percent from almost 5 percent this year,
tracking the forecast global slowdown, the broader impact on the
regions’ countries will be limited.
Of the 26 countries in the region, all are on Stable Outlook except
for the three Negative Outlooks on Egypt (BB), Tunisia (BBB-) and
Lesotho (BB-).
The reason for MEA’s relative resilience is partly the limited
expected impact on commodity prices, especially oil, which Fitch sees
averaging $100/bl in 2012 compared to $110 in 2011. The oil market
remains tight and rising political risk centered on Syria and Iran is
another factor keeping prices high, notwithstanding likely slower demand
growth. Global financial linkages remain limited for most countries in
the region, with noticeable exceptions such as South Africa. Unlike in
2009, however, Fitch expects only a mild slowdown in South African
growth to just under 3 percent.
The major Gulf oil exporters ship most of their oil to Asia.
Meanwhile, China’s growing trade and financial links with Africa and its
importance for global commodity prices, means a slowdown in China and
Asia more generally would be of potentially greater significance for
Africa than the impending slowdown in Europe (see Fitch’s Sub-Saharan
Africa: Facing its Challenges, Dec. 12, 2011).
The expected slowdown in the major oil exporters in 2012 is mainly
because this year’s increase in oil production post the Libya conflict
will not be repeated. Nonoil growth will be sustained by strong oil
revenues and government balance sheets that allow Saudi Arabia and
Kuwait to maintain strong infrastructure programs. Abu Dhabi has put
more emphasis on fiscal consolidation this year, however, and will
probably see a sharper slowdown in 2012 than the other two major oil
exporters. But as a result, its breakeven oil price will fall while
those of Kuwait and Saudi Arabia will continue rising. All three
sovereigns enjoy enormous fiscal flexibility in the event of lower than
expected oil prices.
Trade links with Europe are greatest for North Africa, and this will
add to the political challenges Tunisia, Morocco and Egypt already face,
as markets for exports, tourism and sources of FDI and other capital
inflows become more constrained. Egypt and Tunisia should nevertheless
manage a modest pick up in 2012 but Morocco, which has not seen the
political disruption of its neighbors, will slow, reflecting its
proximity to Europe.
Egypt’s political transition is proving to be turbulent.
Nevertheless, two rounds of elections have been successfully held, with a
high turnout. Islamist parties have won the biggest share of the vote
in each of Tunisia, Morocco and Egypt. And in all three, coalitions have
been or are likely to be formed with secular parties. In no case has
there been any suggestion of radical departures from macro economic
orthodoxy. Nevertheless, meeting newly empowered electorates’ increased
expectations for jobs and growth will present formidable policy
challenges to new governments in 2012.
The main concern in Egypt is the weakness of a succession of
transitional governments, which has hampered decision making and
contributed to delays in agreeing external assistance. Little of the
substantial sums offered earlier this year have actually materialized.
This has increased the burden on domestic financing, with bond yields up
sharply and international reserves continuing to fall, eroding what was
an important rating strength.
The recently appointed government will need to present a coherent
policy framework and boost confidence soon if international reserves are
not to fall to critical levels.
Fitch sees Sub-Saharan Africa growth sustained at 5 percent to 5.5
percent in 2012. The region’s two biggest economies, South Africa and
Nigeria, will slow, but Nigeria is expected to remain one of the few
economies globally with growth above 7 percent in 2012. Others in the
region are Angola, Ghana, Mozambique and Rwanda. Nigeria’s monetary
framework has been strengthened this year.
However, tightening fiscal policy remains a key challenge. A plan to
save excess oil revenues in a new sovereign wealth fund is subject to
political challenge and plans to remove petroleum subsidies are proving
controversial. Prospects for Nigeria in 2012 will depend on the course
of oil prices first and foremost, but also on the government’s success
in implementing its structural reform agenda. Kenya and Uganda have had
the challenge of very rapid inflation this year due to high fuel and
food prices and also weakening currencies. Interest rates have had to
rise sharply. This should help return inflation to single digits in
2012, with only Nigeria and Angola expected to retain double digit
inflation.
LONDON: Fitch Ratings says in its latest global Sovereign Review and
Outlook report that although growth in the Middle East and Africa (MEA)
region will slow in 2012 to 4 percent from almost 5 percent this year,
tracking the forecast global slowdown, the broader impact on the
regions’ countries will be limited.
Of the 26 countries in the region, all are on Stable Outlook except
for the three Negative Outlooks on Egypt (BB), Tunisia (BBB-) and
Lesotho (BB-).
The reason for MEA’s relative resilience is partly the limited
expected impact on commodity prices, especially oil, which Fitch sees
averaging $100/bl in 2012 compared to $110 in 2011. The oil market
remains tight and rising political risk centered on Syria and Iran is
another factor keeping prices high, notwithstanding likely slower demand
growth. Global financial linkages remain limited for most countries in
the region, with noticeable exceptions such as South Africa. Unlike in
2009, however, Fitch expects only a mild slowdown in South African
growth to just under 3 percent.
The major Gulf oil exporters ship most of their oil to Asia.
Meanwhile, China’s growing trade and financial links with Africa and its
importance for global commodity prices, means a slowdown in China and
Asia more generally would be of potentially greater significance for
Africa than the impending slowdown in Europe (see Fitch’s Sub-Saharan
Africa: Facing its Challenges, Dec. 12, 2011).
The expected slowdown in the major oil exporters in 2012 is mainly
because this year’s increase in oil production post the Libya conflict
will not be repeated. Nonoil growth will be sustained by strong oil
revenues and government balance sheets that allow Saudi Arabia and
Kuwait to maintain strong infrastructure programs. Abu Dhabi has put
more emphasis on fiscal consolidation this year, however, and will
probably see a sharper slowdown in 2012 than the other two major oil
exporters. But as a result, its breakeven oil price will fall while
those of Kuwait and Saudi Arabia will continue rising. All three
sovereigns enjoy enormous fiscal flexibility in the event of lower than
expected oil prices.
Trade links with Europe are greatest for North Africa, and this will
add to the political challenges Tunisia, Morocco and Egypt already face,
as markets for exports, tourism and sources of FDI and other capital
inflows become more constrained. Egypt and Tunisia should nevertheless
manage a modest pick up in 2012 but Morocco, which has not seen the
political disruption of its neighbors, will slow, reflecting its
proximity to Europe.
Egypt’s political transition is proving to be turbulent.
Nevertheless, two rounds of elections have been successfully held, with a
high turnout. Islamist parties have won the biggest share of the vote
in each of Tunisia, Morocco and Egypt. And in all three, coalitions have
been or are likely to be formed with secular parties. In no case has
there been any suggestion of radical departures from macro economic
orthodoxy. Nevertheless, meeting newly empowered electorates’ increased
expectations for jobs and growth will present formidable policy
challenges to new governments in 2012.
The main concern in Egypt is the weakness of a succession of
transitional governments, which has hampered decision making and
contributed to delays in agreeing external assistance. Little of the
substantial sums offered earlier this year have actually materialized.
This has increased the burden on domestic financing, with bond yields up
sharply and international reserves continuing to fall, eroding what was
an important rating strength.
The recently appointed government will need to present a coherent
policy framework and boost confidence soon if international reserves are
not to fall to critical levels.
Fitch sees Sub-Saharan Africa growth sustained at 5 percent to 5.5
percent in 2012. The region’s two biggest economies, South Africa and
Nigeria, will slow, but Nigeria is expected to remain one of the few
economies globally with growth above 7 percent in 2012. Others in the
region are Angola, Ghana, Mozambique and Rwanda. Nigeria’s monetary
framework has been strengthened this year.
However, tightening fiscal policy remains a key challenge. A plan to
save excess oil revenues in a new sovereign wealth fund is subject to
political challenge and plans to remove petroleum subsidies are proving
controversial. Prospects for Nigeria in 2012 will depend on the course
of oil prices first and foremost, but also on the government’s success
in implementing its structural reform agenda. Kenya and Uganda have had
the challenge of very rapid inflation this year due to high fuel and
food prices and also weakening currencies. Interest rates have had to
rise sharply. This should help return inflation to single digits in
2012, with only Nigeria and Angola expected to retain double digit
inflation.