MENA: 2025 outlook stable on growth and reforms despite geopolitics
Source: Middle East Insurance Review | Mar 2025
The outlook for credit fundamentals for sovereigns in the Middle East and North Africa (MENA) remains stable, said Moody’s Ratings in a new report.
Supportive, albeit lower oil prices and a recovery in oil production will buttress economic growth and public finances for the region’s hydrocarbon exporters. Easing monetary conditions and large investment projects will underpin steady growth for the wider region, in turn supporting further fiscal adjustment and reforms. Despite having a limited economic and fiscal impact in 2024, regional geopolitical tensions remain the main source of credit risk, said the rating agency.
Takeaways from the report:
- Real GDP growth for the region’s hydrocarbon exporters is set to rise to 3.5% in 2025 from an estimated 1.9% in 2024 as Saudi Arabia, UAE, Iraq, Kuwait and Oman begin to reverse some of the oil production cuts implemented in 2023
- The impact of large investments will be most visible in Saudi Arabia as high government and sovereign wealth fund spending related to the Vision 2030 diversification programme continues into 2025
- Growth in Qatar will be supported by the development of the petrochemical industry and construction activity related to the expansion of the LNG production capacity, scheduled to come online during 2026-2030.
- In Kuwait, non-hydrocarbon growth will be driven by large projects including the construction of a new port and a new airport terminal
- If improved domestic security conditions are sustained, Iraq’s non-hydrocarbon growth will remain above pre-COVID 19 averages due to gradual implementation of several transport and energy projects
- In the UAE, non-hydrocarbon growth will slow slightly due to the completion of some infrastructure projects, but remain robust at around 5% in 2025. M