Country Risk Weekly Bulletin 576

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Country Risk Weekly Bulletin 576

March 21, 2019
Country Risk Weekly Bulletin 576
Source: Mercer

  • Quality of living varies across Arab world
    The 2019 Mercer survey on the quality of living in 231 cities around the world shows that Dubai is the city with the highest living standards in the Arab region and ranks in 74th place globally. Abu Dhabi followed in 78th place, then Muscat (105th), Doha (110th) and Tunis (114th) as the best cities for overall quality of living among 22 Arab cities; while Nouakchott (221st), Damascus (225th), Khartoum (227th), Sana'a (229th) and Baghdad (231st) are the least appealing Arab cities in terms of living conditions. The study evaluates the cities on the basis of 39 key quality-of-living determinants grouped in 10 categories that include political, economic and socio-cultural factors, in addition to healthcare & sanitation, schools & education, public services & transportation, recreation, consumer goods, housing, and the natural environment. Based on the 22 Arab cities that were included in both the 2010 and 2019 surveys, the rankings of 11 cities in the region improved, eight declined and three were unchanged over the 2010-19 period. Amman's rank rose by eight spots and constituted the best improvement regionally. In contrast, the rank of Damascus regressed by 42 spots, representing the steepest decline globally between 2010 and 2019. Also, 12 Arab cities ranked in the bottom third globally in 2019 and six cities came among the bottom 20 cities worldwide. The survey is conducted annually to help multinational companies assess international hardship allowances and incentives for their expatriate workers. 
    Source: Mercer, Byblos Research
     

  • Growth of Western African economies to average 6.7% in 2019-23 period
    The International Monetary Fund projected real GDP growth in the economies of the West African Economic & Monetary Union (WAEMU), which consist of Benin, Burkina Faso, Côte d'Ivoire, Guinea-Bissau, Mali, Niger, Senegal and Togo, to average 6.7% annually during the 2019-23 period, compared to 6.3% in 2018. It noted that the region's economic activity has been driven by strong domestic demand, despite security concerns in the region and lower terms of trade. It expected the inflation rate to remain subdued at about 1.8% annually in the 2019-23 period, which will support the union's economic activity. The Fund indicated that the region's medium-term growth outlook is positive but depends on the implementation of the planned reforms. It said that the outlook is subject to significant downside risks that include persistent security issues, delays in implementing fiscal consolidation and structural reforms, higher imports or lower capital flows, weaker-than-expected global economic activity and tighter global financing conditions.

    The IMF forecast the WAEMU's aggregate fiscal deficit to narrow from 3.8% of GDP in 2018 to 3.1% of GDP in 2019 and 2.6% of GDP by 2023, as the eight economies are committed to meet the regional fiscal deficit convergence criterion of 3% of GDP. It noted that the union's public debt level increased from 50.1% of GDP at the end of 2017 to 52.5% of GDP at end-2018 due to increased Eurobond issuances, but expected the debt level to decline to 46.5% of GDP by end-2023. Further, it said that the aggregate current account deficit of WAEMU economies widened from 6.6% of GDP in 2017 to 6.8% of GDP in 2018 due to strong public capital spending and worsening terms-of-trade amid higher oil prices, while it projected the deficit to narrow to 5% of GDP by 2023. It anticipated the region's gross foreign currency reserves to rise from $12.4bn in 2018 to $23.6bn in 2023.
    Source: International Monetary Fund
     

  • Iraq's growth at 4% in 2019 amid reconstruction plans
    The Institute of International Finance indicated that the domestic political gridlock has impeded Iraq's recovery path, as the government remains incomplete since the May 2018 elections. Still, it noted that economic conditions in Iraq are improving, amid rising oil production and the defeat of Islamic State militants. It projected real GDP growth to accelerate from 2.3% in 2018 to 4% in 2019, and to continue rising over the medium term, driven by reconstruction plans. It forecast growth in the non-hydrocarbon sector to accelerate from 3.4% in 2018 to 8% in 2019 and 7% in 2020, supported by construction projects and infrastructure investments. It anticipated hydrocarbon output to expand by 1.5% in 2019 and 2% in 2020, relative to 1.7% in 2018, as it projected oil output to increase from 4.54 million barrels per day (b/d) in 2018 to 4.61 million b/d in 2019 and 4.71 million b/d in 2020, despite the recent OPEC production cut agreement. It added that the increase in output from the Baji refinery would support economic growth and reduce the need to imports petroleum products. 

    In parallel, the IIF projected Iraq's fiscal balance to shift from a surplus of 2.4% of GDP in 2018 to a deficit of 0.9% of GDP in 2019, as oil prices moderate. It forecast the public debt level to increase slightly from 50.8% of GDP at end-2018 to 52% of GDP at end-2019. Further, it expected the current account surplus to narrow from 10.9% of GDP in 2018 to 2.3% of GDP in 2019, while it anticipated foreign currency reserves to increase from $58.4bn at end-2018 and $65.7bn at end-2019. The IIF pointed out that Iraq is in desperate need of international assistance and reforms to support private sector growth, which include reducing corruption, strengthening institutions, reforming the electricity sector, and ensuring water security. Further, it considered that the state-dominated domestic banking sector lacks the capacity to finance the economic recovery despite the rapid pickup in credit activity. It noted that security conditions and political instability remain the key downside risks to the outlook.
    Source: Institute of International Finance
     

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