Moody's 2018 outlook for Levant and North Africa is 'stable'

TheMoody's Investors Service outlook for the Levant and North Africa is "broadly stable" for 2018, due to structural reforms, global economic growth and a simmering down of regional conflicts across the region. Morocco and Egypt are set to witness the region's highest economic growth this year.

"The improved global growth dynamics, ongoing structural reforms, and gradual re-opening of trade routes in former conflict areas, together with a planned reconstruction drive, will underpin GDP growth in 2018," said Elisa Parisi-Capone, a senior analyst at Moody's, in the agency's sovereigns outlook for the region, published on Tuesday.

“In addition, a tightening of global financing conditions poses fiscal risks for some countries, and elevated political risks will continue to drive event risk in the region.”

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Moody's forecasts oil range of $40-$60 for 2018

Moody’s affirms A3 rating and stable outlook for Sharjah

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Moody's has assigned stable ratings to Egypt, Jordan, Lebanon and Iraq. Morocco, which recently liberalised its monetary policy, has a positive outlook, while Tunisia, which has been rocked by anti-austerity protests this month, has a negative outlook.

The rating agency expects economic growth in the next four years to be most pronounced in Egypt, which has been recovering over the past year from a period of chaos in the aftermath of a series of popular uprisings. The economy of the Arab world's most populous country is expected to increase from 4.2 per cent in 2017 to 5 per cent in 2019 and 5.5 per cent in 2021.

Morocco's economic growth is likely to ease slightly this year to 3.5 per cent from 3.9 per cent in 2017 due to lower contribution from agriculture, before recovering in 2019.

Tunisia’s economy is expected to grow 2.8 per cent in 2018 up from 2.3 per cent in 2017, in spite of recent unrest in the country over price increases. GDP in Iraq, meanwhile, is forecast to increase by 2.9 per cent in 2018, with Jordan and Lebanon due to witness growth of 2.5 per cent and 2.8 per cent, respectively.

Global economic growth will give a boost to regional exports and services, including tourism, remittances and investment flows in 2018, with a rebound in oil prices providing further support, Moody’s predicted.

However, the Levant and North Africa continue to suffer from structural weaknesses, especially in the form of inefficient labor markets and weak competitiveness, the agency said. And while political tensions in the region have quietened down, they will continue to be a source of investor anxiety.

“Elevated tensions between Saudi Arabia and Iran, lingering security risks from recent regional conflicts in Iraq and Syria, and recurring Israeli-Palestinian tensions will shape geopolitical risk in the Levant, whereas North Africa remains exposed to potential policy paralysis from popular opposition to fiscal reform,” Moody’s said.

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Conflict, drought, famine

Estimates of the number of deaths caused by the famine range from 400,000 to 1 million, according to a document prepared for the UK House of Lords in 2024.
It has been claimed that the policies of the Ethiopian government, which took control after deposing Emperor Haile Selassie in a military-led revolution in 1974, contributed to the scale of the famine.
Dr Miriam Bradley, senior lecturer in humanitarian studies at the University of Manchester, has argued that, by the early 1980s, “several government policies combined to cause, rather than prevent, a famine which lasted from 1983 to 1985. Mengistu’s government imposed Stalinist-model agricultural policies involving forced collectivisation and villagisation [relocation of communities into planned villages].
The West became aware of the catastrophe through a series of BBC News reports by journalist Michael Buerk in October 1984 describing a “biblical famine” and containing graphic images of thousands of people, including children, facing starvation.

Band Aid

Bob Geldof, singer with the Irish rock group The Boomtown Rats, formed Band Aid in response to the horrific images shown in the news broadcasts.
With Midge Ure of the band Ultravox, he wrote the hit charity single Do They Know it’s Christmas in December 1984, featuring a string of high-profile musicians.
Following the single’s success, the idea to stage a rock concert evolved.
Live Aid was a series of simultaneous concerts that took place at Wembley Stadium in London, John F Kennedy Stadium in Philadelphia, the US, and at various other venues across the world.
The combined event was broadcast to an estimated worldwide audience of 1.5 billion.

Tips to stay safe during hot weather

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Limit outdoor activities: Avoid strenuous activity during peak heat. If outside, seek shade and wear a wide-brimmed hat.
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Check on vulnerable people: Regularly check in on elderly neighbours, young children and those with health conditions.
Home adaptations: Use blinds or curtains to block sunlight, avoid using ovens or stoves, and ventilate living spaces during cooler hours.
Recognise heat illness: Learn the signs of heat exhaustion and heat stroke (dizziness, confusion, rapid pulse, nausea), and seek medical attention if symptoms occur.