Updated October 2009 The Middle East and North Africa is also being adversely affected by the global economic crisis. Real gross domestic product (GDP) is projected to grow just 2.2 percent in 2009, down from 6.2 percent in 2008 and from an average of 5.1 percent during 2000–07. High food and fuel prices stoked consumer price infl ation, which rose from 7.2 percent in 2007 to 10.6 percent in 2008. Banks and investment companies in the region were not large holders of subprime mortgage–backed securities, and many Gulf countries were in a strong enough financial position to cushion the large outflows of short-term capital in the second half of 2008. Nonetheless, the global financial crisis affected the financing outlook in the region. Spreads on sovereign debt increased, regional stock market indices suffered sizable declines, foreign direct investment inflows are expected to weaken, export revenues and tourism and trade-related services are declining, and remittances are expected to contract. The actual impact of the crisis will vary across the region. Members of the Gulf Cooperation Council—Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates—entered the crisis with very strong fiscal and external balances or with a significant financial reserve from revenues during the oil boom. They are in the best position to weather the global economic crisis. Were the price of oil to drop further or the real estate crisis to deepen, even this group of countries could be forced to draw down reserves and cut investments.  For more information see: MENA Region Brief |
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