The Institute of International Finance indicated that economic prospects vary among the nine oil-exporting economies in the Middle East & North Africa (MENA) region. It projected real GDP growth in the six Gulf Cooperation Council (GCC) countries to decline from about 2.3% in 2018 to 1.8% in 2019, due to compliance with the OPEC production cut agreement and to relatively lower global oil prices. However, it expected non-hydrocarbon sector growth in the GCC to accelerate from 2.7% in 2018 to 3.3% in 2019, driven by stronger domestic demand amid fiscal expansion and improving confidence. It added that tight global financial conditions and geopolitical tensions continue to weigh on private sector activity in the GCC. Further, it forecast growth in Iraq to rise from 2.3% in 2018 to 4% in 2019, supported by post-war reconstruction, while it anticipated Iran's economy to contract by about 3% in the fiscal year ending in March 2020 due to a sharp decline in oil exports and the depreciation of the Iranian rial from the re-imposition of U.S. sanctions. It said that downside risks to the outlook of the region's oil exporters include lower-than-anticipated global oil prices, slower implementation of reforms, and the collapse of the nuclear deal with Iran. 

In parallel, the IIF expected the fiscal balance in most of the region's oil exporters to deteriorate in 2019, mostly due to lower hydrocarbon revenues and rising public spending. It forecast the GCC's aggregate fiscal deficit to widen from 1.5% of GDP in 2018 to 4% of GDP in 2019. However, it anticipated governments to comfortably finance their fiscal needs through external and domestic debt issuances, which would increase their debt levels. Further, it projected the aggregate current account surplus of the region's oil exporters to decline from $172bn, or 7.3% of GDP, in 2018 to $60bn, or 2.5% of GDP, in 2019 due to lower oil export receipts. It noted that external pressures persist in Algeria, Bahrain and Oman, given their wide fiscal and current account deficits and declining foreign currency reserves.
Source: Institute of International Finance

Moody's Investors Service downgraded Oman's long-term issuer and senior unsecured bond ratings from 'Baa3' to 'Ba1', which is one notch below investment grade. It maintained the 'negative' outlook on the ratings. It attributed the downgrade to the authorities' limited scope for further fiscal consolidation in the context of weak growth. The agency pointed out that higher global oil prices during 2018 reduced the fiscal reform momentum, including delaying the introduction of special excise taxes and the value-added tax to the second half of 2019 at the earliest. It added that the 2019 budget includes few new fiscal consolidation measures, such as the sale of state assets and the standardization of municipality fees. As a result, it forecast the fiscal deficit at 7% of GDP to 11% of GDP over the next three years. It anticipated the public debt level to regress to around 60% of GDP by 2021 in case fiscal reforms are implemented as planned. Further, Moody's projected the current account deficit to narrow over the medium term, but to remain wide at between 6% of GDP and 10% of GDP, which raises the risk of external shocks. It also expected Oman to remain dependent on external financing to maintain an adequate level of foreign currency reserves. In parallel, the agency noted that the 'negative' outlook reflects the potential weakening of foreign investors' appetite to finance Oman's wide fiscal deficits at relatively low costs, which would exacerbate the sovereign's external vulnerabilities and raise the pressure on government liquidity. It forecast Oman's gross financing needs to rise from 10% of GDP in 2018 to around 14% of GDP in 2022.
Source: Moody's Investors Service

Fitch Ratings affirmed at 'BB+' the long-term foreign- and local-currency Issuer Default Ratings (IDRs) of Attijariwafa Bank (AWB), BMCE Bank and Crédit Immobilier et Hôtelier (CIH). Also, it affirmed at 'AAA(mar)' the ratings of Société Générale Marocaine de Banques (SGMB) and Banque Marocaine pour le Commerce et l'Industrie (BMCI), and at 'AA-(mar)' those of AWB, BMCE Bank and CIH. It maintained the 'stable' outlook on all the banks' ratings, in line with the outlook on the sovereign. The agency noted that the IDRs of AWB and of BMCE Bank are driven by a moderate probability of support from the Moroccan government. It added that the ratings of BMCI and of SGMB reflect a high probability of support from the banks' respective major shareholder BNP Paribas and Société Générale (SG), while the ratings of CIH are underpinned by potential support from its major shareholder Caisse des Dépôt et Gestion. In parallel, Fitch upgraded the Viability Rating (VR) of BMCE Bank from 'b+' to 'bb-', due to the improvement in the bank's risk appetite, while it maintained at 'bb-' the VR of AWB and CIH. It pointed out that AWB's VR is supported by the bank's strong franchise, balanced business model, strong funding and liquidity profiles, robust earnings, as well as stable deposit base, but is constrained by the bank's weak asset quality and capitalization metrics. 
Source: Fitch Ratings