Fairly stable oil prices and reasonable economic growth balanced against high but contained political and geopolitical risk underpin Fitch Ratings’ expectations for ‘neutral’ credit conditions for the Middle East and North Africa region in 2025. The course and spillovers from regional turbulence remain unpredictable and raise risks.

 

“We forecast Brent crude oil will average above the expected fiscal break-even price for all Gulf Cooperation Council (GCC) sovereigns apart from Saudi Arabia and Bahrain,” Fitch said. 

 

Reforms and large capex have enhanced GCC sovereigns’ capacity to absorb lower oil prices. Non-oil growth is to remain robust, reflecting public and private investment, which benefit from reforms to business and labour markets.

 

Reforms and FDI 

Reforms and FDI will support economic activity of the region’s non-oil exporters, but growth will be weak. This will complicate fiscal consolidation; however, spending restraint, reforms and enhanced revenue collection will allow for a small decline in debt/GDP, which will stay high relative to peers. External financing challenges remain for those at the lower end of the rating scale.

 

The Mena region’s outlook balance is neutral. Only one of the 13 sovereigns to which Fitch assigned a Rating Outlook has an Outlook that is not Stable: Israel’s Negative Outlook reflects risks related to the course of the Middle East war and its implications for public finances and economic activity. Tunisia’s rating (CCC+) is at a level at which Fitch does not assign Outlooks.

 

The share of Fitch’s regional sovereign portfolio with a Stable Outlook (86%) is the joint-highest since 2017 and well above the average of the past decade. Fitch upgraded a record four Mena sovereigns in 2024.--TradeArabia News Service