Bank’s research forecasts Mena real GDP growth of 2.7% in 2020

Business Bureau, Gulf Today

An MUFG Mena Economic report issued expects a pick-up in Mena regional growth in 2020. The bank’s research forecasts Mena real GDP growth of 2.7 per cent in 2020, from a near flat 0.1 per cent in 2019, with Saudi Arabia continuing last year’s trend of being the regional outperformer.

This performance will remain below the long-term equilibrium average level of 4.2 per cent.

According to the research paper, “investors are taking increasing comfort with the lengths and vigour that the Saudi authorities are demonstrating in enhancing the operating environment, enticing foreign investment and implementing structural reforms in accordance with Vision 2030 targets.” Saudi Arabia was named the top global reformer, based on the World Bank’s ease of doing business score, rising 30 places to 62, in the 2020 rankings.

Privatisation, in particular, has received a boost in Saudi Arabia and will have further momentum in 2020. “We believe that the Kingdom as well as the rest of the region will accelerate privatisation plans this year, which is in line with the economic transformation strategy,” the report said.

Ehsan Khoman, Head of MENA Research and Strategy at MUFG and author of the report, explained: “Privatisation initiatives are an integral part of regional government’s strategies for achieving economic development, structurally adjusting the economy away from the reliance on hydrocarbons and realigning it away from volatile oil and gas prices. As such, governments in the region have devised wide ranging reform plans, with privatisation of state-owned enterprises (SOE’s) central to such initiatives.”

Dubai, which already has the most diversified regional economy with hydrocarbons representing only 1.6 per cent of its GDP, is also expected to witness a rebound in economic growth this year, according to the report. This will be triggered by a number of factors that will foster an overall momentum and spur a higher real GDP growth in the Emirate. Dubai’s GDP in 2020 will be boosted by stronger corporate activity, higher credit growth, higher real estate prices, and renewed business optimism surrounding future output as corporates look to the upcoming World Expo in 2020, explained Khoman.

The report expects the bearish trend of oil prices in 2019 to continue through 2020, with slightly weaker energy earnings this year. “Our Brent spot average is forecast at $62.3/b in 2020, based on our models which signal a moderately balanced global oil market (0.4m b/d surplus).,” added Khoman. “Our forecast for one-year forward Brent futures is $56.6/b.”

The GCC financing needs to meet fiscal deficits and investment programmes in 2020 stand at $73.5 billion, or 4.4 per cent of GDP, from $62.4 billion, or 4.8 per cent of GDP, in 2019. This excludes Qatar and Kuwait, both of which are projected to post a surplus.



Mitsubishi UFJ Financial Group, Inc. (MUFG) is one of the world’s leading financial groups. Headquartered in Tokyo and with over 360 years of history, MUFG has a global network with over 2,700 locations in more than 50 markets. The Group has over 180,000 employees, and offers services including commercial banking, trust banking, securities, credit cards, consumer finance, asset management, and leasing.

MUFG aims to be the world’s most trusted financial group through close collaboration among its operating companies, and to respond to all of the financial needs of its clients, serving society, and fostering shared and sustainable growth for a better world. MUFG’s shares trade on the Tokyo, Nagoya, and New York stock exchanges.

Meanwhile the Saudi Arabia’s non-oil private sector remained on a growth footing in December. Business activity, new orders and employment all expanded since the previous month.

In each case the rate of growth lost momentum in comparison to the previous survey period. As a result, the headline seasonally adjusted IHS Markit Saudi Arabia Purchasing Managers’ Index (PMI) - a composite gauge designed to give a single-figure snapshot of operating conditions in the non-oil private sector economy - slipped to 56.9 in December, from 58.3 in November.

The latest reading was well above the 50.0 no-change value, but signalled the weakest improvement in business conditions for five months. December data indicated that business activity growth eased for the second month running and was the slowest since October 2018.

Some firms commented on greater competition for new work and subsequent difficulties converting customer enquiries into sales. Where business activity growth was reported, this was often linked to new product launches and successful marketing strategies.