Middle East and North African debt fears will rise

Significance

Like other fuel-importing countries in the Middle East and North Africa (MENA), it has large structural fiscal and current account deficits. These have resulted in climbing sovereign debt. High interest rates are at the same time increasing debt servicing costs, adding further to fiscal pressures and curtailing the ability of governments to boost weak economic activity through stimulus.

Impacts

• Syria’s devastated economy might strengthen if improving political ties with the Arab countries bring capital flows from the Gulf states.
• Yemen’s economy will remain weak even in the unlikely event that the civil war is resolved to the satisfaction of all parties.
• Tunisia will use the migration crisis to gain support from Europe and the international financial community.