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Nigeria Strategy Report H2 2019 Excerpts- MEA Region - Neither booming nor collapsing

• We continue with the serialization of our core strategy document – The Nigeria Strategy Report. We review developments in MEA (Middle-East and Africa) climes over H1 2019. The section also provides insights on what we believe will be major drivers of both growth and overall investor sentiment for the rest of 2019.
• In our H1 19 outlook, we laid out our expectations for growth in Sub-Saharan Africa (SSA) underpinned by recovery in powerhouse constituents (such as South Africa, Nigeria and Angola) and sustained growth in smaller countries. So far, only the latter part of this forecast played out precisely as we thought, with Ghana and Ethiopia recording strong growth figures in the first quarter of the year. Growth in the larger economies, however, was much slower than anticipated, with weakness in the oil sector tripping off recovery in Nigeria and Angola, with growth SSA region estimated to have slowed to 2.0% in Q1 19 compared to 2.8% over Q4 18. Elsewhere, growth across MENA has been largely mixed albeit to the downside, due to drag from oil exporting countries, with Q1 19 GDP settling at 3% YoY compared to 3.2% YoY in Q4 18.
• Our outlook for 2019 is now bleaker than it was at the start of the year with full year growth estimate for SSA now at 2.9%, a downward revision from 3.4% earlier in the year. Slower demand from major trade partners, persisting policy uncertainty and domestic growth bottlenecks are major headwinds to economic growth in the region. Over in MENA, we see growth for FY 19 decreasing slightly to 1.3% (FY18: 1.4%) following moderation in oil exporting countries, which is expected to more than outweigh modest growth in across oil importers.
• On external positions, current account deficit in the SSA region is projected to widen, primarily reflecting a larger deficit in non-resource intensive countries and oil-exporting countries. For the oil-exporting countries, the voluntary partial compliance with the OPEC+ agreement and the impact of lower crude oil prices on the value of trade is expected to compound the deficit worries. Elsewhere, lower projected oil prices will also weigh on current account balances across MENA economies, adding to pressure of further oil production cuts. However, the better financing conditions in the region and increased Eurobond issuances should help support external positions.