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NSR H2 2020 Excerpts - MEA Region - A period of Gloom and Doom

• In today’s cut-out of our core strategy document – The Nigeria Strategy Report, we look at the major themes that dominated Sub-Saharan Africa, Middle East and North Africa landscape over H1 2020 as well as our outlook for FY 2020.
• In our H1 20 outlook, we expected steady growth in the SSA region hinged on improvement in private consumption, investment and continued support from countries adhering to an easing monetary policy strategy. However, economic growth over the period was largely depressed majorly on the back of the covid-19 pandemic. Economic activities slowed sharply as social distancing and lockdown measures were adopted. Elsewhere, economic activities across the MENA oil exporting countries was expected to be lower hinged on oil production cuts across member countries. However, we anticipated increased government spending in few countries within the region to boost non-oil growth and thus, mildly support overall economy. On the other hand, we expected growth across oil importers to be supported largely by sturdy growth rate in Egypt– a fallout of higher government spending and lower interest rate. True to our expectation, growth came in depressed in the MENA oil exporting region over H1 20, majorly on the back of lower oil output. Unfortunately, hopes of a mild expansion in the non-oil sector dissipated on the back of covid-19 pandemic. Economic activities slowed sharply as social distancing and lockdown measures were adopted nationwide. Meanwhile, our expectation for the oil-importers did not pan out entirely as the growth rate in Egypt lost its stride. Overall, the tourism sector across the region took a hit following movement restrictions.
• Currencies across the SSA region came under significant pressure over H1 2020 as a result of the unprecedented health and economic crisis. Over in MENA, we saw slight depreciation in currency for majority of the oil importers reflecting increased interventions by the central banks. On the other hand, most oil-exporters continued to maintain a fixed peg against the USD. Large reversal of flows was seen across both regions with FX reserves depleted YTD. 
• Growth outlook across SSA is expected to remain bleak over the rest of the year. Our expectation is largely hinged on the impact of travel restrictions, border closures and nationwide lockdown on the economies. In addition, slow growth across major trading partners is also expected to undermine growth in SSA over the period.  Accordingly, the World Bank estimates a 2.8% contraction this year (2019: +2.2% YoY), the steepest contraction on record.  Over in MENA, oil exporters are expected to contract (-5.0% YoY, 2019: -0.9% YoY) over the year owing to a combination of lower oil receipts and impact of restrictions on economic activities. On the other hand, oil importers are expected to contract by 0.8% in 2020 (vs +2.7% in 2019) reflecting slower activities in the tourism sector as well as spill over of slow economic growth in advanced economies.