Middle East outlook 2023 Weathering political and economic headwinds

Economies across the Middle East face mixed prospects in 2023, which will help to drive
comparatively strong growth in the energy-rich Gulf Co-operation Council (GCC) states but
hold most other economies in check.
• The region’s travel and tourism industry is showing strong signs of recovery and
international visitor arrivals could return to pre-covid levels by the end of 2023—largely
owing to effective promotional campaigns, major investments and the release of pent-up
• Troubled states face a very uncertain and insecure future—especially internationally
sanctioned Iran and war-torn Syria and Yemen—where conditions are unlikely to improve
and could easily deteriorate.
• Major players in the Middle East—including Saudi Arabia, the UAE and Iran—will continue
to look eastwards towards Asia for trade, investment and political ties, which could further
strain relations with Europe and the US. Another year of difficult balancing acts is in store.
Major oil and gas producers in the Middle East have benefited substantially from strong global
demand, rising output and high prices for their energy exports in 2022, and the region’s net energy
exporters—except internationally sanctioned and economically unstable Iran—can look forward to
another year of decent returns from international markets in 2023. The OPEC+ alliance will solely
prioritise price levels, despite concerted diplomatic efforts by the US and European allies
to persuade the cartel to increase production. The recent move by OPEC+ to cut output by 2m
barrels/day will be borne by Saudi Arabia and, to a lesser degree, the UAE. The actual cut to output
will be about half the headline figure, as several major producers, most notably Nigeria and Russia,
are producing well below their current quotas. We expect OPEC+ to maintain its solidarity and
forecast that oil prices will remain above US$90/barrel until at least mid-2023.

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