QUEST monthly economic update: April 2022

Welcome to the QUEST report for April 2022 from the EICN in MENA. This report will keep you updated on the economic performance of five of the most significant economies in the region: Qatar, the United Arab Emirates, Egypt, Saudi Arabia and Turkey.

What’s new this month

The conflict between Russia and Ukraine will affect the Middle East and North Africa (MENA) through five main channels: energy, food, tourism, investment and security, as well as broader supply-chain disruption.

All six Gulf Co-operation Council (GCC) states as well as Algeria, Libya, Iran, Iraq and even Syria could reap a major financial windfall from high oil prices and increased demand. Major suppliers of natural gas and liquefied natural gas could benefit from fresh investment to build up production capacity to feed markets in Europe.

The crisis poses a threat to food security in MENA because of increasing agricultural input and operating costs—including fertilisers and fuels—and the rising cost of food imports and access to adequate supplies, specifically for the staples wheat and corn. Russia and Ukraine together typically account for more than a quarter of the global wheat trade and almost a fifth of the global corn trade, and much of their produce crosses the Black Sea and is sold in markets in MENA.

Travel and tourism in parts of MENA will suffer another major setback because of the Ukraine crisis. The imposition of travel restrictions affecting Russian tourist—including bans on flights through the airspace of the EU—together with downward pressure on the Russian currency and international sanctions on Russian financial institutions will impede Russian tourists from travelling to MENA.

Major Russian investments in MENA are under threat because of the widening net of sanctions imposed on Russia that create corporate financing constraints and raise barriers to using the global payments system.

Most governments in MENA would like to sit on the fence and pursue a balanced approach to international relations, but they will find themselves under pressure to take sides in a conflict that has added a new, disruptive dynamic to already volatile regional politics. Meanwhile, it seems likely that Russia will seek to shore up its strategic military alliances in the Middle East involving regimes in Iran, Syria and Iraq.


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