Fitch forecasts neutral credit conditions for MENA sovereigns in ’25

Fitch Ratings is projecting neutral credit conditions for the Middle East and North Africa (MENA) region in 2025, supported by stable oil prices and solid economic growth. However, persistent geopolitical risks pose challenges, particularly from regional turbulence.

Brent crude prices are forecast to exceed fiscal break-even levels for most Gulf Cooperation Council (GCC) countries, except Saudi Arabia and Bahrain. While reforms and capital spending have bolstered GCC resilience to oil price fluctuations, non-oil growth remains strong due to public and private investment, alongside reforms to business and labour markets.

For non-oil exporting nations, foreign direct investment (FX) and structural reforms will sustain economic activity. Yet, weak growth complicates fiscal consolidation efforts. Despite some improvements, debt-to-GDP ratios remain high compared to global peers, and external financing issues persist for lower-rated sovereigns.

Of the 13 MENA sovereigns rated by Fitch, 86 per cent maintain a Stable Outlook, the highest level since 2017. Israel’s Negative Outlook reflects risks tied to the ongoing Middle East unrest, while Tunisia’s CCC+ rating does not carry an Outlook due to its low credit level.

Four MENA sovereigns received upgrades in 2024, a record for the region, underscoring a mixed but cautiously optimistic forecast for 2025.

Attribution: Fitch Ratings

Subediting: Y.Yasser