Standard Chartered Bank projected Iraq's economic growth to increase from 3% in 2018 to 4% in 2019, driven by investment and consumption in the country's non-oil sector amid improved security conditions. It expected growth in the oil sector to be constrained in 2019 by OPEC's efforts to rebalance global oil markets. As such, it projected Iraq's oil production to decline from 4.65 million barrels per day (b/d) in October 2018 to about 4.5 million b/d in the first half of 2019. Further, the bank anticipated that an improving security backdrop would support the authorities' reconstruction efforts. Specifically, it considered that the energy and water industries, which have previously been held back by conflict and under-investment, would be the main beneficiaries of reconstruction funding. Still, it noted that financing the country's reconstruction plans require international support, as the private sector's access to funding is limited amid challenges in the banking sector. In addition, the bank noted that the International Monetary Fund has provided Iraq with financial support and has helped mobilize additional resources from international donors and bilateral institutions. But it said that Iraq's reliance on the IMF for funding has decreased given the country's lower current funding needs, which could pose a risk to the implementation of structural reforms.

In parallel, Standard Chartered forecast Iraq's fiscal surplus to slightly increase from 2.9% of GDP this year to 3.1% of GDP in 2019, which is below the IMF's forecast of 3.8% of GDP. Also, it projected the current account surplus to improve but at a slow pace from 1.5% of GDP in 2018 to 2% of GDP next year, due to higher imports resulting from the re-opening of borders with neighboring countries, as well as to a rebound in consumption. Still, the bank anticipated that the gradual rise in foreign currency reserves from higher oil exports receipts would be positive for the sovereign's creditworthiness in the medium term. Further, it did not expect authorities to tap international markets in the near term in the absence of a sustained decrease in oil prices, which would translate in a decline of government debt in coming years. 
Source: Standard Chartered Bank   

Fitch Ratings indicated that it has a 'stable' outlook on 10 out of the 13 sovereigns that it rates in the Middle East and North Africa (MENA) region. It said that it has a 'negative' outlook on Oman and Tunisia, and a 'positive' outlook on Egypt. It noted that the ratings of Gulf Cooperation Council (GCC) sovereigns lie in the 'A' and 'AA' range, given their high GDP per capita and strong external balance sheets. In contrast, it said that rated countries in the Levant and North Africa mostly fall under the 'B' and lower 'BB' range, mainly due to weaker public or external finances and more acute political risks. It considered that the outlook for MENA sovereigns in 2019 will be mostly affected by fluctuations in oil prices, the countries' commitment to fiscal reforms, and political risks. It noted that its assumption of lower oil prices of $65 p/b in 2019 could reinforce pressure on the debt and net foreign asset metrics of oil exporters. However, it considered that Kuwait, Abu Dhabi and Qatar are well-placed to face a prolonged decline in oil prices, due to their large sovereign wealth funds and low fiscal break-even oil prices. It said that fiscal authorities in the GCC will need to further increase their tax revenues and to enact other tax measures in the context of lower oil prices. In parallel, it pointed out that oil importers could face challenges in stabilizing their public and external finances amid tighter global financial conditions and heightened political instability.
Source: Fitch Ratings

The cumulative net profits of 157 companies listed on Boursa Kuwait totaled KD1.6bn, or $5.2bn, in the first nine months of 2018, constituting an increase of 6.9% from KD1.5bn, or $4.9bn in the same period of 2017. Listed banks generated net profits of $2.9bn and accounted for 55% of aggregate net earnings in the covered period. Financial services companies followed with $633.1m and telecommunications firms with $630.5m (12.1% each), then industrial companies with $532.3m (10.2%), real estate firms with $274.7m (5.3%), insurers with $107.9m (2.1%), consumer services providers with $73m (1.4%), oil & gas firms with $37.7m (0.7%), basic materials companies with $20.4m (0.4%), consumer goods firms with $16.9m and healthcare providers with $14m (0.3% each), and technology firms with $8.3m (0.2%). Further, the net earnings of oil & gas firms rose by 143.6% year-on-year in the first nine months of 2018, followed by banks (+18.8%), insurers (+15.4%), financial services providers (+3.3%), technology firms (+3.1%), and telecommunications companies (+3%). In contrast, profits of consumer goods companies regressed by 55.5% in the covered period, followed by basic material firms (-46.9%), consumer services providers (-30.6%), real estate firms (-26.6%), and industrial companies (-8.6%).  
Source: KAMCO