The MENAT region will continue to recover in 2022, and most countries will return to their pre-pandemic economic size in the second half of the year. Algeria, Iraq, Iran, Lebanon, and Kuwait will lag, while investment and resource attention will flow more toward Saudi Arabia. Normalization in spending patterns, slight easing of operating costs, and potential uptick in tourism will be supportive factors of the Middle East, North Africa, and Turkey outlook, while ongoing fiscal constraints and fluctuating confidence will need to be managed. Executives will need to monitor key political risks and proactively update resource allocation across the regional portfolio.

Risks to Forecast

  • Executives need to prepare for a scenario of early elections in Turkey, held possibly in the second half of 2022.
  • Although a low-likelihood event, a faster fall in oil prices toward low the US$ 50s would pressure exporters.
  • Political developments in Lebanon and Algeria need to be monitored, while a downside risk of total collapse in Iran/US nuclear talks should be prepared for.

Business Implications

Localization pressures will continue to increase across the region alongside competitive pressures. Price sensitivity will remain elevated as customers begin to spend more but also showcase weak confidence and experience weak purchasing power relative to 2019. Diversifying into new customer segments, optimizing online/offline channel integration, and adapting the product portfolio to changing preferences will be critical to hitting targets.

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