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In the GlobalData Regional and Global Risk Index (GCRI) for the fourth quarter (Q4) of 2022, the UAE tops the list of the 10 least risky countries in the Middle East and Africa (MEA) region.
According to a recent report by GlobalData, the region has been affected by disruptions in supply chains and the resulting rise in prices of basic commodities such as food and fuel, putting it at risk of growing food insecurity and rising debt.
Saudi Arabia ranks third as one of the lowest risk MEA countries in the GCRI. Qatar and Kuwait rank fourth and fifth in the region, while Bahrain ranks ninth in the region.
The MEA region is largely dependent on Russia and Ukraine for imported staples; as a result, its risk score rose from 54 to 54.3 out of 100 in the GCRI Q4 2022 update.
Bindi Patel, Economic Research Analyst, GlobalDataexplain: “OPEC+’s decision to cut oil production could affect the profitability of oil-producing countries in the Middle East and Africa region, which rely heavily on oil exports to drive their economies.”
Patel elaborated: “At the same time, many countries in the Middle East and Africa region rely heavily on food imports, and factors such as conflict in Ukraine and Syria, and drought in the Horn of Africa countries and Kenya have disrupted food supply chains and continue to pose major challenges to food security.”
According to the United Nations Office for the Coordination of Humanitarian Affairs (OCHA), a total of 35 million people are reported to be hungry in West and Central Africa in 2022. This number is expected to balloon to 48 million by the end of 2023.
Nearly one in five people living in developing countries in the Middle East and North Africa could face food insecurity by 2023, Roberta Gatti, chief economist for the Middle East and North Africa region at the World Bank, said recently.
Gatti said: “Nearly 8 million children under the age of five will go hungry. Higher food prices, even temporarily, cause long-term, often irreversible damage.”
GlobalData’s Patel meanwhile noted that despite tighter monetary policy, inflation in the Middle East and Africa region will remain alarmingly high and is expected to decline only slightly.
Patel added: “Inflation in the region is estimated at 18.7% in 2023, with inflation forecast to be particularly high in Egypt (23.3%), Iran (40.7%), Turkey (43.7%) and Nigeria (19.3%).”
Analysts at GlobalData concluded: “Overall risks to countries in the region remain elevated as a further slowdown in the global economy, increasingly tightening monetary conditions, overall geopolitical tensions and rising poverty and food insecurity continue to weigh negatively on MEA economies.”
However, a recent report by Mubasher Capital suggests that the economies of the GCC countries will grow by 3.9% throughout 2023, which is double the estimated world growth rate of 1.7%.
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