Making bold calls for the Middle East and Africa

The year 2020 was a particularly difficult one for economic and political forecasting. In a retrospective report, “Predicting the unpredictable: Forecasting in 2020”, we asked our analysts how they approached forecasting in a year like no other.

In the report, analyst Adnane Allouaji and principal economist Benedict Craven discuss two bold calls we correctly made for the Middle East and Africa.

How we saw that a much-publicised wave of debt distress was not coming in Africa

Benedict Craven, principal economist, Africa

During the early part of the pandemic, alarm about impending debt distress and a potential wave of defaults across African countries rang out in international media. However, behind the noise was a more benign story. Our analysis showed that most sovereigns could duck repayment stress in 2020. We also rightly assumed that a moratorium on debt servicing to G-20 creditors would be extended to mid-2021. 

Our analysis showed a mismatch between a flurry of projections in the media and the reality that, in 2020, Africa did not have a mountain of debt repayments. Looking carefully at repayment schedules, which we track closely as part of our sovereign ratings reports, and taking into account our macroeconomic projections, the risk of default appeared low, and much of the hubbub in international news simply did not stack up. Going forward, the story may be slightly different as debt owed to private creditors edges up and suspended payments come due. Again, it will be essential to mute noise and to look soberly at the facts.

How we forecast a Qatari return to the fold of the Arab Quartet in 2021

Adnane Allouaji, analyst, Middle East

We had long predicted that the boycott of Qatar by the Arab Quartet—comprising Saudi Arabia, the UAE, Bahrain and Egypt—and the ensuing financial and diplomatic impact on the region, would end in 2021. And it did! We had been following this issue closely since mid-2017, with the help of our on-the-ground contacts and internal experts. There appeared to be real prospects for an end to the boycott in the final months of 2019, following a brief period of political jockeying, but at the time we had rightly maintained our forecast that reconciliation was still some time away. 

Our view turned out to be correct when, in mid-February 2020, talks eventually broke down between both sides. Throughout 2020, the fact that the previously icy relationship between Qatar and Saudi Arabia appeared to be thawing confirmed our forecast, which finally became true in early 2021. We will continue to monitor developments on the ground closely to flag risks and investment opportunities for our clients as closer regional integration takes shape this year.

For an in-depth look at the trials and tribulations of forecasting throughout 2020 in both the Middle East and Africa and the rest of the world, download our latest report, “Predicting the unpredictable: Forecasting in 2020”.

All our award-winning forecasts can be found in our Country Analysis service. With detailed reports available for more than 190 countries around the world, our insights provide truly global coverage to help you to prepare for what’s ahead.