Outlook is for modest recovery of growth
Real GDP growth moderated to +2% in 2016, down from an average annual +2.7% in 2011-2015 and +6.3% in the decade before that. On the home front, growth in recent years has been held back by remedial policies to limit the twin deficits in the fiscal and current accounts to maintain IMF support. Externally, a less-than-buoyant global economy and an uncertain regional outlook (including an influx of Syrian refugees) have slowed growth.
Growth edged up to +2.2% y/y in Q1 2017, driven by strong increases in mining (+14.7%) and agriculture (+8.2%). We expect full-year growth to accelerate gradually to +2.3% in 2017 and +2.5% in 2018 on the back of some export routes being reestablished, growing infrastructure spending and a modest recovery in tourism. However, downside risks remain significant, subject to regional stability issues.