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���������ֳ�’s Sector Outlook: Improving Oil exporting sovereigns in the Middle East and North Africa (MENA) will register significantly stronger growth in 2022 as the OPEC+ taper drives large increases in oil output, except in Bahrain and Qatar, where oil production will remain stable. High vaccination rates in the Gulf Cooperation Council (GCC) have driven gradual easing of economic restrictions in 2021, which ���������ֳ� expects to underpin average non-oil real GDP growth of about 3%. Elsewhere, ���������ֳ� expects mostly marginal improvements in growth, following partial recoveries in 2021. We factor in a gradual recovery in tourism, which directly accounts for 5%-10% of GDP across MENA’s non-oil economies (except Israel). Fiscal space to help drive stronger growth is limited in non-GCC countries, following an increase in debt in 2020. The outlook is also supported by reform momentum to varying degrees across the region and more constructive regional political dynamics that have emerged in 2021. Nonetheless, the region continues to face significant economic and political challenges and remains vulnerable to a fresh oil price shock. Structural problems such as weak growth, high youth unemployment and poor governance continue to pose risks to political stability and fiscal consolidation. The Gulf states face reform dilemmas as they seek to achieve long-term fiscal sustainability, while also delivering good economic outcomes for citizens and promoting economic diversification. Rating Outlook Distribution The number of Negative Outlooks declined in 2021 after the rise in 2020 due to the coronavirus shock. There were also fewer downgrades. Three of the 15 MENA sovereigns that ���������ֳ� rates remain on Negative Outlook – Kuwait (since February 2021), Oman and Tunisia (downgraded in July 2021) – reflecting the pandemic’s lingering hit to public and external finances and growth, and liquidity and funding uncertainties in Kuwait and Tunisia.