Country Risk in MENA

Bahrain (BHR)

Situated on the Persian Gulf, the nation of Bahrain continues to hold an overall country risk of medium. The current head of state, King Hamad bin Isa Al Khalifa continues to uphold the nation’s centralized control over decision-making, alongside his PM son Crown Prince Salman bin Hamad Al Khalifa. The 2026 Bahraini general election is scheduled for November 2026 using the two-round system. However, given the monarchy’s dominance, significant shifts in major policies are unlikely, as parliament does not have strong authority over key national decisions. Political interference and legal & regulatory risk both remain medium. Bahrain also maintains partnerships with Western economies, in particular the UK and U.S., while strategically aligning with the Gulf Cooperation Council (GCC), a regional intergovernmental, economic union and military alliance, which enhances national security. However, the heightened risk of regional tensions remains following U.S.- Israel strikes against Iran in March 2026. Bahrain, alongside other regions hosting U.S. military bases, have intercepted many Iranian missiles and drones fired toward them, and damage has been reported in several civilian areas despite these defensive actions. In addition to this, Bahrain officials continue to support the instalment of the Comprehensive Peace Plan, introduced by U.S. President Trump in an effort to end the Gaza conflict. Therefore, political violence is unchanged at a medium high-risk rating.

According to the IMF, GDP growth is forecast to increase marginally from 2025 to 3.3% in 2026, though this could be revised lower due to disruption from the March 2026 Iran war. Bahrain’s hydrocarbon sector remains a crucial part of the nation’s economy contributing heavily to GDP; however, oil prices were relatively low last year. The answer to the downward trends in oil prices were Bahrain’s efforts to drive their non-oil sectors, with the focus in 2026 set on developing integrating AI across public and private sectors, supported by the Economic Vision 2030 and National AI Policy 2025. In addition to this, the non-oil sector is driven by financial services; the tourism industry as well as manufacturing; especially in aluminum, with exports and production still climbing even though President Trump’s administration had implemented a 50% tariff on aluminum. Overall, the risk of doing business is assessed as medium low and inflation is indicated to remain low and stable at 0.8% in 2026. Exchange transfer also remains at medium low, while sovereign non-payment risk has remained medium high due to high and rising government debt to an estimated 146.4% of GDP. Domestic debt contributes to approximately 75% of Bahrain’s unsustainable public debt picture.

Egypt (EGY)

Egypt’s overall risk level remains high. Political violence risk rating remains very high, with political interference and legal & regulatory risk at high. Egypt remains concerned about the fragile peace in Gaza could be disrupted by Israel and the risk that it could spill over into domestic tensions, including the risk of displacement of Gaza residents. Meanwhile, the February 2026 Israel/U.S. attack on Iran, has also prompted concerns over unrest in Egypt. Egypt/Israel relations are very strained.  The previous cost-of-living crisis also continues to risk future protests against inflation and unemployment.  

Meanwhile, the medium-term financial situation for Egypt remains better, despite the adverse effects of regional tensions on revenue from the Suez Canal and tourism. Egypt enjoys great multi-year funding helped by IMF/EU/World Bank programs and the two huge USD35bln UAE and USD30bln Qatar investment to build two big tourist cities on the Mediterranean coast.  All of this points to a cyclical rebound in Egypt’s economy, with the IMF forecasting 4.5% growth in 2026.  Even so, the 2026 Iran war will likely cause some temporary economic disruption for Egypt. Additionally, inflation is projected to slow to 11.8% in 2026, which is still too high for the domestic economy and will at some stage require a crawling Egyptian Pound depreciation to avoid the real exchange rate becoming overvalued.  Though the current account deficit is projected to come down to 4.3% of GDP in 2026, Egypt has import dependency for wheat and natural gas. However, the healthy external funding improvement help temper concerns about sovereign debt payments. Sovereign non-payment risk remains at a medium high rating as government debt/GDP is coming down from high levels and projected to be 85% in 2026. The risk of doing business is medium high and the inability of government to provide fiscal stimulus remains at high.

Iran (IRN)

Iran, has seen no change regarding the state’s very high overall country risk. The risk of political interference remains very high, while the risk of political violence is high.  The U.S. – Israeli air war against Iran from March 2026 continues to expand with no immediate resolution in sight. The world’s most critical oil chokepoint, the Strait of Hormuz, is now facing an effective closure, which has prompted a surge in oil and gas prices. In addition, ongoing U.S.-Iran strikes have resulted in the confirmed death of Iran’s Supreme Leader, Ayatollah Ali Khamenei, along with other senior Iranian officials. The immediate focus is now on the appointment of a new Supreme leader, although the Iranian military want to avoid free elections and a popular uprising remains unlikely after the brutal crackdown at the end of 2025.  However, the current attacks by the U.S./Israel are expected to last weeks rather than months, and could lead to renewed negotiations in the future. Therefore, legal & regulatory risk remains very high.

On the economic front, GDP growth is expected to remain pretty subdued at 1.1% in 2026, as the Iranian economy continues to suffer from the economic restrictions surrounding sanctions and geopolitical tensions from the West, and the March 2026 war could trigger a temporary recession. Inflationary pressures are expected to continue throughout 2026, as the IMF forecasts 41.6% in 2026, although inflation is forecast to slow in 2027 to 33.8%. Meanwhile the Iranian Rial (IRR) has depreciated sharply to the USD and is at risk of losing its role as a functioning currency. The risk of doing business is assessed at high, as is exchange transfer, which has come under pressure due to limited access to capital inflows due to tighter sanctions. To end, sovereign non-payment risk has remained at a high-risk rating. Government debt is projected to remain manageable at 36.4% in 2026 with heavy reliance on domestic borrowing to support budget deficits.

Iraq (IRQ)

Overall country risk for Iraq remains very high, including an unchanged very high risk in both political violence and political interference. Mohammed Shia al-Sudani, the current Prime Minister and a member of the pro-Iranian political bloc, the Shia Coordination Framework (SCF), secured victory in the November 2025 election. The results indicated that Sudani’s own coalition had secured 46 seats, making it the single largest party, while the SCF holds approximately 187 seats. However, the SCF’s initial nomination for former PM Nouri al-Maliki to return to premiership is now unlikely, as Maliki has indicated he is open to being replaced as a candidate following U.S. President Trump’s warning that Washington would no longer support Iraq if Maliki returned to power. Current PM Sudani may remain in his role if Maliki is dropped, in which case he will need to: maintain support of the many armed militias that hold ideological loyalty to the neighboring state of Iran rather than to the Iraqi state; pursue a balanced approach regarding Iraq’s relations with the U.S. and Iran; and manage the security risks associated with the U.S. transfer of Islamic State detainees from prisons in north-eastern Syria to Iraq. In terms of Iran’s retaliatory strikes, UK forces had neutralized an Iranian drone heading towards a western military base with in the region of Iraq. Tensions has also increased with the Iran war from March 2025. Both, legal & regulatory risk and the risk of doing business remain very high. GDP growth is projected to improve significantly to 3.6% in 2026 due to an apparent recovery to the nation’s energy sector and increase of oil exports, with many deals signed with the likes of BP and Chevron in the effort to boost production. Although approximately 90% of government income is reliant on its oil sector, alongside subdued growth in the country’s non-oil sectors due to stalling reforms. The government’s inability to provide stimulus remains at medium high. Inflation is projected to stay under control at 2.5% in 2026, as prices are set to remain stable. However, government debt as a percentage of GDP is forecast to climb in 2026 and 2027 to 58% and 62.1%, thereby justifying an increase to a high rating for sovereign non-payment risk. Likewise, exchange transfer has risen to medium high risk following Iraq’s parallel exchange rate falling approximately 13% compared to the official rate. The U.S.’s continued monitoring of Iraqi banking transaction means the parallel market is expected to persist.

Jordan (JOR)

Overall risk in the Middle Eastern nation of Jordan has been assessed to remain medium high throughout Q4 of 2025. Head of State, King Abdullah II, continues to hold his role as a constitutional monarch like he has since succeeding his father in 1999. Jordon’s constitutional monarch holds extensive legislative powers, acting as the nation’s commander-in-chief of the military as well as appointing the Prime Minister, Jafar Hassan, in late 2024. Political interference and political violence both remain unchanged at medium high. Jordan, alongside seven other nations, has accepted the invitation to join President Trump’s Board of Peace in aim to resolve global conflicts, however, relations with neighboring Israel seem to be deteriorating further. For instance, in February 2026, concerns regarding Israel’s potential annexation of the West Bank have surfaced and are being seen as a “silent transfer”, as Israel shifts land registration authority to the Israel Ministry of Justice. If Israel takes over the West Bank, there is a major risk for the high concentration of Palestinian residents in the territory, meaning refugee movement into Jordan may be forced. In retaliation, Jordan has resumed its compulsory military service and may potentially declare its own side of the border a closing military zone. In addition, a shooting by a Jordanian driver had killed two Israeli soldiers temporarily closing the vital Allenby Crossing between the Israeli-occupied West Bank and Jordan, prompting President Netanyahu’s coalition allies to suggest that the government should annex the West Bank in response. The crossing is vital for the transition of commercial goods between Jordan and the West Bank. Legal & regulatory risk remains medium high.

On the economic front, real GDP growth is forecast to maintain its stability at 2.9% in 2026 and 3% in 2027, despite political tensions developing in neighboring regions putting pressure on Jordan’s tourism sector. Jordan’s economy remains resilient; however, major investment projects and the implementation of structural reforms make the region’s future growth look far brighter. The IMF forecast inflation to remain anchored at around 2.6% in 2026, allowing for a 25bps central bank rate cut to 5.75% in late 2025. Jordan’s monetary strategy aligns its policy rate close to the U.S. Federal Reserve in order to support the Jordanian Dinar’s (JOD) peg to the USD. In addition, Jordan’s banking sector has shown resilience as it demonstrates its ability to maintain high liquidity and uphold a capacity that is able to absorb potential shocks. Therefore, banking sector vulnerability has maintained a medium low risk rating, while exchange transfer risk remains medium high. Lastly, the authorities’ commitment to reduce the country’s high level of government debt is evident. The public debt is currently forecast at 87.5% to GDP in 2026 and 83.7% in 2027, supported by gradual fiscal consolidation and efforts to reduce losses incurred by public utilities. Therefore, sovereign non-payment risk is assessed at medium high, alongside an unchanged medium rating for the risk of doing business.

Qatar (QAT)

The resource rich nation of Qatar is assessed as having a medium low overall risk rating. Head of State (Emir), Tamin bin Hamad Al Thani, had continued to propose many labor market reforms throughout 2025 (including the abolishment of exit permits, increasing the national minimum wage and allowing job mobility), while many social and legal reforms had also been implemented. Legal & regulatory risk remains assessed as medium low. Meanwhile, Qatar’s vital role as mediator remains crucial, as a fragile ceasefire was implemented upon the Israel-Hamas conflict. In addition, the key GCC members have condemned Iranian attacks on the region from March 2026, as Iran continues to target civilian infrastructure across the Gulf State, including retaliatory strikes on Qatar’s international airport and assaults on Qatar Energy’s facilities that have led to a temporary halt in LNG production and impacted the capital, Doha. In addition, the Gulf State has affirmed its right to self-defense. The Israeli prime minister wants to ensure Iran abandons its nuclear assets, rather than imposing a short-term halt on its nuclear program. Qatar and seven other nations had begun the new year by accepting U.S. President Trump’s invitation to the Board of Peace, an international organization aimed at resolving global conflicts, which has caused diplomats to warn officials about the potential negative effects on the United Nation’s (UN) work. Therefore, political violence at the moment remains medium low, while political interference is unchanged at medium.

On the economy, the IMF indicate a strengthening GDP number for Qatar entering 2026, with the IMF forecasts reading 6.1% in 2026 and 7.8% in 2027 – though 2026 will likely be revised down with the temporary stop to LNG production and exports in March 2026. Hydrocarbon exports is yet again a key economic driver for the middle-eastern state. Qatar Energy’s North Field expansion is set to start H2 2026, with forecasts of 126 mln metric tons of LNG produced per annum by 2027. In an attempt to drift away from the nation’s reliance on LNG exports, Qatar is also seeking to improve semiconductor supply chains and AI (Pax Silica) under the Vision 2030 plan. The government’s inability to provide stimulus remains low. Government debt to GDP continues it sustainable route, decreasing to the IMF’s projection of 38.8% in 2026 and 36.7% in 2027, while the Qatari Riyal is pegged at QAR 3.64 per USD. The currency peg highlighted previously is expected to remain due to the economic stability it has provided to the Qatar’s hydrocarbon-driven economy, as well as significant international FX reserves available to maintain the peg. Therefore, exchange transfer risk is low, while sovereign non-payment risk is unchanged at medium low.

Syria (SYR)

Syria, formally known as the Syrian Arab Republic, has an unchanged country risk of very high, alongside political interference and political violence. The removal of the Assad regime in December 2024 had paved the way for Syria’s transitional government under Ahmed al-Sharaa, a former al-Qaeda leader and a Sunni Muslim. Under President al-Sharaa, tensions between Syria’s leadership and the Islamic State (IS) have intensified, with two separate attacks on military personnel in the north and east of Syria in February 2026. Recently in January 2026, the Syrian forces had also retaken extensive areas of land in the North and East from the Kurdish-led Syrian Democratic Forces (SDF), while further preventing any retaliation from opposing forces in a new ceasefire deal with the SDF. The U.S. backed ceasefire, however, had led government and Kurdish officials question the integration of SDF fighters and vital SDF border crossings to Iraq, which serve as the primary gateway for both military and economic survival. Turkish President Tayyip Erdogan has expressed positivity surrounding the SDF’s integration into the Syrian state’s structures. Regarding U.S. influence, President Trump declared on 1 February 2026 that he was preparing to completely withdraw American forces from Syria, although diplomatic ties between Washington and Damascus continue to strengthen, as the easing of sanctions supports Syria’s recovery. Both, the risk of doing business and the government’s inability to provide stimulus remain very high. The Syrian economy has seen an approximate 10% growth following Trump’s easing of U.S. sanctions, while the EU have shown support regarding Syria’s post war recovery. In January, a grant of around USD 722 mln had been established, as the EU commission had noted its drive to establish cooperation and a new political partnership with the state. Therefore, the government’s inability to provide stimulus has improved to a rating of high. In addition, talks have been held between President al-Sharaa and major U.S. oil firm Chevron to explore the opportunity in oil and gas exploitation, since Syria’s 14-year civil war completely destroyed its energy infrastructure, with only a portion of that potential being produced today. In attempt to strengthen Syria’s local currency, which had been left critically weak by the Assad regime, the new Syrian Pound (SYP) was introduced on the first day of 2026. Critics have voiced that the new currency could potentially drive up already high levels of inflation, but the Central Bank governor has argued it will be a smooth transition to the new Syrian Pound. Exchange transfer and sovereign non-payment risk both remain very high, while banking sector vulnerability is unchanged at medium.

Tunisia (TUN)

Tunisia continues to hold its overall risk of medium high. President Kais Saied was elected in 2019 with an overwhelming mandate, however, his methods to consolidate power have caused outrage upon the Tunisia public as political opposition becomes far more restricted. Political violence and political interference both remain unchanged at medium high. December 2025 witnessed activists and opposition figures demonstrating that President Saied has immobilized any form of political opposition. In addition to public demonstrations, Tunisia’s UGTT Union had confirmed a nationwide strike on 21st January 2026, to protest against the government’s lack of wage negotiations and the President’s approach to Tunisia’s opposition. However, a delay has been issued on such nationwide strikes with a potential for it to be re scheduled for some time in the near future. Legal & regulatory risk remains medium high.

Economically, Tunisia’s GDP growth is forecasted to slow to 2.1% in 2026 and 1.6% in 2027 due to slowing in both agriculture and manufacturing sectors. Infrastructure, however, has seen the conclusion of a financing agreement between The World Bank and the Government of Tunisia. The agreement in question aims to support Tunisia’s energy sector in efforts to modernize current practices, while delivering a reliable and sustainable supply of electricity through the Tunisia Energy Reliability, Efficiency, and Governance Improvement Program (TEREG). This deal involves USD 430 mln over a five-year period. Therefore, the government’s inability to provide stimulus has remained at medium high, while the risk of doing business remains medium. Since President Saied’s seize of power in 2021, Tunisia’s public debt has continued to climb. According to the IMF, government debt is forecast to stay elevated at 82.6% of GDP in 2026 and to 84.7% in 2027. Given the scarcity of external financing and the USD 2.3 bln of borrowed funds to repay urgent debts, the Tunisian government is again seeking funding of up to USD 3.7 bln from the central bank. Sovereign non-payment risk is assessed as medium high, alongside a climbing inflation rate currently projected by the IMF at 6.1% in 2026. Finally, Tunisia had recorded the heaviest rainfall in 70 years throughout January 2026. Flooding had crippled transport and infrastructure while authorities had confirmed the deaths of 4 people. Supply chain disruption is currently unchanged at medium risk.

West Bank/Gaza (PSE)

Phase 2 of President Trump’s 20-point peace deal has started with the top-level Board of Peace attracting a lot of publicity. Even so, the main focus is on the 3rd tier National Committee for the Administration of Gaza (NCAG) aimed at improving life in Gaza. However, intermittent tensions and deadlock remain over Hamas’s rejection of full disarmament and Israel’s withdrawal of troops. All of this means that the ceasefire remains fragile. Gaza’s economic growth numbers will rebound strongly in 2026 due to the ultra-low base (UN estimate Gaza’s 2024 economy at only 13% of 2022 levels) if the ceasefire holds, but FDI and financing flows will be key to ensuring sustained growth in the coming years. West Bank tensions also remain. Israel security cabinet has decided to expand powers in February, including land purchase and civil/law enforcement. Some within the Israeli government see this as a way to dismiss the idea of a two-state solution, which Israel political parties do not support. This stance could harden ahead of Israel’s autumn election, but momentum to formally annex the West Bank has slowed after pressure from the Trump administration. Israeli settlers/West bank Palestine tensions also remain high, which could worsen the unstable security and economic environment in the West Bank. All of this means that the West Bank and Gaza risk rating remains at high. 

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