Credit Cycles in Countries in the MENA Region—Do They Exist? Do They Matter?

Abstract

This paper estimates private sector credit cycles for most of the oil-importing and oil-exporting countries in the Middle East and North Africa. Credit cycles are the medium-term component in spectral analysis of real private sector credit growth. In addition, the paper estimates the credit cycles for several Western countries and Japan. The analysis finds substantial differences and rare similarities between credit cycles in the Middle East and North Africa and developed countries. Over 1964-2017, credit cycles in the Middle East and North Africa do not appear to be associated with real gross domestic product growth. They only explain a fraction of the growth in private sector credit, and they do not seem to be synchronized across oil exporters and oil importers.