Horizons Middle East & Africa 9/2/2025

Recent reports from the Middle East and Africa highlight several key developments, including Turkey's surprising economic growth despite high interest rates, and a significant slump in global diamond demand posing a direct threat to Botswana's economy. Geopolitically, the reported killing of Yemen's Houthi Prime Minister in an Israeli strike marks a critical escalation in regional tensions.

Analysis

The current landscape in the Middle East and Africa presents a complex mix of escalating geopolitical risk and divergent economic trajectories. A significant regional escalation is marked by the reported killing of Yemen’s Houthi Prime Minister in an Israeli strike, a development that heightens tensions and could impact key shipping routes and regional stability. Economically, there are stark contrasts within emerging markets. Turkey is demonstrating surprising economic growth despite a high-interest-rate environment, suggesting a degree of policy effectiveness or underlying resilience. Conversely, Botswana's economy is under direct threat from a slump in global diamond demand, underscoring the acute vulnerability of commodity-dependent nations. In a separate, positive trend, Dubai has been identified by Savills as the top destination for executive nomads, highlighting its growing status as a stable global business hub amidst regional volatility.

Key Decisions for Investors

• Investors should heighten monitoring of geopolitical developments in the Middle East, as the reported Houthi-Israel conflict escalation poses a direct risk to supply chains, commodity prices, and regional asset stability.
• Re-evaluate exposure to single-commodity-dependent economies, as the diamond slump's impact on Botswana illustrates a significant risk factor that may be present in other non-diversified emerging markets.
• Adopt a country-specific approach rather than a broad-brush strategy for emerging markets, recognizing the pronounced divergence between Turkey's unexpected growth and Botswana's commodity-driven downturn.