Sudan's growth outlook will be dented by high price growth and regulatory uncertainty in the coming quarters. Going forward, we note greater risks that the US will not remove economic sanctions, which would pose significant headwinds to the country's long-term outlook.
Increasing tensions between Sudan and Egypt will pose a risk to the political stability of the two countries and hurt trade relations.
The involvement of other East African governments in the spat will also pose a potential threat to regional relations.
Stunted oil production will continue to weigh on South Sudan's economic growth in 2017. Although oil output will increase thereafter, offering some economic tailwinds, long-term threats to food supply and political turmoil will continue to pose headwinds to the economy going forward.
The failure of opposition factions to participate in South Sudan's government-led National Dialogue will leave few options for renewed implementation of the 2015 peace deal. Going forward, we note that the possibility of foreign intervention in the peace process is increasing, but this is unlikely to act as a panacea, suggesting that the country is set to remain highly fractured and unstable.