Tunisia and Morocco are in the midst of severe droughts that could weigh on activity in the key agricultural and tourism sectors, and could possibly stoke social unrest. Elsewhere, Saudi Arabia continued its geopolitical shift towards China after Aramco struck oil supply deals with Chinese refiners, and the government joined the Shanghai Cooperation Organisation. Finally, we think the Central Bank of Egypt will need to deliver a punchy 300bp interest rate hike, to 19.25%, when it meets later today. If it fails to deliver a large hike, investor concerns about the currency are likely to build.
EM Drop-In (6th Apr.): Our latest EM online briefing is all about the risks around the recent bank turmoil, including potential economic spill-overs and the state of EM bank balance sheets. Register now.
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