SPR release, Turkey exposure, Egypt price adjustments

The US-led release of oil reserves earlier this week did little to bring down the price of oil as President Biden would have hoped and, if anything, could provoke OPEC+ to raise oil production more slowly than its current plans imply. Even so, the move is unlikely to drastically alter the outlook for the Gulf economies. Meanwhile, the spillovers from Turkey’s currency crisis are likely to be contained, although Tunisia's poor external position leave it vulnerable to financial contagion. Finally, Egypt’s government has announced it will cut electricity tariffs which could pose a threat to the fiscal position further down the line.
James Swanston Middle East and North Africa Economist
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Middle East Economics Weekly

Omicron, tourism and the oil market

Low vaccine coverage and large tourism sectors mean that the non-Gulf economies are particularly vulnerable to the emergence of the Omicron variant. Meanwhile, the drop in oil prices and the likelihood that OPEC+ raises oil output more slowly than previously envisaged has increased the downside risks to our GDP growth forecasts for the Gulf.

2 December 2021

Middle East Economics Update

Saudi economy set for a strong end to the year

The economic recovery in Saudi Arabia has picked up pace and should end the year on a strong note. The emergence of the Omicron variant has clouded the outlook, but for now we expect economic growth in the Kingdom to strengthen in 2022 on the back of rising oil output.

2 December 2021

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MENA and the Omicron risks

The Middle East and North African economies are potentially among the most vulnerable to the fallout from the Omicron strain of COVID-19. The North African economies as well as Lebanon and Jordan have low vaccination rates and large tourism sectors, leaving them exposed to the risk of tighter restrictions and curbs on international travel. In the Gulf, vaccination rates are much higher and, Dubai aside, tourism sectors are relatively small. But the fall in energy prices could prompt governments to hold off loosening fiscal policy. And producers may raise oil output more slowly, which would weigh on economic growth.

30 November 2021

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Middle East Economics Update

Tunisia’s fragile external position poses risk to dinar

Tunisia’s external position is in a dire state and policymakers have little ammunition available to defend the dinar. We think the currency will depreciate by more than 10% against the euro by the end of next year and the risks lie heavily to the downside.

25 November 2021

Middle East Economics Weekly

Tunisia fiscal policy, Egypt’s private sector, COVID-19

Tunisia’s government upwardly revised its 2021 budget deficit target this week which, coupled with growing signs of it making concessions to appease the UGTT labour union, adds to our view that the public finances will continue to deteriorate and a debt restructuring will be needed. Elsewhere, Egypt government announced plans to scale back its involvement in the economy. While encouraging, there are reasons to be sceptical. And finally, COVID-19 vaccine rollouts in parts of North Africa have picked up the pace and the news of the development of an antiviral pill will provide countries with a further tool to add to the arsenal.

18 November 2021

Middle East Economics Update

Pockets of vulnerability in MENA banking sectors

Most banking sectors in the region (with the notable exception of Lebanon) have, so far, come through the COVID-19 crisis in relatively good shape. But with support programmes now being withdrawn, there is a risk that vulnerabilities in Tunisia, Qatar, and the UAE crystalise.

18 November 2021
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