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Gulf officials to shrug off recent dip in oil prices The latest drop back in oil prices is unlikely to be of much concern to policymakers in the Gulf and we still think that there is a window of opportunity for fiscal policy to be loosened over the next …
19th August 2021
A rise in oil prices has supported an improvement in Saudi Arabia’s current account position, which should be in surplus over the coming years. That, combined with signs that the sovereign wealth fund is slowing its international investments, will help to …
16th August 2021
Egypt: the Russians are coming (slowly) Egypt welcomed back Russian tourists for the first time in six years this week, which will be a relief to the ailing tourism sector, but any economic boost will be limited. Russia suspended flights to Egypt in …
12th August 2021
CBE to keep rates on hold for now as inflation moves back within target Egypt’s headline inflation rate rose to an eight-month high in July and is likely to drift higher over the coming months. Against this backdrop, we think the Central Bank of Egypt …
10th August 2021
Recovery picking up the pace The 1.1% q/q expansion in Saudi Arabia’s GDP in Q2 was driven by the unwinding of the voluntary oil output cuts and the easing of virus-related restrictions supported domestic activity. With the OPEC+ impasse now resolved oil …
9th August 2021
The Central Bank of Egypt (CBE) kept its policy rate on hold on Thursday, and we continue to hold a non-consensus view that a fall in inflation later in the year will allow the CBE to resume its easing cycle in Q4. The decision to keep the benchmark …
6th August 2021
Egypt: price of bread set to rise The announcement that the price for state-subsidised bread in Egypt is set to be raised adds to our view that inflation will drift higher and that policymakers will hold off from cutting interest rates for now. President …
5th August 2021
Non-oil sectors set to experience a stronger second half of the year July’s whole economy PMIs painted a mixed picture with recoveries in Qatar and the UAE’s non-oil sectors picking up pace, while those in Egypt and Saudi Arabia softening. Strong vaccine …
3rd August 2021
The latest on Tunisia’s political turmoil Tunisia’s President Kais Saied’s power grab on Sunday has been followed by further moves that will reinforce concerns about the future of democracy in the country. Whichever way events unfold in Tunisia, the …
29th July 2021
Saudi Arabia’s economic recovery appears to have been quite strong in Q2 and the further easing of virus restrictions and rising oil production means that GDP growth will continue to gather steam over the rest of this year and into 2022. The economy …
The end of the impasse within OPEC+ this month will result in higher oil output and boost recoveries in the Gulf over the second half of this year and in 2022 . Output quotas will rise by 400,000bpd each month after the UAE backed down in return for …
28th July 2021
The decision by Tunisia’s President Kais Saied to sack the prime minister and freeze parliament has raised serious concerns about the future of democracy in the country and couldn’t come at a worse time for the economy, which is already reeling from the …
26th July 2021
Concerns about the Delta variant of COVID-19 have grown over the past week but high vaccine coverage in the Gulf means that policymakers are unlikely to resort to harsh containment measures. Other parts of the region are more susceptible, adding to the …
22nd July 2021
Overview – Strong COVID-19 vaccine rollouts in most of the Gulf and Morocco mean that remaining virus restrictions should be lifted by the end of this year, providing a boost to recoveries that, in the Gulf, will be turbo-charged by the recent OPEC+ deal …
21st July 2021
Saudi-UAE oil spat seemingly resolved Reports suggest that Saudi Arabia and the UAE have reached an agreement over oil output quotas, which will boost economic recoveries across the Gulf. In principle, the pair have agreed to the Saudi-Russia proposal of …
15th July 2021
Inflation set to fall sharply in July Saudi inflation rose to 6.2% y/y in June but it will fall sharply in July to around 1.0 y/y as the effects of last year’s VAT hike fall out of the annual price comparison. Inflation is likely to hover around 1.0-1.5% …
OPEC+ fallout highlights rising Saudi-UAE tensions The failure of OPEC+ to reach an agreement over new output quotas has raised the risk that the deal collapses and the Gulf states ramp up production. This would mechanically lift GDP growth this year and …
8th July 2021
CBE to keep rates on hold for now as inflation drifts higher Egypt’s headline inflation rate edged up to 4.9% y/y in June and is likely to increase further over the coming months. Against this backdrop, we think the Central Bank of Egypt (CBE) will keep …
Gulf non-oil sectors set for stronger recovery over H2 June’s whole economy PMIs for the Gulf were a mixed bag, although one common thread was that weaker external demand offset a pick up in domestic demand. Strong vaccine rollouts mean that most virus …
5th July 2021
Saudi’s Transport & Logistics Strategy to fall short The National Transport and Logistics Strategy launched this week by Saudi Crown Prince Mohammed bin Salman is the latest effort to boost the non-oil sector, but it raises more concerns over whether …
1st July 2021
Saudi inflation is set to fall sharply in July as last year’s VAT hike falls out of the annual comparison. While there will be some upwards inflation pressure from the re-opening of the economy and global supply shortages, a weak recovery in demand is …
Saudi Arabia’s economic recovery seems to have got back on track in Q2 and, as virus restrictions are eased further and oil production cuts are scaled back, a strong second half of the year lies in store. The final Q1 GDP figures confirmed that the Saudi …
29th June 2021
Kuwaiti budget could be a sign of things to come Kuwait’s FY2021/22 budget that was approved this week added to signs from the Gulf that high oil prices are prompting a shift to looser fiscal policy. In a feisty parliamentary session on Tuesday, the …
24th June 2021
The price of oil has continued to rise and will help to improve balance sheets in the Gulf. With oil prices at $75pb, all Gulf economies with the exceptions of Bahrain and Oman are likely to be running current account surpluses, having run deficits in …
Virus numbers have fallen in the past few months in the MENA region and a rapid vaccine rollout should allow most of the Gulf economies, as well as Morocco, to lift restrictions further over the second half of the year. Elsewhere in the region, where the …
21st June 2021
The Central Bank of Egypt (CBE) announced it kept interest rates on hold on Thursday evening and, with inflationary pressures building, the CBE is likely to refrain from cutting rates in the near term. Even so, very high real interest rates and the …
18th June 2021
Hajj restrictions to delay the Saudi recovery The Saudi government confirmed this week that the Hajj pilgrimage will be at very limited capacity, which will weigh on the Kingdom’s economic recovery. Saudi has barred all foreign pilgrims from attending …
17th June 2021
The Egyptian pound has appreciated significantly since the devaluation in 2016 and there are signs that the strength of the currency is weighing on the country’s external competitiveness. We forecast a gradual depreciation from around 15.6/$ now to 17/$ …
15th June 2021
Rise in inflation to be short-lived The rise in Saudi inflation to 5.7% y/y in May is likely to be followed by another increase in June, but the headline rate will fall sharply in July to around 1.0-1.5% y/y as the effects of last year’s VAT hike fade. …
Egypt’s vaccine rollout still has a long way to go Egypt’s vaccine production has got underway which, the authorities hope, will allow the vaccination programme to speed up. But there is still a long way to go to achieve anything close to herd immunity …
10th June 2021
Inflation rises, but rate cuts are coming Egypt’s headline inflation rate rose to 4.8% y/y in May, the fastest pace recorded so far this year. But it remained below the lower bound of the central bank’s (CBE’s) target range, supporting our view that …
Negotiators appear to be closing in on an agreement to revive Iran’s nuclear deal which, if revitalised, would provide a substantial lift to Iran’s economy – it could plausibly expand by 8-10% per year in 2021-23. Higher Iranian oil output would act as a …
7th June 2021
Rising oil prices to open door for fiscal loosening? Oil prices hit their highest level in more than two years this week and, combined with higher oil output over the rest of this year, will help to rein in large twin budget and current account deficits …
3rd June 2021
Non-oil sector recoveries to pick up the pace in H2 May’s batch of whole economy PMIs were a mixed bag suggesting that economic recoveries in the Gulf are struggling to gather momentum for the time being. But, with vaccination programmes strengthening and …
Saudi Arabia’s economy suffered a small downturn in Q1 and the recovery so far this quarter has been slow-going. But, with the vaccine roll out picking up pace and restrictions being relaxed, coupled with rising oil output, the recovery is likely to …
2nd June 2021
Bahrain and COVID-19: a canary in the coalmine? The surge in COVID-19 cases in Bahrain has forced the government to tighten restrictions to curb the spread of the virus, which will delay its recovery and highlights that vaccination programmes elsewhere …
27th May 2021
Headline inflation rates have increased in almost all countries in the region since the turn of the year reflecting a combination of price pressures as economies re-open, higher food inflation and tax changes, as well as unfavourable base effects created …
Strong vaccine rollouts in the Gulf and Morocco have allowed for an easing of travel-related restrictions but there is still a long way to go and recoveries in tourism sectors are likely to be slow-going. And in the rest of the region, struggling …
26th May 2021
Iran nuclear deal edges closer If reports suggesting that the Iran nuclear deal will be revived (perhaps as soon as next week) prove right, the lifting of sanctions would probably weigh on oil prices as Iran ramps up production, but geopolitical tensions …
20th May 2021
Egypt’s natural gas sector struggled last year as the slump in regional energy prices caused production and exports to fall. But the re-opening of key LNG infrastructure in recent months and prospects for rising exports into Europe will help to improve …
Inflation to continue to drift higher, but set to fall sharply in H2 Saudi inflation rose to 5.3% y/y in April and, while we expect the headline rate to rise further over the rest of this quarter, it is set to fall sharply to 1.5-2.0% from July as the …
UAE property sector turnaround? The downturn in the UAE’s real estate sector appears to have bottomed out. But we still hold concerns that increasing supply will exacerbate overcapacity and put further strain on banks’ balance sheets. This week, property …
13th May 2021
Saudi Arabia’s budget deficit narrowed in the first quarter of the year on the back of higher non-oil revenues and a sharp reduction in capital spending. Higher oil revenues will support a further reduction in the shortfall in the coming quarters and it …
11th May 2021
Fresh downturn in Q1, but cause for optimism Saudi Arabia’s economy recorded a slight contraction in Q1 as the impact of the Kingdom’s additional voluntary output cut more than offset a further rebound in non-oil sectors. With oil output cuts now being …
10th May 2021
Inflation falls, raising possibility that CBE moves sooner to cut rates Egypt’s headline inflation rate fell to a seven-month low of 4.1% y/y in April, leaving it well below the lower bound of the central bank’s (CBE’s) target range. We think the headline …
Tunisia: still a long way to go in IMF negotiations Tunisia’s government has jump started talks with the IMF over a fresh financing package but it may prove difficult to secure. If the talks fall apart, Tunisia would be pushed towards a messy balance of …
6th May 2021
The UAE has been one of the global leaders in its vaccine rollout thanks to the aggressive procurement of vaccines, numerous vaccination centres and wide eligibility. Containment measures have been kept looser than in the likes of the UK and Israel and …
5th May 2021
Saudi Arabia’s economy is likely to have suffered a fresh downturn in Q1 on the back of oil production cuts and tighter virus containment measures. But with the vaccine roll out picking up pace and oil output rising from May, the recovery is likely to …
4th May 2021
Saudi Arabia’s Crown Prince Mohammed bin Salman (MbS) gave a rare TV interview this week to mark five years since the launch of the Vision 2030 reform plans. There were four points to take away. The first is that recent fiscal tightening may be reversed. …
29th April 2021
The Central Bank of Egypt (CBE) opted to keep interest rates on hold at its meeting today and, with inflation likely to rise over the coming months, we think policymakers will keep rates unchanged until Q4. But if the recent weakness of inflation …
28th April 2021
