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Saudi Arabia’s unemployment rate has risen sharply in the past year and, while we expect it to fall back, the weak recovery means that it might take many years before it gets close to its pre-pandemic rates. Saudi Arabia didn’t publish labour market data …
10th February 2021
Inflation falls, but rate cuts still unlikely until later in the year The drop in Egyptian inflation to 4.3% y/y in January leaves the headline rate below the lower bound of the central bank’s (CBE) target range but, if we’re right in expecting inflation …
Recovery still struggling The flash estimate of Saudi Q4 GDP showed that the economy continued to recover at the end of 2020 but it remained slow-going. Tighter virus containment measures and deeper oil production cuts mean that the economy is likely to …
The Central Bank of Egypt (CBE) opted to keep interest rates on hold at its first meeting of the year and, with inflation set to rise over the next 6-9 months, we think policymakers will keep rates unchanged for much of this year. But a drop in inflation …
4th February 2021
Kuwait budget fears: a storm in a teacup? Kuwait’s budget laws have created problems financing the deficit that are now reaching a crunch point, but it seems most likely that the government will be able to get around these. Low oil prices have forced …
Recoveries held back by tightening of virus restrictions January’s batch of whole economy PMIs suggest that that economic recoveries in the region have struggled to gain more momentum at the start of this year as fresh virus outbreaks have prompted a …
3rd February 2021
Saudi: squeezing SAMA to fund PIF The change at the helm of the Saudi Central Bank (SAMA) adds to signs that the government will lean more heavily on SAMA to support its efforts to diversify investments and the Saudi economy. SAMA Governor Ahmed …
28th January 2021
The economic recovery in Dubai is going to be put on ice as a worsening COVID-19 outbreak results in increased precautionary behaviour and tighter containment measures. But if the strong start to the vaccine rollout continues, most restrictions will …
27th January 2021
Governments across the Middle East and North Africa have begun the roll out of COVID-19 vaccines with parts of the Gulf making a particularly strong start. The UAE and Bahrain have already administered vaccines to around 26% and 8% of their populations, …
26th January 2021
Tunisia: protests will make reforms harder to pass Protests that have swept across Tunisia over the past week bring back memories of the revolution a decade ago. While there’s a lot of uncertainty about how these will develop, one point we can make at …
21st January 2021
Overview – A rapid roll-out of COVID-19 vaccines, combined with rising oil production and higher oil prices, will support a quick recovery this year in the Gulf economies. But other parts of the Middle East and North Africa are likely to take longer to …
20th January 2021
Saudi Arabia’s economic struggled at the end of last year and a combination of a slow start to the vaccination programme, voluntary oil output cuts and tight fiscal policy means that the outlook for the first half of this year is pretty bleak. Final GDP …
19th January 2021
Tunisia on the verge of new IMF deal? Tunisian Prime Minister Hechem Mechichi confirmed this week that the government is set to launch a package of reforms in a sign that the authorities are gearing up to secure a new IMF deal. Fiscal consolidation will …
14th January 2021
Inflation eases, but will remain high over first half of 2021 Saudi inflation dropped back to 5.3% y/y in the final month of last year as softer food and housing inflation more than offset a further rise in health inflation to a two-year high. The effects …
Egyptian inflation is likely to rise over the next 6-9 months due to stronger food and fuel inflation, as well as a weaker pound, which will prevent the central bank from resuming its easing cycle for much of this year. But a drop in inflation late this …
13th January 2021
Saudi cuts, but OPEC+ tensions still simmering Saudi Arabia’s surprise voluntary oil output cut unveiled at this week’s OPEC+ meeting has lifted oil prices, but even so GDP growth will probably be weaker in Q1 than previously expected. After much acrimony …
7th January 2021
The announcement that Saudi Arabia will remove its three-year blockade of Qatar will help to strengthen political ties in the Gulf, but the direct economic benefits from the détente are likely to be limited. Instead, Qatar’s (and Saudi Arabia’s) economic …
5th January 2021
Vaccine rollout boosts Gulf economies December’s whole economy PMIs suggest that the Gulf economies have been boosted by improved sentiment on the back of the rollout of COVID-19 vaccines. But activity in Egypt weakened as the country struggles with a …
The roll-out of COVID-19 vaccines and easing of containment measures will boost all the MENA economies next year, although this will be quicker in the Gulf countries which have greater access to vaccines and will be also be supported by a rebound in the …
21st December 2020
The OPEC+ agreement earlier this month to increase oil supply will mean that downturns in hydrocarbon sectors across the Gulf will start to ease. And, of course, the Gulf countries will also benefit from higher prices – Brent crude broke through $50pb …
18th December 2020
Ten years on from the “Arab Spring” uprisings that afflicted large swathes of the Middle East and North Africa, hopes for a shift to democracy that would unleash reforms and transform the region’s economic prospects have failed to materialise. Even once …
17th December 2020
COVID-19: Light at the end of the tunnel COVID-19 outbreaks have started to come under control in recent weeks which, combined with the start of the roll-out of vaccines, should give a lift to the region’s economic recovery. However, there is likely to be …
The Saudi 2021 budget shows that the recent improvement in the oil market hasn’t swayed officials to alter their plans to keep fiscal policy tight in the coming years. This will help to keep the dollar peg intact and limit any further rise in government …
16th December 2020
Inflation holds steady Saudi inflation held steady at 5.8% y/y in November as a rise in transport inflation was offset by weaker price pressures elsewhere. The effects of July’s VAT hike will continue to keep the headline rate elevated until the middle of …
15th December 2020
Egypt: government keeps the belt tight Egypt’s budget deficit has narrowed this year despite the COVID-19 pandemic as the authorities maintained a tight grip on public spending. While this highlights the commitment to lowering the public debt ratio, it …
10th December 2020
Inflation rises, but still scope for further monetary loosening The jump in Egyptian inflation to 5.7% y/y in November still leaves it below the lower bound of the central bank’s target range, leaving the door open for interest rates to be lowered further …
A rebound in global economic activity triggered by COVID-19 vaccines will lift the oil market and, in turn, the Gulf economies over the coming quarters. But one legacy of the crisis is that these countries will have to contend with peak oil demand being …
7th December 2020
Deal or no deal? The past week has been dominated by the OPEC+ meeting and, while it has brought to the fore divisions within the cartel, it seems that the group is moving towards some sort of agreement. The OPEC Conference started on Monday but, having …
3rd December 2020
Recoveries still struggling to gather momentum November’s whole economy PMIs from across the Middle East and North Africa showed a mixed performance and, despite the global economic backdrop improving amid the rollout of COVID-19 vaccines, economic …
UAE: major oil discovery, OPEC quit rumours This week’s revelation by the UAE that it has discovered major new oil reserves boosts the economy’s long-term prospects but it may further raise questions over its commitment to OPEC. On Sunday, Abu Dhabi …
26th November 2020
The positive news on COVID-19 vaccines in recent weeks has helped to lift the near-term outlook for the Middle East and North Africa. For the Gulf countries, oil prices have picked up with Brent crude reaching its highest level since March and we think …
24th November 2020
Aramco’s bond issuance: a cause for concern? This week’s dollar bond sale by Saudi Aramco is a further sign that the government is squeezing every last drop out of the company in order to contain the size of this year’s budget deficit, but adds to …
19th November 2020
Policymakers across the region have drawn down foreign exchange reserves this year in order to prop up currency pegs and, in the Gulf countries at least, this can be sustained for some time to come. Even in Bahrain and Oman, financial support from their …
18th November 2020
The Central Bank of Egypt (CBE) unexpectedly moved to cut interest rates for a second consecutive meeting on Thursday evening and, with inflation set to remain weak, we think that the easing cycle has further to run over the next twelve months or so. The …
13th November 2020
What does a vaccine mean for MENA? The distribution of an effective COVID-19 vaccine would clearly improve the near-term outlook but scarring effects from the crisis mean that we still expect the region to recover more slowly than most other parts of the …
12th November 2020
Stronger inflation to temper CBE rate cuts The rise in Egyptian inflation to 4.5% y/y in October adds to the reasons why we think that policymakers will hold off on cutting interest rates when they meet on Thursday. Further out, we think that the easing …
10th November 2020
Slow recovery gets underway The first ever “flash estimate” of Saudi GDP released today showed that the easing of virus containment measures supported an economic recovery in Q3. But the rebound was weak and the latest monthly activity figures suggest …
Saudi Arabia’s economic recovery has lost momentum in recent months and persistent low oil prices reinforce our view that policymakers are unlikely to row back on fiscal austerity and there is rising probability that current oil production cuts are …
9th November 2020
The US election and implications for MENA This week’s US election has yet to reach a conclusive result but it looks increasingly likely that Joe Biden will secure the presidency. Even so, some of the potential downside risks facing the Middle East and …
5th November 2020
The deterioration in Gulf public finances this year has pushed governments across the region to finance a significant portion of their budget deficits through international debt markets, which we expect to continue in the coming years. While this doesn’t …
A mixed bag, but recoveries to remain sluggish October’s whole economy PMIs from across the Middle East and North Africa were a mixed bag but, against the backdrop of renewed lockdowns across the globe and low oil prices, recoveries are likely to remain …
3rd November 2020
The latest fall in the price of oil increases the chances that current OPEC+ production quotas are extended beyond the end of this year and reinforces our view that governments across the Gulf are unlikely to row back on recent austerity measures. …
2nd November 2020
Saudi budget data: austerity doing its job Data published this week showed that, even though it’s early days, fiscal austerity in Saudi Arabia is already having the desired effect of improving the underlying budget position. But this will come at the …
29th October 2020
The latest OPEC oil production figures continue to show that several countries are overproducing, which is making Saudi Arabia – which has borne the brunt of production cuts – increasingly frustrated. For now, at least, countries are making compensatory …
26th October 2020
Oman’s issuance to help unlock financing? Oman successfully returned to the international bond market this week, which will help finance the large twin deficits and support the rial’s dollar peg. Ultimately, though, we think Oman will have to rely on …
22nd October 2020
Overview – The economies of the Middle East and North Africa have continued to recover in recent months but, while the Gulf countries seem to have the virus under control, low oil prices mean that fiscal consolidation will continue to hold back growth. In …
21st October 2020
More Saudi bank mergers in the pipeline? The merger of two of Saudi Arabia’s largest banks may be a sign of things to come as firms in the sector look to boost profitability against the backdrop weak economic growth and low interest rates. National …
15th October 2020
Food and education drag inflation down Saudi inflation dropped back to 5.7% y/y in September as food inflation eased and schools slashed tuition fees ahead of the new academic year. While the effects of July’s VAT hike will keep inflation elevated until …
The weakness of Egypt’s inflation reading for September is likely to prompt another rate cut at the central bank’s (CBE’s) next meeting. With inflation persistently undershooting the CBE’s target (which expires this quarter), policymakers are likely to …
14th October 2020
Egypt: low inflation to elicit IMF call for rate cuts Egypt’s September inflation reading will be closely watched next week as there is a good chance that it will prompt the IMF to give the central bank the green light for further interest rate cuts. A …
8th October 2020
