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The Egyptian government’s decision this week to impose import tariffs on steel rebars and iron pellets highlights the government’s slippage on structural reforms and also suggests that the pound may be too strong, undermining competitiveness. Elsewhere, …
18th April 2019
Morocco’s current account deficit ballooned to its largest level in four years in Q4, but we think that this is temporary and that the shortfall will narrow this year. … Widening Moroccan CA deficit not a cause for …
17th April 2019
Aramco’s bumper bond sale this week was seen by many as a vote of confidence in the Saudi economy and the government’s reform plans. But other indicators don’t back this up. … Aramco’s bond sale, Saudi risk …
11th April 2019
We hold below-consensus growth forecasts for the Gulf States, where oil output cuts and renewed fiscal austerity will result in a sharp slowdown. We are, by contrast, relatively optimistic about the prospects for Egypt, as well as Morocco, where growth is …
10th April 2019
The relatively high Egyptian inflation reading, of 14.2% y/y in March, reduces the probability that the central bank will resume its easing cycle at the next meeting in late May. But if we’re right that April’s inflation figure (due before the next MPC …
Strong PMIs across the Gulf were driven by higher oil prices rather than a sustained economic recovery. We expect that activity will slow as oil prices falter, though spending on the 2020 Expo will prop up growth in the UAE. … Whole Economy PMIs …
8th April 2019
The raft of Q4 GDP data released this week showed that the region recorded its fastest growth in three years at the end of 2018. But a slowdown is now underway and is likely to intensify. Meanwhile, financial details of Saudi Arabia’s state oil company, …
4th April 2019
The decision by Algeria’s President Bouteflika to step down is likely to result in a long and potentially messy transition. At the very least, economic growth will weaken and the chances of a severe balance of payments crisis at some point in the next …
3rd April 2019
Saudi Arabia’s economy expanded at its fastest pace in three years in Q4 of last year, but our GDP Tracker points to a renewed slowdown at the start of 2019. … Saudi slowdown to be steeper than most …
1st April 2019
The Egyptian central bank’s decision today to keep interest rates unchanged (rather than cut rates) appears to have been a result of the jump in inflation in February. But if we’re right that inflation will fall again over the coming months, the easing …
28th March 2019
The latest attempt to quell protests in Algeria doesn’t appear to have worked and there’s a risk that the demonstrations become more disruptive and the chances of a messy political transition are rising. The announcement that Saudi Arabia’s state oil …
Economic growth in Dubai should hold up well at 3.8-4.5% over the next couple of years due to a boost from the 2020 World Expo. Loan restructurings undertaken in 2014 have masked the Emirate’s debt problems in recent years, but these are likely to come …
26th March 2019
Plans announced this week for a wave of megaprojects in Saudi Arabia’s capital, Riyadh, add to the impression that the government is diverting its attention away from the bold reforms needed to improve the country’s long-run economic prospects. Meanwhile, …
21st March 2019
The recovery in oil prices since the start of this year is only likely to provide brief respite for the Gulf economies. Brent crude briefly touched $68pb this month, marking a 30% rise from the trough reached at the end of last year. This will provide a …
20th March 2019
Consumer prices in Saudi Arabia fell at an even faster pace in February than in January and we expect the Kingdom to remain mired in deflation for much of this year. … Saudi Consumer Prices …
19th March 2019
Talk of banks in the UAE needing to lengthen the maturity of real estate loans may be the first sign that the country’s property slump is starting to cause fresh debt problems. Elsewhere, Oman may not have any large FX debt repayments due in 2019-20, but …
14th March 2019
Any economic fallout from the protests in Algeria will have a negligible impact on the rest of the MENA region. The greater risk stems from political contagion. Past experience suggests that governments in the Gulf may resort to fiscal stimulus to dampen …
13th March 2019
Algeria’s President Abdelaziz Bouteflika’s decision not to seek a fifth term in office is unlikely to spell the end of the political saga. Whoever eventually takes over will inherit an economy that has yet to adjust to low oil prices. But the lesson from …
12th March 2019
The jump in Egyptian inflation in February has reduced the chances that the central bank will loosen policy at this month’s MPC meeting, but subdued core price pressures and strong capital inflows mean we think that an interest rate cut is still more …
11th March 2019
Reports that the Saudi government is considering hiking taxes on banks supports our view that low oil prices will eventually prompt a return to fiscal austerity. Meanwhile, Moody’s decision to strip Oman of its last investment-grade rating was hardly a …
7th March 2019
Saudi Arabia’s economy appears to have expanded by around 4.5% y/y in Q4 of last year, but it is now almost certainly slowing. Our forecast for GDP growth of 1.3% this year lies towards the bottom of the consensus range. … Saudi economy’s strong end to …
6th March 2019
The protests in Algeria have inevitably spurred comparisons with the Arab Spring uprisings in 2011 and the experience from that period is that economic growth will slow and balance of payments strains will intensify. Algeria is arguably in a much worse …
5th March 2019
February’s PMI data suggest that looser fiscal loosening has offset the impact of weaker external demand and supported a further pick-up in Saudi Arabia’s economy. In contrast, growth in the UAE and Egypt seems to have slowed last month. … Whole Economy …
Interest rate moves in Egypt and Tunisia this month highlighted the important role that balance of payments positions are playing in monetary policy decisions. In Egypt, tighter fiscal policy and the devaluation of the pound in late-2016 have contributed …
28th February 2019
Fresh hints from Saudi Arabia that it will extend its oil production cuts into the second half of this year support our view that economic growth in the Kingdom will be weaker than most anticipate. Meanwhile, further demonstrations planned in Algeria on …
The recent improvement in Egypt’s budget position will be enough to keep the government’s debt ratio on a downward trend. Government bond yields are likely to fall and austerity looks set to come to an end. This underpins our view that GDP growth will be …
27th February 2019
The recent protests in Algeria threaten to worsen the country’s economic problems. We already expected sharp falls in the dinar and much weaker economic growth over the next couple of years, but the chances of a more disorderly adjustment are mounting. … …
25th February 2019
The Tunisian central bank hiked its key policy rate aggressively this week and we think that further steps will be needed to correct the country’s large economic imbalances. Meanwhile, the UAE has denied reports that ships will now be allowed to travel to …
21st February 2019
Weak domestic demand has pushed several Gulf economies into deflation, although most places are well placed to deal with the negative repercussions. If anything, a period of deflation is what is needed to improve competitiveness within the confines of the …
20th February 2019
Saudi Arabia re-entered deflation at the start of 2019 as we had anticipated, with consumer prices falling by 1.9% y/y in January. A fresh round of subsidy cuts poses an upside risk to the inflation outlook but, with domestic demand likely to remain …
19th February 2019
Comments from Saudi Arabia’s Oil Minister that oil production will be reduced to well below its OPEC quota suggests that the authorities are focused on driving oil prices higher in order to prevent a return to growth-sapping austerity. Meanwhile, …
14th February 2019
Egypt’s tourism sector has mounted a rapid recovery over the past couple of years and, so long as security concerns don’t flare up again, it probably has further to run. Tourism receipts could rise by a further 2% of GDP in the coming years, potentially …
12th February 2019
The formation of a new government in Lebanon has raised investors’ hopes that the dire public finances will be put on a stable footing. But we think that these will be disappointed, causing the recent rally in the country’s bond markets to go into …
7th February 2019
January’s PMIs point to stronger growth in the Gulf but we doubt that this will last as oil prices drop back and fiscal consolidation resumes. Elsewhere, inflation pressures in Egypt continued to soften, which supports our view that the central bank will …
5th February 2019
Our GDP Tracker suggests that the Saudi economy gathered pace towards the end of last year, recording growth of as much as 5% y/y. But oil output cuts, combined with a tightening of fiscal policy in the second half of the year, will cause GDP growth to …
31st January 2019
Rally in Egyptian pound to be short-lived The appreciation of the Egyptian pound this week appears to have been driven by a spurt of foreign portfolio inflows, but we still think that the currency will record a modest fall in the next couple of years. …
A raft of GDP releases over the past month showed that growth in the Gulf strengthened in Q3 of last year, but a renewed slowdown is likely in the coming quarters. In aggregate, it looks like the Gulf economies expanded at their fastest pace since early …
29th January 2019
Tunisia’s large current account deficit is the result of struggles in the tourism sector as well as an overvalued exchange rate and overly loose fiscal policy. Implementing austerity looks to be an increasingly difficult challenge and we think the …
24th January 2019
Comments from the Central Bank of Egypt’s governor, Tarek Amer, earlier this week add weight to our view that the authorities will scale back support for the pound. This is likely to result in a modest depreciation over the next couple of years. …
The region’s recovery is set to falter in 2019 and growth is likely to be weaker than most expect. Low oil prices shouldn’t cause major balance sheet strains in the Gulf, but tighter fiscal policy and oil output cuts will cause economic growth to weaken. …
22nd January 2019
Inflation in Saudi Arabia edged down to 2.2% y/y in December on the back of weaker food and housing inflation and we expect it to fall back into negative territory in early 2019. … Saudi Consumer Prices …
Saudi Arabia’s stock market has rallied over the past week or so, but we expect this to go into reverse. Meanwhile, public sector strikes taking place in Tunisia today highlight the scale of the challenge facing the next government in pushing through …
17th January 2019
It seems more likely than not that the Lebanese authorities will have to follow through with debt restructuring to place the public finances on a more sustainable footing. With commercial banks holding a large share of the debt, there’s a major risk that …
16th January 2019
Reports that Lebanon’s government is putting together a debt restructuring plan suggest that some of the risks we’ve previously warned about are crystallising. And there’s a good chance that this leads to strains in the Lebanese banking sector. Meanwhile, …
10th January 2019
The sharp fall in Egyptian inflation in December increases the chances that policymakers start to cut interest rates again at the next MPC meeting in February. If inflation falls a bit further this month, as we anticipate, a cut of 50bp to the overnight …
The fall in oil prices since late last year has cast the spotlight on to Oman’s weak balance sheet and caused the rial to come under pressure. The country’s neutral stance in regional politics means it is less certain that it will receive financial …
9th January 2019
The raft of GDP figures released over the past week showed that, in aggregate, the MENA economies strengthened in Q3 of last year. But we think that a fresh slowdown is on the cards in 2019. Meanwhile, t he Egyptian central bank left interest rates on …
3rd January 2019
Saudi Arabia’s 2019 budget was premised on optimistic assumptions regarding oil prices that are likely to be disappointed. If we’re right, fiscal austerity will probably return in mid-2019 and there’s a growing chance that the authorities push for deeper …
20th December 2018
Saudi Arabia’s budget for 2019 outlined further fiscal loosening but the government seems to be relying on optimistic assumptions for oil prices to rise to almost $80pb. If prices stay low as we expect, this stimulus is likely to be reversed in the second …
18th December 2018
The past month has brought signs that Egyptian policymakers are trying to simplify the country’s exchange rate setup, which is ultimately likely to result in a weaker pound. Over the past six months or so, Egypt’s government appears to have leaned on …
17th December 2018
