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The OPEC meeting concluded last Friday with a deal to cut oil output but we don’t think that this will provide a lasting boost to oil prices and, overall, the deal is set to result in slower GDP growth in the Gulf. Meanwhile, t he fall in oil prices since …
13th December 2018
Our GDP Tracker suggests that Saudi Arabia’s economy accelerated in Q3 but last week’s OPEC deal to cut oil output means that a fresh slowdown is on the cards in early 2019. … Stronger growth in Saudi Arabia won’t …
11th December 2018
Egyptian inflation dropped back in November and we expect it to fall further over the coming months. The central bank is likely to keep interest rates unchanged at its meeting later this month, but we think that it will resume its easing cycle in early …
10th December 2018
The deal reached by OPEC to reduce oil output means that the economic slowdown in the Gulf that we had expected from the middle of next year will now occur earlier and be more severe. Accordingly, we are revising down our GDP growth forecasts for 2019. … …
7th December 2018
OPEC’s biannual meeting kicked off today and all the signs are that the cartel will agree to an output cut by the time the meeting concludes tomorrow. Meanwhile, the Egyptian authorities have taken some positive steps over the past week to improve …
6th December 2018
November’s PMI data suggest that the Gulf’s non-oil sectors have held up well given the backdrop of the fall in oil prices. But we doubt that this resilience will last. Meanwhile, the surveys showed that price pressures in Egypt eased further, supporting …
The Egyptian authorities appear to have leaned on state-owned banks to sell FX assets to offset pressure on the pound recently, but this can only be sustained for a few more months at most. The central bank could decide to intervene directly to support …
4th December 2018
Qatar’s decision to pull out of the oil cartel, OPEC, is unlikely to have a major impact on global energy markets but it further cements the country’s feud with Saudi Arabia and its allies. The experience since the blockade was imposed in mid-2017 is …
3rd December 2018
The recent slump in oil prices is unlikely to cause major economic ructions in the Gulf, although it does look like policymakers will push ahead with an oil output cut at next week’s OPEC meeting. Meanwhile, comments from Egypt’s finance minister that the …
29th November 2018
Morocco’s rapid integration into global manufacturing supply chains, particularly in the automobile sector, should spur rapid economic growth in the coming years. We expect Morocco to be one of the few EMs to grow at a faster pace in the coming decade …
28th November 2018
Saudi inflation increased to a six-month high in October but this rise is likely to prove fleeting. Inflation will drop sharply at the start of next year as the effects of the new value-added tax and administered price hikes fall out of the annual …
The upcoming OPEC meeting is likely to result in Saudi Arabia agreeing to reduce its oil output. But we think that any cut will be at the more modest end of the spectrum as the authorities balance the need to placate President Trump with a desire to put a …
27th November 2018
The latest slump in oil prices is unlikely to lead to major balance sheet strains in the largest Gulf economies and, even if prices fall further to $40-50pb, dollar pegs shouldn’t come under threat. But in the long run, this will only be sustainable if …
26th November 2018
President Trump’s statement this week supporting US ties with Saudi Arabia suggests that attempts by Congress to force a firmer response to the murder of Jamal Khashoggi are unlikely to result in further sanctions. That said, a general deterioration in …
22nd November 2018
The recent plunge in oil prices is unlikely to cause major economic ructions in the Gulf, but it has taken a toll on local financial markets. Brent crude has plunged from $85pb at the start of October to just under $65pb now, in the process wiping $130bn …
21st November 2018
The imposition of targeted sanctions by the US on Saudi Arabia in relation to the murder of journalist Jamal Khashoggi is unlikely to hit local financial markets hard when they reopen on Sunday. After all, the near-term economic damage will be minimal and …
16th November 2018
The decision by Egypt’s central bank to keep its policy interest rate on hold confirmed that the MPC is paying more attention to weak underlying price pressures than the recent spike in headline inflation. The easing cycle is likely to resume next year as …
15th November 2018
The drop in oil prices over the past week probably has further to run, which is a key reason why we think that the economic recovery in the Gulf will peak in the middle of 2019 and perhaps even sooner. Meanwhile, the latest political twists and turns in …
Saudi Arabia’s push for a fresh round of oil output cuts isn’t a done deal and a sustained unilateral cut is unlikely. Even so, it adds to the evidence of a more erratic approach to oil policy under Crown Prince Mohammed bin Salman. And while there could …
12th November 2018
The further rise in Egyptian inflation in October, taking it above the upper bound of the central bank’s end-year target range, raises the risk that policymakers will hike interest rates at this week’s MPC meeting. But with underlying price pressures …
Rumours suggest that OPEC will discuss the possibility of oil output cuts this weekend, although a decision seems highly unlikely at this stage. But if oil prices fall further, as we expect, production cuts could become a real possibility next year, which …
8th November 2018
Egypt’s economy has grown at a robust pace over the past couple of years, but we estimate that there is still an output gap equal to 2.0-2.5% of potential GDP. Accordingly, as demand strengthens, the economy should be able to record fast growth over the …
7th November 2018
We expect that growth will strengthen in the Gulf over the coming quarters, but any potential boost to the rest of the MENA region is likely to be modest. While remittance flows might pick up, trade ties are limited and financial support to shore up …
October’s PMI data suggest that the fallout from the murder of Saudi journalist, Jamal Khashoggi, including the threat of sanctions by the US, has had no discernible impact on Saudi Arabia’s economy. Meanwhile, inflationary pressures in Egypt continued to …
5th November 2018
Data released this week confirmed that higher oil prices have prompted Saudi Arabia’s government to loosen fiscal policy further and we expect this to continue over the next few quarters, boosting growth in the non-oil sector. But fiscal loosening will …
1st November 2018
Our GDP Tracker suggests that the Saudi economy picked up in August on the back of rising oil output. And while the threat of the US imposing sanctions on the Kingdom has clouded the outlook, we still expect the economy to strengthen further over the rest …
31st October 2018
Political developments have re-emerged as a key risk to the region’s economic outlook in recent weeks. The economic fallout for Saudi Arabia from the Khashoggi scandal should be limited, at least in the near-term. The threat of sanctions has weighed on …
30th October 2018
The rally in Saudi Arabia’s stock market today has partially reversed the losses suffered since Jamal Khashoggi’s disappearance hit the headlines. But the threat of sanctions, coupled with falling oil prices, means that Saudi markets will stay under …
25th October 2018
The recovery in the Middle East and North Africa will gather pace over the rest of this year and in early 2019, but growth will peak sooner than most expect. Egypt’s cyclical upturn should continue and we expect it to be a regional outperformer. In Saudi …
24th October 2018
The fallout from the murder of Saudi journalist, Jamal Khashoggi, appears to have triggered a spike in capital outflows, putting pressure on the riyal. But we think it’s highly unlikely that the Saudi authorities will abandon the dollar peg. … Saudi …
23rd October 2018
Saudi Arabia might be patching together a face-saving statement over the disappearance of journalist Jamal Khasoggi, but the affair will damage the country’s long-term economic prospects and another political shock will remain a key risk to the outlook. …
18th October 2018
The fallout from the disappearance of Saudi journalist, Jamal Khashoggi, has supposedly shifted investors’ attention to the Saudi government’s rising debt burden, but we think that these concerns are overdone. Investors should, instead, be prepared for …
The escalation of tensions between Saudi Arabia and the US over the disappearance of Saudi journalist Jamal Khashoggi is likely to weigh on local financial markets, but the Kingdom is in a strong financial position to withstand the economic impact of …
15th October 2018
The disappearance of Saudi journalist Jamal Khashoggi in Istanbul raises fresh questions about Crown Prince Mohammed bin Salman’s reputation as a reformer and political developments pose a growing threat to the economic outlook. Meanwhile, Egyptian …
11th October 2018
The Gulf’s economic recovery looks set to gather pace over the coming quarters and growth is likely to be stronger than most expect. But the recovery will probably peak in the middle of next year and a fresh slowdown is on the cards in 2020. … Gulf’s …
10th October 2018
The rise in Egyptian inflation to 16.0% y/y last month was driven almost entirely by higher food inflation but, even so, it probably means that the central bank’s easing cycle will be paused for a little longer. … Egypt Consumer Prices …
The $10bn financial support package for Bahrain will help to prevent a currency devaluation but, as we have long expected, financing has come with strings attached. A step up in fiscal consolidation efforts means that GDP growth will be weaker than most …
5th October 2018
Reports that Saudi Arabia will ramp up oil output over the coming months support our view that GDP growth will be stronger than most expect over the rest of this year and in the first half of 2019. Meanwhile, data released this week showed that Egypt’s …
4th October 2018
Last month’s PMI data paint a mixed picture in the Gulf but we expect growth in non-oil sectors to pick up over the coming months on the back of fiscal stimulus. Elsewhere, the survey in Egypt suggested that price pressures have eased further supporting …
3rd October 2018
We don’t expect the recent jump in oil prices to be sustained but if we are wrong and prices stay at $85pb, annual export revenues in the Gulf would be $200bn higher than in 2017. Governments would almost certainly respond by loosening fiscal policy …
2nd October 2018
Saudi Arabia’s economic recovery gathered pace in Q2 and we think that GDP growth will accelerate further over the coming quarters as oil output rises and fiscal stimulus supports stronger activity in the non-oil economy. … Saudi economy to gather …
1st October 2018
August’s rise in inflation and signs of weaker capital inflows swayed Egypt’s central bank to leave interest rates on hold last night but, if we are right in expecting inflation to drop back over the coming months, the easing cycle is likely to resume. We …
28th September 2018
JP Morgan’s announcement that it will include five GCC economies in its EMBI dollar bond indices should provide a further fillip to foreign investment in the region’s financial markets. Even so, we expect dollar bond spreads in the Gulf to widen over the …
27th September 2018
Balance sheets in MENA’s largest economies have improved in recent years, but those in some the smaller economies remain very fragile, something that the markets are now paying attention too. Bahrain, Oman, Tunisia and Jordan should be able to muddle …
26th September 2018
Saudi inflation was unchanged between July and August but we still expect it to rise a little over the rest of this year as underlying price pressures pick up. … Saudi Arabia Consumer Prices …
25th September 2018
The sharp widening in Lebanese dollar bond spreads this week suggests that investors are increasingly fearful that the country is lurching towards an economic crisis and, in the event of a fresh escalation of tensions with the Gulf, we think that a …
20th September 2018
Capital outflows from Saudi Arabia have picked up over the past 18 months, but the bulk of this seems to reflect ongoing foreign investments by the sovereign wealth fund. A bigger concern from the point of view of the dollar peg would be stronger private …
Balance sheets in the largest MENA economies have received a lot of attention over the past couple of years, but more recently there has been increasing scrutiny of those in some of the region’s smaller economies. Bahrain and Oman always appeared to be …
19th September 2018
August’s rise in Egyptian inflation means that the central bank will probably leave interest rates on hold at this month’s MPC meeting. But signs that core price pressures have eased means that it won’t be long until rate cuts come back on to the agenda. …
13th September 2018
Economic growth in Dubai appears to have been broadly stable this year despite signs of weakness in the real estate and tourism sectors. The recent fiscal stimulus package and a step-up in preparations for the 2020 World Expo should mean that growth holds …
12th September 2018
