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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
Lebanon’s recent political deadlock has reignited fears over the country’s weak balance sheets. A fresh escalation of tensions with the Gulf is still a major threat and, as we’ve warned before, this could ultimately force the authorities to devalue the …
11th September 2018
The rise in Egyptian inflation to 14.2% y/y last month, coupled with the backdrop of the recent sell-off in EM financial markets, means that the central bank will probably leave interest rates unchanged (rather than cut them) at this month’s MPC meeting. …
10th September 2018
Egypt’s finance minister stated this week that the government will continue to prioritise bringing down its high debt-to-GDP ratio, but recent developments have raised fresh concerns that the appetite for fiscal consolidation may be waning. Meanwhile, …
6th September 2018
The Central Bank of Egypt appears to have intervened to support the pound in recent months, but we expect the authorities to loosen their grip over the next couple of years. We have pencilled in a 10% fall in the pound against the dollar by the end of …
5th September 2018
August’s PMIs for the Gulf economies suggest that fiscal stimulus has continued to support a recovery in Saudi Arabia, but weaker external demand is weighing on growth in the UAE. Meanwhile, Egypt’s survey points to a pick-up in activity and adds to the …
4th September 2018
The Tunisian dinar has continued to decline over the past week and we think that the currency has further to fall. However, any moves should be fairly gradual. Elsewhere, the recent widening of Lebanese dollar bond spreads underlines the urgency for …
30th August 2018
Our GDP Tracker suggests that rising oil output supported a pick-up in growth in Saudi Arabia at the end of Q2. We expect that the economy will perform better than most anticipate over the next twelve to eighteen months. … Saudi economy accelerated at the …
29th August 2018
Saudi inflation edged up in July on the back of stronger food inflation, although underlying price pressures eased. We expect that headline inflation will rise a little further over the rest of this year. … Saudi Arabia Consumer Prices …
28th August 2018
Reports this week suggest that Saudi policymakers may be close to shelving the Aramco IPO, which would reinforce concerns that the country’s commitment to the Vision 2030 reforms is waning. Elsewhere, fears about Bahrain’s weak public finances have eased …
23rd August 2018
Oil production figures for July, the first that should capture the impact of revisions to the OPEC deal in June, support our view that growth in the Gulf will strengthen in the coming quarters. Oil output rose by 3-5% in most countries after the agreement …
20th August 2018
The Egyptian central left interest rates on hold last night, but declining inflation means that the easing cycle is likely to resume at September’s MPC meeting. And we still think that interest rates will, ultimately, be lowered by more than most analysts …
17th August 2018
Egyptian dollar bonds have performed particularly poorly this week, suggesting that the recent turmoil in EM financial markets exacerbated the slowdown in capital inflows to the country that was already underway. It seems likely that the central bank is …
16th August 2018
Last month’s PMI data for the Gulf provide further evidence that higher oil prices and recent fiscal measures are supporting robust growth in the non-oil sector. Elsewhere, Egypt’s survey suggests that activity improved in June but that price pressures …
13th August 2018
The diplomatic spat that erupted between Saudi Arabia and Canada this week should have little economic impact, but it does risk undermining investor confidence in Saudi Arabia at a time when the government is already wavering on its reform agenda. …
9th August 2018
Egyptian inflation edged down to 13.5% y/y last month, a sign that the impact of the recent administered price hikes are starting to fade. But this will not be enough to prompt policymakers to loosen. … Egypt Consumer Prices …
The re-introduction of the first tranche of US sanctions on Iran, which came into force today, will result in a downturn in Iran’s economy but, as things stand, the economic impact on the rest of the MENA region shouldn’t be severe. That said, the …
7th August 2018
Morocco’s economy has slowed this year. But this is almost entirely a result of weakness in the agricultural sector, and we expect growth to strengthen in 2019. Moreover, as Morocco continues to integrate into global manufacturing supply chains, we remain …
6th August 2018
Reports that Saudi Arabia’s sovereign wealth fund is looking for alternative sources of financing suggest that the government is moving further away from its flagship sale of a stake in Aramco. This adds to the signs that momentum behind the Vision 2030 …
2nd August 2018
Egypt’s public finances are still in a poor state but the government has made progress in cutting the budget deficit in recent years and the debt ratio is now falling. The pace of fiscal consolidation will slow in the coming years, which will support a …
1st August 2018
Our GDP Tracker suggests that economic growth in Saudi Arabia plateaued in the first two months of Q2. But rising oil output is now providing a boost to the recovery and we expect that GDP growth will strengthen markedly in the second half of 2018. … …
31st July 2018
Financial markets across the MENA region have shrugged off the latest escalation of tensions between the US and Iran, although we doubt that this resilience will last. Meanwhile, news that Egypt will sign contracts to hedge oil prices will improve the …
26th July 2018
Saudi inflation fell to 2.1% y/y in June as the effects of last year’s “sin” taxes faded and housing inflation fell deeper into negative territory. But there are signs that broader price pressures are picking up on the back of stronger economic growth. We …
25th July 2018
The improvement in Egypt’s balance of payments position over the past eighteen months should be sustained, providing some support to the pound. Accordingly, inflation should resume its downward trend later this year, allowing the central bank to resume …
24th July 2018
The raft of quarterly GDP data released over the past month confirmed that the MENA region rebounded at the start of this year and more timely figures suggest that the recovery is gathering momentum. Saudi Arabia pulled out of recession and Egypt’s …
19th July 2018
The recent tumble in oil prices has raised the pressure on Bahrain to secure financial support from the rest of the Gulf and for the government to outline its fiscal consolidation plans. We still think that the dollar peg will remain intact, but growth is …
The recovery in the MENA region will be stronger than most anticipate over the coming quarters. The Gulf economies are set to benefit from rising oil output and fiscal stimulus, while Egypt’s cyclical upturn also has further to run. Fragile balance sheets …
17th July 2018
Reports that Saudi Arabia will scrap the Aramco IPO would, if confirmed, deal a symbolic blow to the Kingdom’s reform plans, but the economic impact should be limited. And the news flow on arguably more important (but lower-profile) reforms has been …
12th July 2018
Our GDP Tracker suggests that Saudi Arabia’s economy slowed a touch in April, but we think that this will prove temporary. Growth is likely to pick-up sharply over the coming months as the Kingdom ramps up oil production and fiscal stimulus supports …
11th July 2018
Egyptian inflation jumped to 14.4% y/y last month on the back of recent administered price hikes, but we still think that the next move in interest rates will be down. … Egypt Consumer Prices …
10th July 2018
The economic agenda laid out by Egypt’s new cabinet this week suggests that, despite the improvement in the budget position over the past couple of years, it will continue to tighten fiscal policy. Accordingly, the IMF deal should stay on track. But the …
5th July 2018
The sharp rise in the Egyptian government’s foreign currency debt over the past few years is not yet a major cause for concern – the risk of a destabilising fall in the pound appears to be low and the authorities are making progress with fiscal …
4th July 2018
Last month’s PMI data for the Gulf provide further evidence that growth in non-oil sectors is strengthening, supported by higher oil prices and recent fiscal stimulus measures. Elsewhere, Egypt’s survey suggests that activity improved in June but price …
3rd July 2018
Saudi Arabia’s economy pulled out of recession in Q1 and we expect the recovery to gain momentum over the coming quarters, supported by fiscal stimulus and a jump in oil output. … Saudi emerges from recession, recovery to gather …
2nd July 2018
The Egyptian central bank’s decision to leave interest rates on hold (rather than lower rates) was a response to recently-announced subsidy cuts that will push up inflation. But the easing cycle is likely to resume at September’s MPC meeting. And we still …
28th June 2018
The announcement on Wednesday that Bahrain is in talks with the other Gulf countries over financial support reinforces our view that, despite recent worries in the markets, its dollar peg won’t be abandoned. … Bahrain gets Gulf support, new gas discovery …
Saudi inflation edged down for a fourth consecutive month to 2.3% y/y in May on the back of falling housing and utilities prices. Recent signs that growth in the non-oil economy is starting to strengthen again, however, suggest that price pressures will …
27th June 2018
The sell-off in Bahrain’s financial markets this week reflects fears that it is struggling to secure external financing to plug its large twin budget and current account deficits. We still think that the other Gulf countries will ultimately come forward …
26th June 2018
Revisions to OPEC’s oil output agreement will lead to a rise in supplies from the Gulf over the coming months, providing a direct boost to economic growth. Higher production will, however, depress oil prices and thus limit spillovers to the Gulf’s non-oil …
25th June 2018
Hikes to fuel prices announced by the Egyptian government over the past week mean that the central bank will refrain lowering interest rates at its upcoming meeting. Meanwhile, growing tensions within OPEC ahead of the cartel’s meeting on Friday create a …
21st June 2018
The OPEC meeting scheduled to start on Friday will probably result in a compromise to increase oil output and this could provide a boost to Saudi GDP growth of around 1%-pt. Frictions within the group mean there’s a real risk that the talks break down, …
20th June 2018
MSCI’s upcoming decision on whether to include Saudi Arabia in its benchmark emerging market equity indices has been billed as a game changer for the Kingdom’s stock market, but past experience suggests that a lot of the optimism is probably overdone. …
19th June 2018
The past month has brought further signs that governments across the Gulf are responding to higher oil prices by ramping up spending. Both Abu Dhabi and Dubai, the two largest emirates that make up the UAE, have announced stimulus packages. Details still …
15th June 2018
A further sharp fall in Egyptian inflation last month has strengthened the case for further interest rate cuts. But policymakers seem hesitant to loosen policy against the backdrop of upcoming subsidy cuts, so the easing cycle probably won’t be resumed …
11th June 2018
One year after the diplomatic crisis surrounding Qatar first erupted, the economy appears to have weathered the storm. An escalation of the crisis remains the key threat to the economic outlook, but assuming this is avoided, Qatar should record a modest …
7th June 2018
Ongoing protests in Jordan have already prompted the resignation of the prime minister and King Abdullah seems to be taking further steps to defuse the situation. The new tax law which triggered the protests looks set to be watered down or scrapped, but …
6th June 2018
