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Egypt’s economy has weathered the fallout from the pound’s devaluation in late-2016 and, as fiscal consolidation slows and inflation and interest rates drop back, growth should remain robust over the next couple of years. We expect that the economy will …
23rd May 2018
The recent rally in oil prices has already prompted governments across the Gulf to shift away from the harsh austerity of recent years. But long-term oil price expectations are still low and the authorities have shown greater prudence in recent decades, …
18th May 2018
The Egyptian central bank’s decision to keep interest rates on hold, rather than cut them again, comes on the back of a pick-up in underlying price pressures as well as the recent sell-off in EM currencies. But we think this marks only a pause in the …
17th May 2018
Financial markets in the Middle East & North Africa have underperformed those in the rest of the emerging world over the past week following President Trump’s decision to pull the US out of the Iran nuclear deal. Equity markets have been the hardest hit, …
The further fall in Egyptian inflation in April – to 13.1% y/y – should be enough to prompt the central bank to continue its easing cycle next week. We have pencilled in another 100bp reduction in the overnight deposit rate, and still expect more easing …
10th May 2018
President Trump’s decision to pull the US out of the nuclear deal with Iran is likely to prompt a fresh 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 decision will …
9th May 2018
Saudi Arabia’s budget deficit widened in Q1 compared with a year earlier as a raft of public sector bonuses more than offset the boost to revenues from the introduction of a new value-added tax. That said, the recent rally in oil prices means that the …
8th May 2018
Last month’s PMI data showed that Saudi Arabia’s economy continued to weaken as a result of austerity measures introduced at the start of this year, but we think that this slowdown will be temporary. Elsewhere, the surveys provide further evidence that …
3rd May 2018
The Saudi economy appears to have returned to positive growth in the first few months of this year as a fading drag from the oil sector has more than offset a modest slowdown in the rest of the economy. … Saudi economy pulling out of …
2nd May 2018
There’s a growing chance that US President Donald Trump will refuse to waive sanctions on Iran later this month. In this Update , we answer five key questions on the sanctions and the nuclear deal, as well as the potential impact on the oil market, Iran’s …
1st May 2018
Dollar bond yields have risen across the MENA region over the past month and we think this process has further to run. Underlying US Treasury yields look set to creep up as the Fed raises interest rates by more than the markets anticipate. And if oil …
26th April 2018
The Lebanese authorities have suggested that they will soon undertake another “financial engineering” exercise in an effort to boost the central banks’ FX reserves and reduce the government’s debt servicing costs. In this Watch, we explain the process and …
25th April 2018
The recent jump in oil prices to $75pb has been fuelled in part by reports that the Saudi authorities have expressed a desire for prices of $100pb. But we don’t think a fundamental shift in Saudi oil policy is on the cards and, in any case, the …
24th April 2018
Saudi inflation edged down to 2.8% y/y last month, although it was still much higher than the rates recorded last year due to the impact of tax hikes and subsidy cuts. The early evidence suggests that households are struggling in the face of higher …
The narrowing in Egypt’s current account deficit has further to run, supported by a recovery in the tourism sector and strong export growth. This will help to limit downward pressure on the pound and provide room for the central bank to continue its …
19th April 2018
The recovery in the Middle East and North Africa should continue over the coming months but growth is likely to be weaker than most anticipate. The rebound is being led by the Gulf as the drag from last year’s oil output cuts fades and fiscal austerity …
Mounting tensions surrounding the conflicts in Syria and Yemen have rattled financial markets in the MENA region, but the associated rally in oil prices should limit the economic fallout for the Gulf. A chemical weapons attack on the Syrian city of Douma …
12th April 2018
The further decline in Egyptian inflation last month, to 13.3% y/y, means the central bank will continue its easing cycle when it next meets in mid-May. We have pencilled in another 100bp reduction in interest rates and still expect more easing than most …
10th April 2018
The UAE’s economy should recover this year as the drag from the oil sector fades and preparations for the 2020 World Expo are stepped up. Even so, we still think that growth will be weaker than most anticipate over our forecast horizon. … UAE set for …
5th April 2018
The downturn in Saudi Arabia deepened at the end of last year, but the latest figures suggest that the economy returned to positive growth at the beginning of 2018. … Saudi economy starting a slow …
4th April 2018
March’s PMI data for the Gulf suggest that austerity measures are continuing to dampen growth in the non-oil sectors in the region. However, conditions should improve over the coming months as the impact of rises in public sector bonuses filters through …
3rd April 2018
A victory for Egypt’s President al-Sisi in this week’s presidential election was never in doubt and attention will now shift to any changes to key policymaking positions. Mr. al-Sisi begins his second term just as the economy is enjoying a cyclical …
29th March 2018
Saudi Arabia’s stock market has jumped in recent weeks on the back of growing hopes that it will be upgraded to “emerging market” status by the index compiler FTSE Russell. But past experience shows that similar decisions have had little lasting impact on …
27th March 2018
Pressure is building on the Tunisian dinar and our central scenario is that the IMF will push the authorities to loosen their grip on the currency in the near future. This is likely to result in a 10% drop in the currency against the euro by the end of …
22nd March 2018
Egypt’s President al-Sisi is certain to emerge victorious in next week’s election and will begin his second term just as the economy is about to enjoy a cyclical upturn in growth. Beyond the next few years, though, reforms will be needed to raise Egypt’s …
21st March 2018
Inflation in Saudi Arabia edged down to 2.9% y/y last month but it remained much higher than the rates recorded in late-2017 due to the impact of recent tax hikes and subsidy cuts. We expect inflation to hover around 3% y/y for the remainder of this year. …
Saudi Arabia’s Crown Prince Mohammed bin Salman (known as MbS) is in the midst of a global tour, which has highlighted the challenges facing his Vision 2030 economic reforms as well as ongoing geopolitical tensions in the region. Reports suggest that the …
15th March 2018
Qatar’s banking sector has weathered the worst of the impact of the blockade. But tight external financing conditions and a need to deleverage mean that credit growth will provide less of a prop to the economy than it has done over the past decade. … …
14th March 2018
Reports that the initial public offering of Saudi Arabia’s national oil company, Aramco, will be delayed until next year are not a major surprise given the complexity of the transaction. The delay probably increases the chances of the OPEC oil output …
12th March 2018
Public debt-to-GDP ratios in Bahrain and Oman are on a worrying path and we expect the pace of austerity to be stepped up over the coming years to slow the rise in debt. However, that will come at the expense of weaker GDP growth, which is likely to fall …
8th March 2018
The further sharp fall in Egyptian inflation last month, to 14.4% y/y, should be enough to persuade the central bank to cut interest rates by a further 100bp at its monetary policy meeting this month. We continue to expect inflation and rates to fall by …
It looks like Saudi Arabia’s economy turned the corner in late 2017 and, while the early data from the start of this year have been disappointing, a recovery should still get underway. … Saudi economy moving towards …
6th March 2018
Last month’s PMI readings for the Gulf suggest that the imposition of austerity measures at the start of this year is still weighing on non-oil sectors in the region. But we think that the impact will start to fade over the coming months as governments …
5th March 2018
Saudi Arabia’s new bankruptcy law, which was approved by King Salman last month, will make it easier to deal with the fallout from corporate failures and, through improving access to credit, support the development of small and medium-sized enterprises …
1st March 2018
The Gulf’s dollar pegs mean that further rate hikes by the US Federal Reserve will be imported into the region, keeping a lid on credit growth and pushing up government borrowing costs. This is unlikely to derail the economic recovery but it is another …
27th February 2018
The sharp rise in Saudi inflation in January was almost entirely the result of various austerity measures that came into effect at the start of this year. That said, a change to the base year of the data has depressed the inflation figures compared with …
26th February 2018
The recent changeover at the helm of Tunisia’s central bank has raised hopes of a shift towards more orthodox policymaking. But the new governor is likely to run in to resistance from the government and there are few signs so far that he is about to make …
22nd February 2018
The drop in Egyptian inflation over the past six months has largely reflected the unwinding impact from the pound’s devaluation in late-2016. But there are a couple of additional reasons to think that inflation will fall further and then stay low compared …
21st February 2018
The Central Bank of Egypt embarked on an easing cycle last week and we expect inflation and interest rates to fall by more than most anticipate over the next couple of years. Accordingly, the recent decline in Egyptian local currency bond yields probably …
20th February 2018
The Egyptian central bank’s easing cycle, which started last night, is likely to result in larger interest rate cuts than most anticipate. We expect an additional 650bp of rate cuts by the end of 2019. … Egypt’s easing cycle to be larger than most …
16th February 2018
Egypt defied the recent turmoil in global financial markets and issued $4bn of international bonds earlier this week. The sale was three times oversubscribed and the issuance was split into three tranches – $1.25bn was sold at a 5-year maturity, $1.25 at …
15th February 2018
Bank lending to Egypt’s private sector has been weak for a number of years as the government has leaned on local banks to purchase government bonds, crowding out credit to the rest of the economy. But fiscal consolidation, coupled with a loosening of …
14th February 2018
The latest data suggest that the worst of the downturn in the Saudi economy had passed in late 2017 and a recovery should get underway over the coming months. The limited evidence so far suggests that the anti-corruption purge launched in November has had …
12th February 2018
The further sharp decline in Egyptian inflation in January, to 17.1% y/y, paves the way for the central bank to embark on an easing cycle at its monetary policy meeting next week. And further ahead, we maintain our long-held view that inflation and …
8th February 2018
The Egyptian government has finally made inroads into its large budget deficit and we expect the shortfall to narrow further over the coming years. But the public finances remain in a poor state and there’s a clear threat that the fiscal consolidation …
7th February 2018
Last week, Egypt’s President al-Sisi inaugurated the Zohr gas field which, combined with the onset of production from a number of other fields, will provide a sizeable boost to GDP growth over the next few years and also help to rein in the country’s …
6th February 2018
The drop in PMIs in the Gulf last month appears to reflect the impact of recent austerity measures, including the introduction of a new value-added tax, at the start of this year. But conditions should improve over the coming months, particularly in Saudi …
5th February 2018
The spread of interbank interest rates in the Gulf over those in the US has narrowed to its lowest level since 2008. While we correctly argued in 2016 that spreads would begin to narrow, we think that the process has now gone too far. If oil prices drop …
31st January 2018
Growth in the Middle East and North Africa slowed to its weakest pace since the global financial crisis in 2017, but the region is set for a recovery over the next twelve months. The rebound in growth is likely to be driven by the Gulf, where the drag …
30th January 2018
The recent rally in oil prices has led governments in the Gulf to move away from the harsh austerity of recent years. Earlier this month, Saudi Arabia announced a raft of bonuses for public sector workers, while Bahrain’s government has put any further …
25th January 2018
