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Egypt’s new investment law is a positive step towards improving the dire business environment. But greater efforts, particularly in raising domestic savings, are needed if investment is to reach the levels that historically have supported strong and …
16th May 2017
This month’s dip in oil prices means that it is almost certain OPEC will agree to an extension to its oil output cuts into the second half of this year. But we think Saudi Arabia and the other Gulf countries are likely to resist calls for even deeper …
11th May 2017
New quarterly public finance figures released by the Saudi government today show a sharp narrowing in the budget deficit at the start of this year, supported by higher oil revenues. The data also suggest that the large spending cuts implemented over the …
The further rise in Egyptian inflation last month, to 31.5% y/y, was driven entirely by stronger food price pressures. We think inflation is now close to a peak and today’s figures are unlikely to prompt the central bank to hike interest rates at its …
10th May 2017
The recent fall in oil prices has reignited fears over the outlook for the Gulf, but as we explain in this Watch these countries are in a better position now to weather a period of low oil prices than at any point over the past three years. One important …
8th May 2017
The recent recovery in the UAE’s non-oil sector is set to continue over the coming years, supported by easing fiscal austerity, robust global economic growth and a step up in preparations for the 2020 World Expo. Overall, our GDP growth forecasts are …
4th May 2017
April’s PMI data suggest that non-oil sectors in the Gulf have continued to recover from last year’s austerity-led slump. Elsewhere, the PMIs brought further evidence that Egypt is feeling the benefits from a boost to external competitiveness. … Whole …
3rd May 2017
Fears that low oil prices would force the Gulf countries to devalue their currencies have continued to fade over the past month. However, one country in the region where the authorities have loosened their grip on the currency is Tunisia. The dinar has …
26th April 2017
Our GDP Tracker suggests that Saudi Arabia’s economy continued to slow in February on the back of oil production cuts. On a more positive note, the recovery in the non-oil sector has strengthened and is likely to gain momentum following the government’s …
The Saudi government’s decision to reinstate benefits for civil servants appears to be a U-turn on one of the more unpopular austerity measures, rather than the start of a wholesale reversal of recent belt tightening. We still expect the headline budget …
24th April 2017
Recent comments from Saudi Arabia’s Oil Minister, Khalid al-Falih, suggest that OPEC is edging towards an agreement to extend its oil production cuts when it meets in Vienna next month. Having ruled out an extension earlier in the year, Mr. al-Falih has …
21st April 2017
Saudi inflation stood in negative territory for a third consecutive month in March, but we continue to think a long and damaging bout of deflation should be avoided. … Saudi Arabia Consumer Prices …
18th April 2017
Budget positions across the Gulf should improve over the next couple of years – and many will return to surplus – supported in large part by higher oil prices. As a result, governments across the region are likely to ease up on fiscal austerity, while the …
13th April 2017
The Egyptian government has probably made sufficient progress to pass the upcoming review of its IMF programme and receive the second tranche of its US$12bn loan. Investors are likely to welcome this, but we think there will be bigger hurdles for the …
11th April 2017
Egyptian inflation rose further in March, to 30.9% y/y, but we think it’s close to peaking and the central bank is unlikely to tighten monetary policy further. Indeed, as inflation starts to fall back later in the year, the next move in interest rates is …
10th April 2017
The recent dip in Saudi inflation into negative territory following a period of weak growth has raised broader concerns about the threat of deflation in the Gulf. Our core inflation measures for the region are generally very low and we expect this to …
6th April 2017
March’s PMI data show that the recovery in the Gulf’s non-oil sectors continued at the end of Q1. There’s little sign that the fall in oil prices last month has hit sentiment. Meanwhile, the surveys suggest that while Egypt’s economy has picked up …
4th April 2017
The Egyptian central bank’s decision to leave interest rates unchanged today confirmed that policymakers are looking through the recent surge in inflation but, while inflation should start to fall soon, any loosening of monetary policy is still some way …
30th March 2017
The recent dip in oil prices has prompted the usual drop in equity markets across the Gulf, but bond markets have fared better. In fact, spreads on the region’s dollar bond have actually narrowed over the past month. Despite a small rally yesterday, oil …
Saudi Arabia’s economy picked up in the final quarter of 2016, supported by stronger growth in both the oil and non-oil sectors. Cuts to oil output on the back of the OPEC deal will trim headline growth this year but the recovery in the non-oil sector …
29th March 2017
The recent drop in oil prices, from around US$56pb at the start of March to just over US$51pb at present, is unlikely to be a major cause for alarm in the Gulf. For one thing, oil prices are still above their average of US$45pb recorded last year. …
Today’s decision by the Saudi authorities to lower the tax rate applied to Aramco is unlikely to have any impact on the Kingdom’s day-to-day public finances. Instead, it simply reflects a shift in the channels through which oil revenues accrue to the …
27th March 2017
Our GDP Tracker suggests that Saudi Arabia’s economy slowed at the start of this year, which was entirely due to oil production cuts. There has been better news on the non-oil economy, where easing fiscal austerity has supported an improvement in recent …
The recent dip in oil prices has raised concerns in some quarters that the Saudi authorities may devalue the riyal, but we find this highly unlikely. Indeed, the probability that the dollar peg will be abandoned is lower now than at any time since fears …
23rd March 2017
Saudi inflation was in negative territory for a second consecutive month in February, but there are signs that deflation may not last much longer. … Saudi Arabia Consumer Prices …
22nd March 2017
Household consumption in Saudi Arabia slowed sharply last year in the face of fiscal austerity and, while low-level indicators suggest that the worst may now be over, there’s little sign of a strong pick-up. … Saudi consumer spending continues to …
21st March 2017
Headline GDP growth in the Gulf looks is likely to slow to an eight-year low of 1.5% in 2017. However, this will be entirely the result of oil production cuts as countries comply with last year’s OPEC deal. The good news is that the region’s non-oil …
20th March 2017
Saudi Arabia has continued to comply with its side of November’s OPEC agreement and recent comments from policymakers suggest that the Kingdom’s opposition to extending the deal beyond June is easing. While this increases the chances of the deal being …
14th March 2017
The sharp slowdown in credit growth in Saudi Arabia is likely to reach a trough soon. However, as we explain in this Watch, a weak economic outlook and higher interest rates mean that lending growth is unlikely to return to the rapid rates recorded over …
13th March 2017
Egyptian inflation jumped again in February but it is probably now close to peaking and is likely to start falling in the second half of the year. This, coupled with signs that the balance of payments position is improving, means that it is unlikely the …
9th March 2017
Egypt’s balance of payments data for Q4 released today show only a modest narrowing in the current account deficit, but digging a little deeper there are signs that the 50% drop in the pound against the dollar since early November is helping to place the …
8th March 2017
Our GDP Tracker suggests that the Saudi economy strengthened in the final quarter of 2016 as the drag from fiscal austerity eased. Headline GDP growth is likely to slow sharply in the first half of this year on the back of oil production cuts, but we …
6th March 2017
February’s batch of PMI data suggests that the Gulf’s non-oil sectors have continued to strengthen, supporting our view that growth may be a little stronger than most expect this year. … Whole Economy PMIs …
The recent dip in Saudi inflation into negative territory has raised concerns in some quarters that the country could be at risk of a long and damaging period of deflation. There are good reasons to think that such a scenario will be avoided, but sluggish …
2nd March 2017
Oman and, for the first time, Kuwait are expected to sell dollar bonds in the coming weeks, continuing the raft of issuances from the Gulf countries over the past year. Kuwait’s strong balance sheet means that it should be able to sell debt at low yields …
28th February 2017
Tunisia’s economy picked up over the course of 2016 and, while growth is likely to strengthen a little further over the next couple of years, we expect it to remain sluggish at 2-3%. … Tunisia’s economy set for a slow recovery in …
23rd February 2017
Consumer prices in Saudi Arabia fell in year-on-year terms in January as food prices continued to decline at a steep pace and the effects of last year’s subsidy cuts dropped out of the annual comparison. However, with fresh subsidy cuts on the cards in …
21st February 2017
The latest activity data suggest that non-oil sectors in the two largest Gulf economies, Saudi Arabia and the UAE, are starting to recover from their slumps in early 2016. Both countries have been major beneficiaries from the OPEC deal in November to cut …
20th February 2017
The decision by Egypt’s central bank to leave its policy interest rate on hold despite the rise in inflation to a 30-year high last month means that additional monetary tightening is no longer on the cards. We have taken the 150bp of rate hikes that we …
16th February 2017
Weaker import demand and a pick-up in foreign investment have pushed the Egyptian pound up by 15% against the US dollar in the past couple of weeks, and we think the rally may have a little further to run. Even so, the pound will remain much weaker than …
14th February 2017
The sharp rise in oil prices means that, despite implementing a larger-than-pledged oil output cut, Saudi Arabia has been a big beneficiary from the recent OPEC agreement. But with compliance likely to wane in the coming months and signs that non-OPEC …
13th February 2017
The rise in Egyptian inflation in January to a 30-year high of 28.1% y/y makes it even more likely that the central bank will raise interest rates at its monetary policy meeting on Thursday. We now expect a 100bp hike in the overnight deposit rate. … …
The recent sharp slowdown in private sector credit growth, coupled with falling real estate prices, has ignited concerns that Qatar’s credit boom of the past few years is quickly unravelling. For now, we think severe strains in the banking sector should …
9th February 2017
Algeria’s economy held up better than expected last year as a rebound in the hydrocarbon sector offset weakness in the non-hydrocarbon sector. However, the adjustment to low oil prices is far from over and a further depreciation of the dinar and more …
8th February 2017
January’s batch of PMI data suggests that the Gulf’s non-oil sectors have continued to strengthen. Meanwhile, amid high inflation and a big fiscal squeeze, Egypt’s economy is still struggling. … Whole Economy PMIs …
6th February 2017
The spotlight in the region’s currency markets over the past couple of years has been on the threat of large devaluations but, as we explain in this Focus, the risks in Morocco appear to lie in the other direction. With the authorities pushing ahead with …
3rd February 2017
An early morning tweet from President Trump suggests that his attention may now shift to Iran and its infamous nuclear deal. In this Update, we explain what has happened, the chances of the deal being scrapped and what it means for the rest of the region. …
2nd February 2017
The recent decline in Saudi interbank rates reflects fading fears that the riyal will be devalued and easing liquidity shortages in the banking system. We still expect Saudi interbank rates to rise over the coming years, although this will be due to …
30th January 2017
Egypt’s recent economic reforms received a warm welcome from investors earlier this month, as the country successfully issued US$4bn of international bonds. The sale was almost double the amount that the Egyptian authorities had originally targeted and …
26th January 2017
The big fiscal squeeze that the Egyptian government has signed up for as part of its IMF deal will, if fully implemented, bring the debt ratio down. However, the authorities are likely to struggle to meet the targets set by the Fund and we suspect that …
