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There have been signs in recent weeks that the sharp slowdown in the Saudi economy caused by fiscal austerity may have prompted the authorities to look at alternative solutions to deal with the collapse in oil prices. In particular, officials have …
22nd September 2016
Saudi Arabia’s upcoming international bond sale has sparked a lot of investor interest and we estimate that the Kingdom will manage to sell its 10-year debt for a relatively low yield of 3.50-3.75%. Moreover, the issuance should go a long way to financing …
20th September 2016
The slowdown in Saudi Arabia’s economy has prompted the authorities to soften their opposition to a deal to freeze oil output. While a deal is more likely than it was earlier this year, there are several reasons, including ongoing tensions with Iran, to …
14th September 2016
The Middle East and North African economies have slowed sharply this year and growth is likely to be much weaker than the consensus expects in 2017-18. Growth in the Gulf will remain sluggish as the adjustment to low oil prices continues. Dollar pegs will …
13th September 2016
The further sharp rise in Egyptian inflation, to 15.5% y/y in August, is likely to prompt the central bank to hike interest rates at its meeting later this month. With further subsidy cuts on the cards and the pound set to fall again, the inflation …
8th September 2016
Saudi Arabia’s upcoming Eurobond issuance has thrust the country’s finances back under the spotlight. Overall, the hit from lower oil prices has been significant – annual oil export revenues are down by around US$200bn – but large savings and a low debt …
6th September 2016
The dip in Egypt’s PMI last month suggests that, while financial markets have welcomed the announcement of an IMF deal, business sentiment doesn’t appear to have received a boost. Meanwhile, PMIs from the Gulf were a mixed bag but, in general, support our …
5th September 2016
We think the Egyptian pound could fall by as much as 25% against the US dollar, to 12.0/US$, by end-2017 if the authorities shift to a more flexible exchange rate as part of its prospective IMF deal. … Egyptian pound could fall 25% if central bank loosens …
1st September 2016
The Egyptian authorities seem close to securing an IMF deal, but the conditions attached to lending have been a stumbling block to a bailout in the past and opposition has already started to emerge this time around. In this Update, we take a closer look …
31st August 2016
Our GDP Tracker suggests that the slump in Saudi Arabia’s economy has deepened, with output falling by more than 2% y/y in June. A recovery is likely to get underway over the rest of this year and in 2017-18, but it is likely to be slow-going. … Slump in …
30th August 2016
Financial markets in Egypt have rallied over the past month after the government reached an agreement with the IMF over a US$12bn financing package. Equities have risen, spreads on dollar-denominated bonds have narrowed and the pound has strengthened on …
25th August 2016
Saudi inflation edged down in July to its lowest rate this year, at 3.8% y/y, and further ahead the weakness of economic activity means that headline inflation will fall further over the next twelve to eighteen months. … Saudi Arabia Consumer Prices …
22nd August 2016
The UAE’s economy is likely to record its slowest growth since 2010 this year, but the country’s strong balance sheet means that it should embark on a recovery in 2017-18. Indeed, we expect it to be one of the Gulf’s best performing economies in the …
The past month has brought further evidence that non-oil sectors in the Gulf are suffering as low oil prices have started to hit home. The picture is most stark in Saudi Arabia, where official data showed that the non-oil economy contracted by 0.7% y/y in …
18th August 2016
Our GDP Tracker suggests that Saudi Arabia’s economy is suffering heavily under the weight of fiscal austerity, with output contracting by around 2% y/y as of May. IMF and consensus expectations for growth of more than 1% this year are well wide of the …
17th August 2016
July’s high inflation reading in Egypt, of 14.0% y/y (the same as in June) confirmed that March’s devaluation of the pound is continuing to pass through into higher consumer prices. Against this backdrop, we still think it’s likely that the central bank …
10th August 2016
The sharp improvement in last month’s ‘whole economy’ PMIs in the Gulf suggest that the slowdown seen in the first half of the year may now have bottomed out. … Whole Economy PMIs (Jul. …
3rd August 2016
Egypt’s financial markets have responded extremely positively to the news that the government is close to securing an IMF deal, although at this stage few details about the negotiations are actually known. In this Watch, we shed some light on Egypt’s …
2nd August 2016
News that Egypt is on the brink of receiving an IMF deal (and the subsequent easing of pressure on the pound) provided the central bank with a window of opportunity to pause its tightening cycle today, but we still think further interest rate hikes are …
28th July 2016
Most stock markets in the Gulf have edged up over the past month, but their performance looks poor compared with the rises seen elsewhere in the emerging world. Meanwhile, expectations of another devaluation of the Egyptian pound have continued to build. …
26th July 2016
Speculation has mounted in recent weeks that the Egyptian pound could be on the cusp of (another) devaluation. The initial rumours were sparked by the central bank governor, Tarek Amer, who suggested that his predecessors’ decision to keep the pound …
25th July 2016
The Egyptian pound has been held steady since March’s devaluation, but persistent strains in the balance of payments mean that it needs to fall further. Recent shifts towards more orthodox policymaking suggest that this is likely to happen sooner rather …
19th July 2016
Saudi Arabia’s current account position deteriorated at the start of this year due to lower oil prices, but even taking this into account the underlying balance of payments position improved. We expect this trend to continue over the coming quarters, …
14th July 2016
The relative strength of the PMI readings from Saudi Arabia have prompted some to argue that the economy is holding up well. However, our GDP Tracker suggests that the economy is struggling and we expect it to record very weak, if any, growth this year. … …
12th July 2016
Rumours have circulated again that Egypt is seeking a deal with the IMF and, as we argue in this Watch, an agreement is now looking more likely than at any point in the past five years. A financing package would help to plug the holes in Egypt’s balance …
5th July 2016
Data released over the weekend, showing that Saudi GDP growth slowed in Q1 (particularly in the non-oil private sector), highlights the impact that fiscal austerity is already having on the economy. And more timely data suggest that growth has weakened …
4th July 2016
The return of several countries to the IMF for financial support over the past month underlines the severity of long-standing balance of payments problems in parts of the region. In Jordan and Tunisia, recently-agreed IMF deals will help these countries …
30th June 2016
This year looks set to be the toughest for the economies of the Middle East and North Africa in almost three decades. The Gulf countries will continue to tighten fiscal policy in response to low oil prices. While this should ensure that dollar pegs remain …
29th June 2016
Egyptian financial markets have been hit in the past month amid ongoing concerns over the country’s balance of payments position. Equities have fallen, spreads on dollar bonds have widened and downward pressure on the pound remains strong. … Egyptian …
22nd June 2016
Our GDP Tracker suggests that tighter fiscal policy is taking a heavier toll on the economy than even we had anticipated. We will revisit our forecasts soon, but the short point is that expectations for growth of anything more than 0.5% this year now seem …
21st June 2016
Saudi inflation edged down for a second consecutive month in May, although it remained elevated due to the energy and water tariff hikes earlier in the year. Further ahead, with economic growth slowing sharply, we think underlying price pressures should …
20th June 2016
Today’s 100bp rate hike in Egyptian interest rates was larger than even our own above-consensus forecast and, with inflation likely to rise further in the coming months and the central bank willing to tighten policy aggressively, we’ve pencilled in …
16th June 2016
Speculation has mounted in recent weeks that Saudi Arabia will devalue the riyal. For our part, we have long argued that policymakers would be loath to abandon the dollar peg. And, as we explain in this Watch , there are strong economic reasons to expect …
14th June 2016
Egyptian inflation jumped to 12.3% y/y in May as the impact of March’s devaluation of the pound continued to feed through into price pressures, while a decision by the government to hike medicine prices last month also played a role. Today’s figures, …
9th June 2016
Saudi Arabia’s “National Transformation Plan” represents a credible effort by the authorities to flesh out some of their policies as they look to overhaul the Kingdom’s economy over the coming years. In particular, the government provided more details on …
7th June 2016
PMIs from the Gulf picked up in May, but we suspect that this can be largely explained by a boost to sentiment on the back of the further recovery in oil prices. Meanwhile, the data provided further evidence that price pressures in Egypt are building …
6th June 2016
This week’s OPEC meeting in Vienna is likely to pass without any major surprises. Policymakers should be a little happier heading into the meeting than they were at the previous one in December – after all, oil prices broke through US$50pb last week for …
31st May 2016
Equity markets across the Gulf have struggled over the past month, in spite of a further recovery in oil prices. At the same time, speculation has increased that Saudi Arabia will devalue the riyal, but we maintain our long-held view that this will only …
30th May 2016
In spite of the backdrop of the recent recovery in oil prices, which broke through US$50pb today for the first time this year, speculation has mounted that Saudi Arabia will devalue its currency. We maintain our long-held view that policymakers will rely …
26th May 2016
Egypt’s tourism sector has had a torrid time in recent months and last week’s crash of an EgyptAir plane has (although the cause is still unknown) reinforced security concerns. Overall, we think tourism receipts could be down by around US$5bn (close to 2% …
Inflation in Saudi Arabia edged down last month, but it still remained elevated due to the energy and water tariff hikes earlier in the year, as well as the recent hike in tobacco import duties. These factors will keep the headline rate high this year. …
25th May 2016
Growth in the Tunisian economy is likely to pick up in the coming quarters following a difficult 2015, but we think the recovery will, in the near-term, be weak. Medium-term prospects are brighter and a combination of IMF-backed reforms and improving …
23rd May 2016
Economic growth in the Gulf countries has slowed sharply in recent months and this has raised concerns of negative spillovers into the other MENA economies. In this Watch , we argue that, for most countries, the gains from lower oil prices – the trigger …
17th May 2016
Egyptian inflation jumped to 10.3% y/y in April as the impact of March’s devaluation of the pound started to feed through into the wider economy. We expect inflation to rise further over the coming months which is likely to prompt the central bank to hike …
10th May 2016
The government reshuffle in Saudi Arabia announced over the weekend is unlikely to herald a major shift in economic policy, although it may strengthen the Kingdom’s commitment to its oil market strategy. Moreover, while the moves are a positive step in …
9th May 2016
Our GDP Tracker suggests that Saudi Arabia’s economy continued to slow sharply at the start of this year, with the non-oil sector suffering under the weight of fiscal austerity. The risks to our long-held forecast for growth of 1.5% this year lie firmly …
5th May 2016
Since March’s devaluation, Egypt’s central bank has been hesitant to let the pound fall further, but pressures are building and we think a further devaluation is on the cards. We expect the pound to reach at least 9.50/US$ by the end of this year. … …
4th May 2016
April’s PMI data suggest that Egypt’s economy has continued to struggle and provided the first sign that inflation pressures are building following March’s devaluation of the pound. Meanwhile, the decline in the surveys from the Gulf support our view that …
3rd May 2016
Saudi Arabia’s ambitious plans to overhaul its economy have grabbed the headlines in recent days, but the past month has seen a number of other Gulf countries announce further measures to deal with the fallout from low oil prices. Qatar has followed in …
29th April 2016
