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The Central Bank of Egypt (CBE) kept its overnight deposit rate at 10.75% today as it awaits further evidence of the impact on inflation from last month’s devaluation of the pound. With inflation set to rise and the pound likely to weaken in the coming …
28th April 2016
Saudi Arabia’s Deputy Crown Prince Mohammed bin Salman has created a buzz with his ambitious plans to transform the Kingdom’s economy, but we would caution against getting carried away. The authorities have made considerable progress in tightening fiscal …
The Saudi government’s “Vision 2030” plan outlined today has been welcomed by the local financial markets, but it provided few fresh details on the reform agenda and missed key issues such as education reform. We were hoping for more, although we will …
25th April 2016
Inflation in Saudi Arabia remained elevated at 4.3% y/y in March due to the electricity and water tariff hikes earlier in the year and, more recently, last month’s hike in tobacco import duties. These factors will keep the headline rate high this year …
Financial markets across the Gulf have performed well over the past month, supported by the continued recovery in oil prices. Meanwhile, Egyptian markets have been buoyed by last month’s decision by the central bank to devalue the pound. Speculation that …
21st April 2016
The Egyptian government seems to be increasingly reliant on the central bank to finance the budget deficit. If this persists, inflation is likely to remain elevated and downward pressure on the pound will continue to build. … Egypt: CBE’s deficit …
20th April 2016
Saudi Arabia’s insistence that Iran agree to freeze oil production scuppered any chance of a deal in Doha at the weekend and suggests that the Kingdom is in no mood to abandon its oil market strategy. And with this coming alongside the latest comments by …
18th April 2016
Our GDP Tracker suggests that Saudi Arabia’s economy slowed sharply at the start of this year as the impact of fiscal austerity weighed heavily on the non-oil sector. Meanwhile, today’s decision by Fitch to downgrade the Kingdom’s sovereign credit rating …
12th April 2016
Qatar has been one of the best performing economies in the MENA region over the past decade and one of the key drivers of this has been the rapid growth of bank lending. However, we are concerned that the credit boom looks increasingly unsustainable and …
11th April 2016
Egyptian inflation edged down to 9.0% y/y in March, but we think the inflation figures are yet to fully capture the impact of the devaluation of the pound in the same month. Indeed, we expect inflation to rise in the coming months. … Egypt Consumer …
The Egyptian government faces a tough task in meeting its budget deficit target for the upcoming fiscal year and, worryingly, there seems to be a growing sense that the authorities are wavering on their commitment to fiscal consolidation. We don’t foresee …
7th April 2016
The sharp fall in March’s ‘whole economy’ PMI for Egypt is the first sign that the recent devaluation of the pound will, in the near-term, weigh on the economy. Meanwhile, we suspect that the modest improvement in the surveys from the Gulf reflects a …
5th April 2016
Data released today confirmed that Saudi GDP growth held steady at 3.6% y/y in the final quarter of last year but we think the economy will slow sharply this year and even further in 2017. … Saudi Arabia GDP …
4th April 2016
Comments today by Saudi Arabia’s Deputy Crown Prince Mohammed bin Salman in an interview with Bloomberg confirm our view that Saudi policymakers are comfortable with a period of low oil prices. What’s more, his comments on the privatisation of Aramco and …
1st April 2016
The Egyptian central bank’s decision to devalue the pound this month ended months of growing speculation that a move in the currency was on the cards. In the near term, this will bring some pain. The central bank has already jacked up interest rates in an …
30th March 2016
The Egyptian central bank’s decision to (finally) devalue the pound this month has raised hopes of an improvement in the country’s balance of payments position and faster growth, resulting in a jump in the local equity index and a decline in dollar bond …
29th March 2016
The recent devaluation of the Egyptian pound will create winners and losers within the country through its impact on balance sheets. Households and commercial banks stand to gain from a rise in the pound value of their foreign currency assets, but the …
24th March 2016
The storm created by low oil prices will finally make its presence felt in the Gulf this year and we expect this to be the start of an extended period of slow growth. A wave of devaluations is highly unlikely and, although the Gulf countries have agreed …
23rd March 2016
Saudi inflation eased in February to 4.2% y/y, although it remained high due to the impact of recent administered price rises. But with economic growth slowing, we think underlying price pressures will weaken in the coming quarters. … Saudi Arabia …
21st March 2016
The Central Bank of Egypt’s larger-than-expected 150bp in its overnight deposit rate, to 10.75%, was a pre-emptive move to limit the inflationary impact from the recent devaluation of the pound. We think the pound is likely to weaken further over the …
17th March 2016
The decision this morning by the Central Bank of Egypt to devalue the pound and move to a more flexible exchange rate regime is a positive step and should help to improve the country’s balance of payments position. There will inevitably be some short-term …
14th March 2016
Low oil prices mean that budget deficits will persist for some time in the GCC and we think these countries will shift away from a reliance on savings towards issuing debt to plug the gap this year. We estimate that more than US$85bn of debt will be …
10th March 2016
The fall in Egyptian inflation to a six-month low of 9.1% y/y in February may make policymakers more confident to push ahead with a devaluation of the pound. … Egypt Consumer Prices …
Recent announcements by the Gulf countries that they will cut off financial support to Lebanon and slap a travel ban on the country are likely to have a larger political than economic impact. But if the Gulf followed up with further measures, it could be …
8th March 2016
The modest rise in ‘whole economy’ PMIs in the Gulf last month probably reflects a boost to sentiment on the back of the recovery in oil prices from their January lows. The big picture, however, is that activity is subdued and we expect growth to slow …
3rd March 2016
We think the latest moves by the Central Bank of Egypt suggest that a long-awaited devaluation of the pound may be just around the corner. This will inevitably involve some short-term pain, but over a longer horizon, it should help to lay the foundations …
2nd March 2016
Recent elections in Iran have provided a positive endorsement of President Rouhani’s reformist policies ahead of next year’s presidential vote and should ease fears that Tehran will renege on its nuclear agreement with major foreign powers (which could …
1st March 2016
Our GDP Tracker suggests that Saudi Arabia’s economy slowed sharply at the end of last year and, as the fiscal squeeze begins to bite, we expect growth to weaken to just 1.5% this year. … Saudi economy ended last year on a weak …
29th February 2016
Recent comments from Saudi Arabia’s veteran Oil Minister Ali al- Naimi have dashed hopes that had been growing in some quarters that the Kingdom was about to shift direction on its oil market policy and cut production. The decision earlier this month by …
25th February 2016
The gradual rise in oil prices from the lows reached in January has underpinned a rebound in equity markets in the Gulf this month and dampened speculation that these countries will be forced to abandon their dollar pegs. Meanwhile, fresh moves to ease FX …
22nd February 2016
The slump in oil prices has raised fears that banks in the Gulf could come under strain, as governments withdraw deposits, foreign exchange reserves are depleted and assets begin to sour. But, while we expect credit growth to slow over the coming years, …
17th February 2016
Egyptian inflation came in at 10.1% y/y in January and, with a looming devaluation of the pound and the government preparing the ground for a fresh round of subsidy cuts, it is likely to remain in (or close to) double digits for most of this year. … …
11th February 2016
A drought is likely to weigh heavily on Morocco’s agricultural sector this year and headline GDP growthlooks set to slow to around 2.5%, down from more than 4% in 2015. Nonetheless, with twin budget andcurrent account deficits narrowing sharply and the …
9th February 2016
A period of fiscal austerity means that we expect the Gulf economies to slow this year, a view that not too long ago was non-consensus but is now relatively mainstream . Both the consensus and the IMF anticipate that growth in this part of the region …
4th February 2016
We have argued for some time that the Gulf economies are in a strong position to weather a period of low oil prices and, despite speculation in markets, that dollar pegs won’t be abandoned. Bahrain and Oman are the two countries where the risk of …
3rd February 2016
The further drop in ‘whole economy’ PMIs in the Gulf in January adds to evidence that tightening fiscal policy is beginning to weigh on growth. Elsewhere, the surveys suggest that Egypt’s economy continued to struggle at the start of 2016. … Whole Economy …
The raft of budgets announced in the Gulf over the past month should help to ease concerns that these countries lack a clear agenda to adjust to cheap oil. The Saudi government has already cut energy subsidies and intends to reduce spending by around 14% …
29th January 2016
The Central Bank of Egypt kept its benchmark overnight deposit rate unchanged at 9.25% today as an influx of financial support has eased immediate concerns over the country’s external position and reduced the need to follow up on December’s rate hike. But …
28th January 2016
The start of 2016 has brought more of the same for financial markets in the Gulf – equity markets have fallen, bond yields have risen and speculation has continued to mount that currencies will be devalued. … Gulf financial markets battered by fresh …
26th January 2016
The latest drop in oil prices has intensified speculation that the Gulf economies might abandon their dollar pegs but there remain good reasons to think that this would achieve little in terms of narrowing current account deficits. It would also involve …
21st January 2016
Our GDP Tracker suggests that growth in Saudi Arabia’s economy was broadly stable between October and November but, with a fiscal squeeze underway, growth looks set to weaken this year. We remain comfortable with our long-held view that the economy will …
19th January 2016
Sanctions relief should support a revival of Iran’s economy and a short period in which it enjoys growth of as much as 6-8%. But there is unlikely to be much impact on the rest of the region, either via moves in oil prices or in trade with Iran. … Iran …
18th January 2016
A privatisation drive in Saudi Arabia looks increasingly likely and we estimate that the government might be able to raise between $75bn and $100bn (12-15% of GDP) from asset sales. This wouldn’t be enough to plug the Kingdom’s large twin budget and …
14th January 2016
Inflation in Saudi Arabia was unchanged at 2.3% y/y in December, but the recent wave of subsidy cuts means that it is likely to edge higher over the coming months. … Saudi Arabia Consumer Prices …
The latest Egyptian economic data, on the face of it, show that the economy held up well in 2015, but the underlying picture is actually pretty weak. With the tourism sector in the midst of a fresh downturn and a devaluation of the pound looking …
13th January 2016
In an interview with The Economist published earlier today, Saudi Arabia’s Deputy Crown Prince Mohammed bin Salman (or MbS, as he is known locally) outlined encouragingly ambitious fiscal and reform plans, including an admission that the government is …
7th January 2016
The fresh drop in oil prices has once again prompted speculation that Saudi Arabia will follow other major oil producers and devalue its currency. But we think this will only be used as a last resort. Indeed, the recently announced budget for this year …
The drop in ‘whole economy’ PMIs from the Gulf countries in December, in the case of Saudi Arabia to a fresh record low, provides further evidence that non-oil sectors are starting to feel the pinch from fiscal consolidation. This reinforces our long-held …
Saudi Arabia’s budget for 2016 released at the end of last year sets the Kingdom up for a period of fiscal consolidation. The plans outlined will help to rein in the country’s large twin budget and current account deficits and will be taken as a sign that …
5th January 2016
The slowdown in Saudi GDP growth in the third quarter of last year, to 3.6% y/y, is a sign of things to come. With the recent budget confirming that a period of fiscal consolidation is now underway, we expect growth to slow to just 1.5% this year. … Saudi …
