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With oil prices still languishing at multi-year lows, Saudi Arabia’s budget position – which looks set to post a shortfall of close to 20% of GDP this year – has come under increasing scrutiny in recent months. However, there seems to be some confusion …
7th September 2015
August’s ‘whole economy’ PMIs suggest that the slump that the surveys had been pointing to in recent months has now reversed. Similarly, there is early evidence that Egypt’s economy may have turned the corner. … Whole Economy PMIs …
3rd September 2015
After a difficult few years, the outlook for Morocco is finally brightening. We think the country could be one of the best performing economies in the emerging world over the coming years. … Five reasons why we’re upbeat on the outlook for …
1st September 2015
Egypt’s economy has slowed sharply and by more than we expected over the first half of this year. But we think some of the constraints on growth will start to lift in the coming quarters. … What’s behind the apparent weakness in Egypt’s …
26th August 2015
The drop in oil prices over the past couple of months is unlikely to cause policymakers in the GCC countries to panic. The region’s large reserves mean that most countries are under little immediate pressure to tighten fiscal policy and we think it is …
25th August 2015
Equity markets across the MENA region have been hit hard over the past month against the backdrop of the general turmoil in global financial markets and a fresh drop in oil prices. … MENA equity markets take a …
24th August 2015
The past month has brought further signs of diverging attitudes in the Gulf to dealing with the fiscal headache caused by low oil prices. If media reports are to be believed, the UAE looks set to follow up last month’s deregulation of fuel prices by …
20th August 2015
Our GDP Tracker suggests that Saudi Arabia’s economy continued to grow by over 5% y/y at the end of Q2, supported by strong growth in the oil sector. However, with Iranian oil set to return to the market,the boost to consumer spending from the “accession …
18th August 2015
Reports that the UAE is planning to introduce a sales tax, coming soon after some fuel prices were deregulated, add to the impression that it is taking fiscal consolidation more seriously than the rest of the Gulf. These measures are likely to weigh on …
13th August 2015
Saudi Arabian inflation remained unchanged at 2.2% y/y last month and, overall,price pressures appear to be subdued. We think this is likely to remain the case overthe next 18 months or so. … Saudi Arabia Consumer Prices …
The sharp fall in Egyptian inflation to a 13-month low of 8.4% y/y in July was due toboth lower food inflation and the unwinding of last year’s energy price hikes. Withinflation now back in single-digits, and likely to remain so, we think interest …
10th August 2015
Media reports suggesting that the Saudi central bank will issue bonds in greater volumes over the rest of this year have raised fresh concerns about the government’s seemingly relaxed response to the fall in oil prices. But as we explain in this Watch , …
6th August 2015
Last month’s ‘whole economy’ PMIs provide early signs that activity in the Gulf strengthened at the start of Q3. Elsewhere, although Egypt’s PMI edged down in July, it still points to stronger growth than at the start of the year. … Whole Economy PMIs …
4th August 2015
The new Suez Canal, due to be inaugurated this week, could in theory bring major economic benefits to the Egyptian economy. However, the government’s projections appear to be based on implausibly optimistic assumptions about world trade and we think the …
3rd August 2015
The Egyptian central bank kept its benchmark O/N deposit rate unchanged at 8.75% late last night, but with inflation set to fall sharply, rate cuts are likely to come back onto the cards. We have pencilled in a 50bp cut, to 8.25%, with the most likely …
31st July 2015
Equity markets in the Gulf have performed better than might have been expected this month, given the fresh fall in global oil prices. Meanwhile, Egyptian stocks,bonds and the currency have all fared poorly. … Gulf markets weather fall in oil …
28th July 2015
The fresh fall in oil prices has turned attention back to fiscal positions in the Gulf, with the UAE’s government the latest to announce measures to rein in spending. The UAE plans to deregulate fuel prices and, while details are sketchy at the moment, …
27th July 2015
This week’s announcement that Italian energy group Eni has discovered gas reserves in the Nile Delta provides the first concrete evidence that the Egyptian government’s energy reforms are starting to pay off. With several other major energy companies …
23rd July 2015
Our GDP Tracker suggests that growth in Saudi Arabia accelerated further, to around 5.5% y/y in May, supported by strong growth in the oil sector. But with Iranian oil likely to return to the market and fiscal policy set to become less supportive, we …
21st July 2015
The recent nuclear agreement between Iran and the P5+1 has rekindled investors’ interest in the Islamic Republic. In this Focus, we take a closer look at the outlook for Iran’s economy and explain that, while growth could be quite strong over the next few …
16th July 2015
The long-awaited announcement that Iran has secured an agreement over its nuclear programme will have implications for the wider Middle East. In short, the economic impact is likely to be small, although the UAE may be a beneficiary from a revival in …
14th July 2015
Saudi Arabia’s budget deficit is likely to reach an eye-watering 17.5% of GDP this year and the government has now turned to the bond market in order to help plug the gap. Some have argued that debt issuance is aimed at slowing the pace at which the …
13th July 2015
The sharp fall in Egyptian inflation last month, to 11.4% y/y, confirmed that May’s surprise jump was a one-off. And with the headline rate likely to fall further in July, we think interest rate cuts could come back onto the agenda. Elsewhere, the modest …
9th July 2015
The Central Bank of Egypt has loosened its grip onthe pound over the past week and we think the currency probably needs to fall by at least another 5% in order to restore external competiveness. Butgiven the CBE’s past history with managing the exchange …
8th July 2015
The drop in Saudi Arabia’s ‘whole economy’ PMI to a record low last month suggests that growth has slowed in the second quarter. Elsewhere, after a disappointing start to the year, Egypt’s economy is finding its feet again. … Whole Economy PMIs …
6th July 2015
The pick-up in Saudi GDP growth in the first quarter of this year, to 2.4% y/y, was supported by a rebound in the oil sector and robust activity in the non-oil sector. These data confirm our view that that lower oil prices wouldn’t cause activity in Saudi …
2nd July 2015
The plunge in oil prices over the past year has forced Saudi Arabia to dip into its foreign exchange reserves, but one point that is often overlooked is that the Kingdom’s external position had been deteriorating for some time before that. In particular, …
The formal opening up of Saudi Arabia’s stock market earlier this month was adamp squib, as equities remained flat. Elsewhere, stocks in Egypt have been the worst-performers over the past month, while growing concerns that Qatar may be stripped of the …
25th June 2015
There seems to be a lot of confusion as to exactly how Saudi Arabia is using its foreign exchange reservesto finance twin budget and current account deficits. In this Update, we shed some light on the matter. … A primer on how Saudi Arabia uses its FX …
Egypt’s public finances are gradually improving, but the recent watering down of tax and spending measures combined with the relatively unambitious targets set out in a recent draft budget has raised concerns about the government’s commitment to fiscal …
24th June 2015
The slowdown in Egypt’s economy since the start of the year has been disappointing, but there are at least encouraging signs that the government’s reform programme is starting to bear fruit. Indeed, inward direct investment reached $2.9bn in Q1, its …
18th June 2015
Our GDP Tracker suggests that Saudi Arabia’s economy grew by 5.0% y/y in April, supported by a rebound in oil production and robust growth in the non-oil sector. But activity is likely to soften in the coming quarters and we expect GDP growth to slow to …
17th June 2015
The Gulf economies have weathered the storm created by low oil prices relatively well this year, with foreign exchange reserves having been drawn down to sustain spending. Large savings mean that this can continue for some time. The upshot is that …
15th June 2015
The Central Bank of Egypt left interest rates unchanged today, but we expect a rate cut later in the year, despite the recent pick-up in inflation. … Central Bank of Egypt holds rates as inflation remains …
11th June 2015
Inflation in Saudi Arabia edged up to 2.1% y/y in May, but price pressures are still subdued. Against the backdrop of slower growth and weak commodity prices, we expect this to remain the case for the foreseeable future. … Saudi Arabia Consumer Prices …
The move by Saudi Arabia to open up its stock market to foreign investors from next week is a step in the right direction. But, as we explain in this Watch , we think some of the optimism about its impact is overdone. … Optimism over opening up of …
10th June 2015
The jump in Egyptian inflation to 13.1% y/y in May was almost entirely driven a sharp rise in food inflation and, as a result, we don’t expect it to have an impact on the MPC’s rate decision tomorrow. But equally, it means that the chances of the CBE …
This week’s OPEC meeting is likely to see the Gulf countries, led by Saudi Arabia, once again shrug off calls from some of the cartel’s smaller members to cut oil production in order to shore up oil prices. As we’ve argued before, the Gulf States are in a …
4th June 2015
The latest ‘whole economy’ PMIs from the MENA region continue to suggest that the Gulf economies are holding up well in the face of low oil prices. However, the boost to Saudi Arabia’s economy from the recent “accession bonus” now appears to have faded. …
3rd June 2015
Reports in the Egyptian media that the government is set to open discussions on a $6bn financing package with the IMF are likely to prove premature. For now, the authorities seem content to undertake reforms at their own pace while relying on financial …
2nd June 2015
It has been a quiet month for financial markets in the Middle East, with most stock markets treading water and bond yields staying low. The one exception is the Egyptian equity index, which rose sharply this month following the government’s decision to …
28th May 2015
The latest activity data suggest that the MENA region’s two largest economies, Saudi Arabia and Egypt, have headed in opposite directions at the start of 2015. After recording strong growth last year, Egypt’s economy has slowed in recent months. This …
27th May 2015
The steady recovery in oil prices over the past couple of months will clearly be welcomed by the MENA region’s oil producers and provides some encouragement for the Gulf countries that their oil strategy is working. However, as we explain in this Watch , …
21st May 2015
Our GDP Tracker suggests that Saudi Arabia’s economy strengthened further in March as the oil sector returned to growth and consumer spending remained buoyant. But we expect this rebound to fizzle out, particularly as the effects of the recent “accession …
19th May 2015
Inflation in Saudi Arabia held steady at 2.0% y/y in April as further weakness in food price pressures was offset by a pick-up in rental inflation. Looking ahead, we expect headline inflation to remain subdued for the rest of this year. … Saudi Arabia …
18th May 2015
We think concerns that Saudi Arabia is drawing down its savings to maintain spending in the face of lower oil prices misses the point that these buffers were built up precisely for a time like this. Indeed, the Kingdom’s strong balance sheet has allowed …
14th May 2015
The sharp fall in oil prices since the middle of last year has thrust the Gulf’s dollar pegs under the spotlight but there are plenty of reasons to think that the risk of currency devaluation remains small in most places. Instead, we suspect that fiscal …
12th May 2015
Egyptian inflation fell back to 11.0% y/y in April but we think the central bank will wait for inflation to ease further before it cuts interest rates again. The effects of last year’s energy price hikes are set to fall out of the annual comparison in the …
11th May 2015
Qatar was the MENA region’s best performing economy last year and, with low oil prices unlikely to derail the government’s investment programme, we expect it to grow at a decent clip of 5.0-5.5% in 2015-16. But rapid credit and property price growth means …
7th May 2015
