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The rise in December’s whole economy PMIs suggests that, in spite of the plunge in oil prices at the end of last year, economic activity in the Gulf has held up reasonably well. Meanwhile, Egypt’s economy appears to have ended last year on a slightly …
6th January 2015
Saudi Arabia’s 2015 budget statement doesn’t provide a clear steer about the path for actual government spending. Reading between the lines, it looks like the authorities will keep spending restrained this year, but there’s no sign that they will tighten …
5th January 2015
The recent plunge in Dubai’s stock market, coming alongside a drop in oil prices, has rekindled fears that the Emirate could face renewed problems with its large corporate debts. For our part, we think Dubai’s debt problems are far from resolved. But for …
17th December 2014
In spite of small rises today, equity markets in the Gulf have tumbled over the past month and all of the gains made earlier this year have now been wiped out. While we suspect that the big falls have probably now taken place, with lower oil prices here …
15th December 2014
The slump in oil prices has caused the Gulf’s equity markets to tumble, but the region’s governments still seem to be unfazed. Oman aside, no country has announced cuts in public spending. And Saudi Arabia’s Oil Minister has once again shrugged off calls …
11th December 2014
The fall in Saudi Arabia’s inflation rate in November to a two-and-a-half year low probably marks the trough and we expect it to rise gradually to 3.0-3.5% over the coming year. … Saudi Arabia Consumer Prices …
The slump in oil prices has caused concerns to emerge about the exposure of financial institutions to energy companies, but for banks in the Gulf this risk seems small. They are more vulnerable to a period of low oil prices if it results in weaker income …
10th December 2014
Egyptian inflation fell sharply last month on the back of easing food price pressures. If inflation remains in single digits over the coming months, it could prompt the Central Bank of Egypt to cut interest rates in the first half of next year. … Egypt …
Our GDP Tracker suggests that the Saudi economy started Q4 on a slightly weaker note. We don’t think that the latest fall in oil prices will cause growth to collapse but with fiscal policy set to become less supportive, we do think growth will soften …
9th December 2014
Last month’s drop in the whole economy PMIs for the Gulf economies appears to have been driven by weaker domestic demand. One explanation for this is that the continued slide in oil prices has weighed on sentiment. Meanwhile, the further fall in Egypt’s …
4th December 2014
The recent fall in oil prices, if sustained, will effectively wipe out the Gulf’s current account surplus. This shouldn’t pose too many problems for these economies. Even if oil prices fall further, large FX reserves could finance current account …
2nd December 2014
The Central Bank of Egypt left its benchmark interest rate unchanged at 9.25% today and, with growth picking up and inflation still high, it looks unlikely that July’s rate hike will be reversed any time soon. Equally, however, policymakers don’t appear …
27th November 2014
Comments ahead of today’s OPEC meeting, playing down calls for a cut in the cartel’s output target, suggest that the Gulf States aren’t too alarmed by the recent slide in oil prices. Indeed, Saudi Arabia’s Oil Minister, Ali al- Naimi , has explicitly said …
Low oil prices have continued to take their toll on equity markets in the Gulf. Meanwhile, pressure on the Egyptian pound has intensified over the past month and we think the authorities will need to loosen their grip on the currency sooner rather than …
25th November 2014
Egypt’s tourism sector has turned the corner in recent months and, if this improvement can be sustained, we estimate that it might result in additional revenues of as much as $3.3bn (1.2% of GDP) over the next twelve months. However, lingering security …
20th November 2014
Our GDP Tracker suggests that growth in Saudi Arabia’s economy stabilised in Q3. The oil sector was a drag on the economy, but this was offset by stronger growth in the non-oil sector. Going forward, we think that economic growth is likely to soften. A …
19th November 2014
Saudi Arabia is likely to resist pressure from other OPEC members to cut oil output in an effort to arrest the recent slide in prices. After all, the Saudi economy is in a stronger position to withstand a period of lower oil prices than many other members …
17th November 2014
The sharp fall in oil prices in recent months has led some to call into question the sustainability of the Gulf’s dollar pegs. However, we think the risk of currency devaluation is relatively small. … Gulf dollar pegs under little threat from lower oil …
13th November 2014
The fall in Saudi Arabia’s inflation rate in October suggests that, for now at least, price pressures in the economy are limited. … Saudi Arabia Consumer Prices …
It’s been a year since the Saudi Arabian authorities launched a crackdown on illegal migrants working in the Kingdom. In this Watch, we assess what impact that the crackdown, as well as the government’s other labour market policies, have had on the Saudi …
12th November 2014
The increase in Egyptian inflation last month should not ring too many alarm bells. In fact, it can be almost entirely explained by a sharp rise in education inflation ahead of the new academic year. … Egypt Consumer Prices …
10th November 2014
The sharp slide in oil prices since the summer won’t cause a major headache for the Gulf States, but it does reinforce the point that these economies are set to lose some steam over the coming years. Falling oil revenues mean that government spending …
6th November 2014
The Egyptian pound has held steady in recent months but we think that policymakers will need to loosen their grip on the currency in the not-too-distant future. All told, we forecast the pound to drop by 10% against the dollar, to 8.0/US$, by the end of …
5th November 2014
September’s Brazilian industrial production data suggest that the sector remained a drag on the overall economy in the third quarter and, with both domestic and external demand set to remain weak, it is unlikely to take over as a driver of growth in the …
4th November 2014
The slide in oil prices this month has raised concerns in some quarters that the Gulf States will need to tighten fiscal policy. But while the prospect of this has been talked about in Oman, lower oil prices have received a muted reaction in the rest of …
30th October 2014
Growth in the Saudi Arabian economy appears to have stabilised in Q3, as a pick-up in activity in the non-oil sector offset a further slowdown in the oil sector. But in spite of the relative strength of the recent figures, we expect growth to slow further …
28th October 2014
The victory for Nidaa Tounes in Tunisia’s parliamentary election is likely to raise hopes that economic reforms are in the pipeline. Perhaps more importantly, the fact that the election passed smoothly and that there is a growing consensus among …
27th October 2014
In contrast to the Gulf, the rest of the MENA region stands to gain from the recent fall in oil prices. That being said, a period of low oil prices alone won’t be sufficient to reduce these economies’ large twin budget and current account deficits …
23rd October 2014
Despite recovering a little in recent days, it’s been a torrid month for stock markets across the MENA region. In part, this has reflected the broader sell-off in EM financial markets. But in the Gulf, this has been compounded by the sharp fall in oil …
22nd October 2014
Concerns that the recent fall in oil prices could lead to another “lost decade” for the Gulf, similar to the 1980s, are probably overdone. The region’s large accumulated savings mean that most countries are in a much stronger position to weather a period …
21st October 2014
The Central Bank of Egypt’s decision to keep interest rates on hold today came as little surprise. Inflation remains high but policymakers are undoubtedly wary of tightening monetary policy due to fears of stifling the economic recovery. And with …
16th October 2014
The ongoing slide in oil prices doesn’t pose too much of a threat to the Gulf economies. But it does reinforce the point that a key driver of the region’s economies over the past decade is weakening. We don’t expect growth to collapse, although we do …
In aggregate, inflation in the Gulf countries has remained stable over the past few months, helped by easing food inflation. But there are signs that core price pressures are starting to build, particularly in the UAE and Qatar, and we expect inflation to …
13th October 2014
Saudi Arabia’s fiscal position looks set to swing from surplus to deficit in the near-future. This would by no means be a disaster as the authorities could easily finance budget shortfalls for many years to come. However, it does mean that the government …
9th October 2014
Upcoming elections in Tunisia are another important step along the country’s long and bumpy path to democracy. If the elections pass smoothly, as seems likely, this should at the very least provide a near-term boost to growth. But perhaps more …
8th October 2014
September’s ‘whole economy’ PMI data suggest that non-oil sectors in the Gulf, and in Saudi Arabia in particular, ended the third quarter on a strong note. Meanwhile, the survey provided further evidence that Egypt’s fragile economy has gathered pace in …
7th October 2014
Moroccan GDP growth continued to be affected by a slump in the agricultural sector in Q2. But other parts of the economy are performing well and we still think that Morocco will be North Africa’s best performing economy over the coming years. … Morocco’s …
1st October 2014
… Egypt’s economy shifts up a gear …
30th September 2014
Having suffered following last summer’s “second revolution”, the Egyptian economy is finally starting to gather steam. Activity has been buoyed by recent political stability and the government’s Gulf-funded stimulus packages. Indeed, industrial production …
25th September 2014
The Saudi Arabian economy slowed sharply between Q1 and Q2, largely due to weakness in the oil sector. The data also provided further signs that Saudi consumers may be struggling. Looking ahead, it’s unlikely that the oil sector will be able to match the …
24th September 2014
Large energy subsidies in the GCC lead to a number of distortions in their economies, including smaller current account and fiscal surpluses as well as weaker investment in the non-hydrocarbon sector. Even so, subsidies remain a key part of the Gulf’s …
23rd September 2014
The latest headline trade figures from Egypt suggest that the country’s trade deficit has narrowed sharply over the past year, reducing a key economic vulnerability. However, by taking a closer look at the data, it seems that there is less to this than …
18th September 2014
The recent sharp drop in oil prices is unlikely to be a major headache for the Gulf economies although, if sustained, it will mean that there will be less room for fiscal policy to provide the same support to growth as it has done in recent years. …
16th September 2014
In his first 100 days in office, Egypt’s President al- Sisi has made more progress in tackling the country’s economic problems than many, including ourselves, had expected. In particular, his government has cut subsidies and also started to address the …
15th September 2014
Algerian President Abdelaziz Bouteflika’s re-election in April seemed to mark a return to business as usual for the economy. However, Algeria’s growth model is looking increasingly unsustainable. If, as we expect, global energy prices fall over the …
10th September 2014
Our GDP Tracker suggests that the Saudi economy slowed further at the start of Q3 as growth in the oil sector continued to ease, while activity in the non-oil sector remained weak by past standards. … Saudi slowdown continues at the start of …
8th September 2014
The past month has brought further news that Dubai’s government-related entities, which were at the heart of the Emirate’s crisis in 2009, are tackling their debt problems. But while these latest developments provide grounds for optimism, as we argue in …
4th September 2014
The pick-up in Egypt’s ‘whole economy’ PMI last month suggests that the economy has continued to make a gradual recovery from last summer’s “second revolution”. Meanwhile, non-oil sectors in the Gulf appear to be enjoying a period of robust activity, …
3rd September 2014
The Egyptian central bank’s decision to keep interest rates on hold today appears to confirm that July’s rate hike was a one-off in response to higher inflation following the government’s recent decision to raise energy prices. However, inflation should …
1st September 2014
Over the past month Dubai’s government-related entities (GREs), which were at the heart of the Emirate’s crisis in 2009, have made further efforts to tackle their huge mountains of debt. The recovery in the real estate sector over the past 18 months has …
28th August 2014
