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The fact that the Egyptian government intends to increase public sector employment in the next fiscal year adds to our view that its fiscal deficit target for 2012/13 is too optimistic. We think that the deficit will come in at around 9.5% of GDP – well …
17th September 2012
We don’t agree with recent reports suggesting that some of the major hydrocarbon producers in the Gulf are likely to become net oil importers within the next two decades. Instead, we think that a combination of slower population and economic growth, …
13th September 2012
The impressive rally in dollar-denominated bond markets across the GCC over the past year has seen yields in Qatar and Abu Dhabi hit record lows in recent months, while even those in debt-ridden Dubai and crisis-hit Bahrain have fallen sharply. Looking …
12th September 2012
Saudi Arabia’s headline inflation rate fell for the fifth consecutive month in August, which will help to ease fears that the economy is overheating. … Saudi Arabia Consumer Prices (Aug. …
The slowdown in Saudi Arabia’s annual GDP growth rate from 5.9% in Q1 to 5.5% in the second quarter was due to the fact that both the oil and government sectors slowed sharply. Meanwhile, the private sector remained stable, but it is likely to weaken over …
While Egypt’s central bank kept rates on hold today, the government’s progress towards securing a deal with the IMF means that the easing cycle could start sooner rather than later. … Egypt’s rates on hold, although easing could come …
6th September 2012
PMIs for the UAE and Saudi Arabia show that their respective non-oil private sectors continued to grow at a healthy pace in August. However, we think both are set to slow over the rest of the year. … UAE and Saudi still growing at a healthy …
4th September 2012
On the back of ample liquidity, scarce supply and low interest rates, highly-rated bond markets in the oil-rich Gulf should continue to outperform other Middle Eastern assets in the coming months. Meanwhile, most equity markets are set to disappoint. … …
30th August 2012
Concerns over the balance of payments positions of some of the resource-poor Arab countries have faded as Morocco and Jordan have secured funding from the IMF. The recent surge in global agricultural and crude oil prices had left these countries facing …
29th August 2012
The visit of Christine Lagarde to Egypt today is perhaps the clearest signal yet that the country is close to signing a deal with the IMF. If this materialises before the end of the year (as the recent statement from the Egyptian Prime Minister …
22nd August 2012
Reports that Christine Lagarde will visit Egypt next week and that the country may seek more funds from the IMF than had been initially thought are positive developments. This follows the news that Egypt has reached a number of deals with external …
16th August 2012
The rapid rise in global commodity prices over the past two months has raised fresh fears over food inflation in most Arab countries. But we think that the bigger concern could be the balance of payments positions of some of the resource-poor Arab …
15th August 2012
In a surprising move, the Egyptian President decided to sack the country’s two top-ranking generals and cancelled an earlier declaration by the military council that gave it wide legislative powers. While curbing the military’s powers bodes well for …
13th August 2012
Egyptian inflation fell to a six-year low in July as price pressures in virtually all the components of the consumer price basket eased. … Egypt Consumer Prices …
9th August 2012
Today’s data from the Central Bank of Egypt (CBE) showing that foreign currency reserves fell in July serve as a reminder that devaluation of the pound remains a real and likely prospect. … Egypt: devaluation back on investors’ …
7th August 2012
The decision by the IMF to approve funding for Morocco and Jordan will reduce the risks of a balance of payments crisis in the immediate term. But both economies remain fragile. While Morocco is heavily exposed to troubles in Europe, Jordan will continue …
6th August 2012
The drop in Saudi Arabia’s PMI in July suggests that although the non-oil economy is growing at a healthy pace, it is beginning to run out of steam. … Saudi Arabia’s economy starting to show signs of …
The much-anticipated announcement of the new Egyptian cabinet was a bit of a damp squib. Admittedly, the technocratic nature of the new administration has calmed fears of an Islamist-dominated government. But since many of the ministers were part of the …
2nd August 2012
Global agricultural prices have risen by around 17% in July, raising fresh fears that food inflation will increase in the oil-rich Gulf. But given subdued core price pressures in most of these countries and the strength of the US dollar, overall …
31st July 2012
The decision by Egypt’s Central Bank (CBE) to keep interest rates on hold was unsurprising. Although the economy is weak and inflationary pressures subdued, political instability will keep pressure on the balance of payments. … Egypt’s rates on hold as …
26th July 2012
The increase in oil prices over the past few weeks has been partly blamed on the escalation in tensions in Syria, which has raised fresh concerns of supply disruptions. But unless the Syrian crisis develops into a full-scale regional conflict, we think …
The surprising appointment of Dr. Hisham Kandil as Egypt’s new Prime Minister is unlikely to calm nerves in the financial markets. For a start, he lacks the economic credentials that some were hoping for. At the same time, his appointment may hint at …
24th July 2012
Inflation pressures are easing in most countries in the Middle East and North Africa region. The drop in global commodity prices has led to a fall in food price inflation across the region. Meanwhile, weak domestic demand in the resource-poor countries …
19th July 2012
Today’s announcement that the UAE has approved plans for its first nuclear power plant should help to reduce fears that even more oil will have to be used for domestic consumption rather than exported. Admittedly, the UAE accounts for less than 4% of …
18th July 2012
Saudi Arabia’s headline inflation fell in June on the back of easing core price pressures and a modest drop in food inflation. … Saudi Arabia Consumer Prices …
11th July 2012
The election of Dr. Mohamed Mursi as Egypt’s first democratically-elected president last month represented a significant step in the country’s transition. But as we expected, tensions between the new president and the military have quickly surfaced, …
Egyptian inflation fell to a nine-month low in June on the back of weaker food inflation. Nonetheless, this is unlikely to pave the way for looser monetary policy – at least until the political situation stabilises and an IMF deal is in place. … Egypt …
10th July 2012
Provisional data from the Central Bank of Egypt (CBE) showing no improvement in foreign currency reserves in June – as had been hoped – will keep pressure on the pound. With political conditions still fragile, we think that reaching a deal with the IMF is …
9th July 2012
Kuwait’s political crisis is showing no signs of abating as former Prime Minister Sheikh Jabir bin Mubarak Al-Sabah has been reappointed only four days after he resigned. For now, tensions between the opposition-led parliament and the government are set …
5th July 2012
June’s PMI data show that Saudi Arabia’s non-oil private sector continued to grow robustly, bucking the trend in other parts of the world. Nonetheless, the data also suggest that a repeat of last year’s record performance is looking increasingly unlikely. …
3rd July 2012
The UAE’s PMI fell slightly in June but the headline index still point towards a modest improvement in private sector activity between Q1 and Q2. … UAE HSBC/Markit PMI …
Investor concerns over the risk of a disorderly devaluation of the pound are beginning to fade on the back of fresh hopes that the new Egyptian president will pursue an agreement with the IMF. However, given that political conditions remain fragile, the …
2nd July 2012
We maintain our view that the imminent tightening of Western sanctions on Iran is unlikely to have anywhere near as large an impact on global oil prices as many had feared. Demand is weakening and other suppliers are both able and willing to meet any …
29th June 2012
The economic prospects for some of the resource-poor Arab countries are brighter than their current conditions suggest. Although political transitions are proving difficult, we still think that they could ultimately usher in a new era of rapid growth in …
28th June 2012
Egypt made a significant step in its transition yesterday following the announcement that the Muslim Brotherhood’s Mohamed Mursi has won the presidential election run-off. Even so, we remain cautious in the very near term, since recent moves to increase …
25th June 2012
Fears for the health of the global economy have sent Brent crude prices down by more than $30 per barrel in the past month, raising fresh concerns over the sustainability of the recent fiscal packages across the oil-rich Gulf. In contrast, the …
22nd June 2012
The Egyptian military is tightening its grip over political life in the country, casting doubts over the authority of the new president. Investors should therefore be concerned that recent developments will probably increase the risk of further social …
18th June 2012
The decision by Egypt’s Central Bank (CBE) to keep interest rates on hold was understandably overshadowed by rising tensions following today’s recommendation by the constitutional court that parliament should be disbanded. As political conditions worsen, …
14th June 2012
The escalation in the euro-zone crisis and recent falls in the oil price have weighed heavily on the Arab region’s equity markets over the past month. Indeed, even if Dubai and Qatar are upgraded to the MSCI Emerging Markets index on 20th June, any …
One of the main channels through which the euro-zone debt crisis could affect the oil-rich Gulf economies is via a drop in foreign capital inflows due to heightened global risk aversion. In particular, lending from euro-zone banks could fall. In this we …
13th June 2012
The fall in Egyptian inflation to a seven-month low in May is good news but does not provide sufficient grounds for the central bank to cut its benchmark interest rate on Thursday. … Egypt inflation down, but little chance of rate …
11th June 2012
The combination of a deep recession in the euro-zone and the Arab world’s own political turmoil will act as a drag on the region’s economies in the near term. The North African countries are likely to be hurt most given their heavy exposure to Europe and …
7th June 2012
The primary channels through which a recession in the euro-zone will impact the Arab region are a deterioration in world trade, lower remittances, a drop in capital flows and falls in commodity prices. Although no part of the region is immune, North …
The slowdown in Saudi Arabia’s annual GDP growth rate from a 6.6% y/y in Q4 2011 to 5.9% y/y in Q1 2012 suggests that last year’s record performance in the non-oil sector is unsustainable. … Saudi Arabia’s economy disappoints in …
6th June 2012
Our new Saudi Arabian whole-economy activity proxy suggests that GDP grew by around 7% y/y in the first quarter of this year, maintaining the record pace of growth in 2011. However, the combination of weaker government spending growth, the deteriorating …
29th May 2012
Early results from the first round of Egypt’s presidential election appear to have polarised society, pitting Islamists against secularists, and revolutionaries against the old guard. The outcome remains highly uncertain, but the key point is that while …
28th May 2012
The results of the 1st round of presidential elections in Egypt could prolong the political uncertainty that has gripped the country since the revolution, which will increase the near-term risk of a currency crisis. … Egypt: political uncertainty set …
The pick-up in Tunisia’s annual GDP growth rate from a of 0.4% y/y in Q4 2011 to an impressive of 4.8% y/y in Q1 2012 is flattered by base effects stemming from the collapse in output this time last year. With these effects set to begin to fade, and …
25th May 2012
Today marks the first day in Egypt’s presidential elections with the opinion polls and expatriate votes showing contradictory results. Regardless of who wins, two outstanding issues remain from an economic perspective. First the new constitution defining …
23rd May 2012
The soaring cost of energy subsidies has led the Jordanian government to turn to the IMF and Saudi Arabia for $5 billion in external financial assistance. We think that given Jordan’s geopolitical importance, foreign funding will be forthcoming which will …
