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January’s PMI data show that, on the back of fiscal stimulus boosting domestic demand, Saudi Arabia’s non-oil private sector made a strong start to the year. However, a surge in input prices is continuing to squeeze profit margins. … Saudi Arabia …
6th February 2012
Today’s decision to keep the benchmark rate unchanged at 9.25% in a sign that Egypt’s central bank is increasingly confident that loans from the IMF and elsewhere will materialise soon. Indeed, the recent stock market rally (which is in part due to …
2nd February 2012
Given that public finances are vulnerable to swings in oil prices, rumours that Qatar and other Gulf countries are considering Value-Added Tax (VAT) to diversify revenue sources are welcome. Indeed, the recent fiscal stimulus packages across the Gulf have …
31st January 2012
The Arab League’s uncharacteristically unified position on Syria last year has quickly reversed. While some countries, led by the Gulf Cooperation Council (GCC), favour a tough stance, others, including Algeria, Egypt, Iraq and Lebanon, favour a less …
25th January 2012
On the back of a smooth start to the new parliament, Egyptian equities have jumped by 5.4% so far this week, and CDS premia have fallen by around 70 basis points. However, since last year’s revolution, Egyptian markets have been driven by political …
24th January 2012
The escalation of tensions with Iran has meant that financial markets in the Gulf have underperformed those in the rest of the emerging world so far this year. While the MSCI emerging market equity has gained nearly 9% since the start of this month, most …
23rd January 2012
At first glance, given their large external funding requirements, Lebanon and Jordan appear vulnerable to turmoil in international financial markets this year. However, we think that, in contrast to Egypt, there are good reasons to expect both countries …
20th January 2012
Comments earlier this week from Saudi Arabia’s Oil Minister Ali Al-Naimi indicating that the government is comfortable with a crude oil price of $100pb (up from $70-80 previously) suggests that public spending could exceeds current plans in 2012. Of …
18th January 2012
Egypt’s decision to request a $3.2 billion stand-by facility from the IMF will not be enough to cover its external funding needs in 2012. Instead, it will need at least double that amount to avoid a balance of payments crisis. We think that the country’s …
17th January 2012
Saudi Arabia’s headline inflation edged up slightly in December as a rise in core inflation (non-food prices) helped to offset a drop in food inflation. … Saudi Arabia Consumer Prices …
16th January 2012
The Egyptian government’s decision to resume negotiations with the IMF is good news. The proposed $3 billion facility would help plug a gaping hole in the budget. But it would not be sufficient to stabilise the country’s growing external payments …
12th January 2012
At first glance, the Gulf’s lack of trade links with Iran means that international sanctions will have little impact on most of the oil-rich region’s economies. Indeed, Iran’s threat to block the Strait of Hormuz seems to be the only risk to the Gulf’s …
11th January 2012
The pick-up in Egypt’s headline inflation in December has increased the likelihood of another rate hike when the central bank’s monetary policy committee (MPC) meets in February. … Egypt Consumer Prices …
10th January 2012
The increase in the costs of food and fuel subsidies, and public sector salaries, has left most oil-importers in the Middle East and North Africa (MENA) with no room to counteract the impact of a slowdown in global growth this year. And, in some cases, …
9th January 2012
December’s PMI data show that the UAE’s non-oil private sector continued to slow on the back of weaker external demand. Moreover, the data highlight the UAE’s vulnerability to conditions in the global economy. … UAE HSBC/Markit PMI …
4th January 2012
December’s PMI data show that growth eased in Saudi Arabia’s non-oil private sector on the back of softer domestic demand. Meanwhile, businesses continue to face squeezed profit margins in spite of decelerating input costs. … Saudi Arabia HSBC/Markit PMI …
3rd January 2012
Given the political turmoil in the Arab world and growing concerns of a conflict with Iran, it is unsurprising that politics took centre stage at the Gulf Cooperation Council’s (GCC) 32nd Summit this week. A number of previously announced economic …
21st December 2011
Successful elections in Tunisia and Morocco, and initially in Egypt, have been overshadowed by a marked deterioration in economic conditions in North Africa. Indeed, Egypt is at a growing risk of a full-blown of balance of payments crisis. In contrast, …
20th December 2011
Today’s reports that Egypt’s GDP grew by 0.5% y/y in the third quarter suggest that the economy has now recovered most of the initial losses in output brought about by the social unrest. However, given the poor state of public finances and the threat of a …
15th December 2011
Yesterday’s ministerial reshuffle in Saudi Arabia reflects the fact that previous administrations have fallen well short of the targets for growth and employment set out in the recent National Development Plan. But even if these moves help to speed up the …
14th December 2011
This year’s fiscal stimulus packages in the Gulf Cooperation Council (GCC) countries have increased the risk of a spending squeeze in the next 10 to 20 years. Admittedly, enormous foreign currency reserves, low public debt levels and consistent fiscal …
Despite growing concerns, we think that Dubai’s government-related entities (GREs) should be able to service the $3.8 billion in bonds that mature next year. Instead, the more pressing issue is the on-going restructuring of loans by banks, and delayed …
12th December 2011
The ruling Supreme Council of the Armed Forces’ (SCAF) dithering over securing external financial assistance has left Egypt teetering on the edge of a full-blown economic crisis. The central bank’s reserves are dangerously low and, without outside help, …
7th December 2011
We broadly agree with the consensus view that most emerging economies will hold up well in 2012. But with the US set to slow and the euro-zone heading towards break-up, the path ahead is going to be bumpy. Here are five developments that emerging market …
November’s PMI data show that, after slowing in the third quarter, growth in Saudi Arabia’s non-oil private sector is gathering momentum again. However, higher purchase and staff costs mean that price pressures have increased. … Saudi Arabia HSBC/Markit …
5th December 2011
The sharp fall in the PMI’s export component shows the vulnerability of UAE’s non-oil economy to global conditions. … UAE HSBC/Markit PMI …
Although the official results from Egypt’s first round of elections have not yet been released, it is almost certain that the Freedom and Justice party (the political arm of the Muslim Brotherhood) has won at least 40% of the vote. If this is confirmed, …
1st December 2011
Following similar moves in other Gulf countries, the UAE announced an increase of up to 100% in the pay of some public sector workers, as well as the introduction of a $2.7 billion fund to help low-income households with loan repayments. But while the …
30th November 2011
On the face of it, the resignation of the Kuwaiti government adds to the general sense that political risks in the Arab world are escalating once again. However, given that Kuwait is much wealthier than the likes of Egypt and Tunisia, and that its …
28th November 2011
Today’s rate hike by 100 bps to 9.25% is a clear sign that Egypt’s central bank is increasingly concerned over growing balance of payments strains and the risk of a currency crisis. Although the economy is still weak, and core inflation has fallen to …
24th November 2011
The past month has been dominated by events in Egypt. Renewed clashes between protestors and the security forces, coupled with the resignation of the interim government, have left parliamentary elections planned for later this month in serious doubt. For …
22nd November 2011
21st November 2011
Inflation in Saudi Arabia edged down slightly last month as a sharp drop in food inflation offset a rise in domestic goods and services inflation. … Saudi Arabia Consumer Prices …
The UAE’s banks are better prepared to face the fallout of the euro-zone debt crisis than they were during the financial crisis of 2008. However, lending to the private sector is unlikely to return to healthy levels until 2013 at the earliest. …
17th November 2011
The decision by privately-owned banks in Egypt to raise deposit rates by around two percentage points may slow the rate of dollarization of resident accounts, which could help the central bank in its efforts to stabilise the pound. Nonetheless, any …
15th November 2011
The Arab League’s decision to suspend Syria’s membership paves the way for harsher economic and political sanctions that should weaken President Bashar Al-Assad’s leadership. Admittedly, Iraq, Yemen and Lebanon, which combined account for over 40% of …
14th November 2011
Although Egyptian inflation fell to its slowest rate for 4 years in October, currency concerns continue to prevent a near-term cut in interest rates. Indeed, if there is any rate change before the end of the year, it is more likely to be up than down. …
10th November 2011
We estimate that the Central Bank of Egypt has sufficient FX reserves to maintain its current rate of intervention in the foreign exchange markets until early next year. Assuming this month’s elections go ahead as planned, this gives the new government a …
8th November 2011
The recent moves by the countries of the Gulf Cooperation Council (GCC) to increase the participation of their citizens in the private sector jobs market, notably Saudi Arabia’s Nitiqat scheme, are not new. However, these moves are crucial to meeting the …
3rd November 2011
October’s PMI data show that growth in the UAE’s non-oil private sector has accelerated, but it is still much weaker than that seen earlier in the year. … UAE HSBC/Markit PMI …
The combination of deepening problems in advanced economies and the legacy of political unrest earlier this year has heightened the risk of fiscal and balance of payments crises in the resource-poor Arab economies. As a result, we think that these …
2nd November 2011
October’s PMI data show that growth in Saudi Arabia’s non-oil private sector is stabilising, albeit at a slower pace than that seen earlier in the year. … Saudi Arabia HSBC/Markit PMI …
31st October 2011
With oil prices likely to fall further next year, the Qatari authorities’ decision to hedge part of their 2012 oil exports looks wise. While the government’s balance sheet is amongst the healthiest in the oil-rich Gulf region, the recent fiscal stimulus …
28th October 2011
The fact that the moderate Islamic party, Al-Nahda, is on track to become the strongest political force in Tunisia should not be a concern for Western governments or international investors. From the latter’s perspective, the principles of economic policy …
26th October 2011
The fact that there was no market reaction to the death of Libya’s former leader, Muammar Gaddafi, is no surprise. That said, today’s events could reduce political risks in the Middle East and North Africa (MENA) region, if they lead to a swifter …
21st October 2011
Emerging markets are not immune from the deepening debt crisis in the developed world, but most are well-placed to deal with the fallout. China faces a difficult structural transition of its own but, along with the rest of emerging Asia, has policy …
The drop in PMIs in Saudi Arabia and the UAE provide the first signs that the Gulf States are being hit by the on-going problems in the developed world. But the oil-rich countries have strong balance sheets and will be able to maintain stimulus spending …
20th October 2011
The rise in Saudi Arabia’s inflation to a nine-month high in September will revive speculation that stimulus spending is leading to a build up in domestic price pressures. A closer look at the data, however, suggest that these fears may be misplaced. … …
18th October 2011
There were no surprises from Egypt’s Central Bank today as the benchmark interest rate was left unchanged at 8.25%. Although the economy is still weak, and core inflation in single digits, the threat of more capital outflows remains. Therefore, we expect …
14th October 2011
The global economic crisis will affect the Middle East and North Africa (MENA) region through a deterioration in world trade, falls in commodity prices and a drop in capital inflows. We expect that GDP growth in most MENA countries will slow next year. …
