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Whilst OPEC+ has been failing to meet its production quotas in recent months, it will technically finish unwinding its pandemic-related supply cuts come September. We think OPEC+ will then move to a more liberal approach and allow the few members with …
23rd June 2022
What will OPEC+ do from September? OPEC+ may drop some hints about the future for the group’s oil output beyond September at its meeting next Thursday. We think the group is likely to remove the shackles, and the Gulf stands to be a major beneficiary. …
Egypt’s public debt dynamics look increasingly fragile due to a combination of the extremely short average maturity of its debt, rapidly rising yields, and a growing share of debt denominated in foreign currency. That said, for now, there are reasons to …
20th June 2022
Two sides of the coin for MENA as Fed hikes by 75 Even though central banks in the Gulf have followed the US Fed in hiking interest rates, the early signs are that these economies have weathered the impact well so far. In contrast, the non-Gulf economies …
16th June 2022
Inflation to drift higher but not for long Saudi inflation edged down to 2.2% y/y in May as food and transport inflation slowed last month, and, while we think that the headline rate will drift higher over the coming months, it is unlikely to reach the …
15th June 2022
Saudi and the UAE to benefit from OPEC+ fallout OPEC+’s decision last week to accelerate the pace at which it is raising its oil production quota lays the ground for Saudi Arabia and the UAE to capitalise to increase output quicker, which will provide a …
9th June 2022
Saudi Arabia’s economic recovery is likely to be one of the strongest in the emerging world over the next couple of years as oil output is ramped up and fiscal policy is loosened. We expect GDP growth of 10.0% this year and 5.3% in 2023, which is far …
Inflation to rise further and more monetary tightening on the cards Egypt’s headline inflation rose to a three-year high of 13.5% y/y in May as the lagged effects from the devaluation of the pound in March continued to push up non-food inflation. …
Egypt’s government is set to kick off its latest privatisation drive later this year, but its track record provides little hope that it will meet targets. The authorities are likely to retain a high degree of control over the economy, holding back Egypt’s …
6th June 2022
Gulf states to step up oil output increases? Reports that OPEC+ may suspend Russia from its oil output deal reinforce our view that the Gulf states will raise production faster later this year. The West has increased pressure on OPEC+ to rethink the …
1st June 2022
Saudi gearing up to loosen the purse strings Comments from Saudi Arabia’s finance minister this week provide some hints that the fiscal purse strings could soon be loosened if oil prices remain elevated. Finance Minister Mohammed al-Jadaan said that the …
26th May 2022
A majority of central banks in the region hiked interest rates over the past month. In the Gulf, central banks raised interest rates in line with the Federal Reserve, although this won’t necessarily curb demand in the region. Credit growth tends to …
Tunisia: further rate hikes needed The central bank of Tunisia (BCT) joined the region’s tightening cycle this week, in part to shore up the dinar and mitigate the risks stemming from the currency to the public finances. But we doubt that this will …
19th May 2022
Saudi Arabia’s economy grew at its fastest pace in a decade in Q1 and we think this strength will carry on over the rest of this year. The combination of rising oil output and the increasing likelihood of looser fiscal policy underpin our above-consensus …
18th May 2022
Headline inflation in Saudi Arabia rose to 2.3% y/y in April and we think that it will continue to accelerate over the coming months. Unlike in other parts of the emerging world, however, inflation will not surge to multi-year highs and, if anything, the …
The passing of the UAE’s President Sheikh Khalifa bin Zayed al Nayhan today is unlikely to alter the economic outlook with GDP set to grow rapidly amid stronger oil output and looser fiscal policy. That said, the next president will face several …
13th May 2022
Risks to Egypt’s debt dynamics building Egypt’s draft budget for FY2022/23 showed that officials remained committed to keeping fiscal policy tight but, with debt servicing costs rising sharply and the currency set to weaken, there are increasing concerns …
12th May 2022
Inflation leaps, further interest rate hikes beckon Egypt’s headline inflation rate jumped to a near-three year high of 13.1% y/y in April on the back of the spillovers from the war in Ukraine and effects of the devaluation of the pound. Inflation will …
10th May 2022
The war in Ukraine has compounded strains in Egypt’s balance of payments and prompted officials to devalue the pound. The key risk now is that the authorities revert to heavily managing the nominal exchange rate (as they appear to have done since the …
9th May 2022
Regional divergence grows April’s batch of whole economy PMIs showed a loss of momentum at the start of Q2 but continued to highlight the growing divergence between the Gulf and non-Gulf economies as a result of the spillovers from the war in Ukraine. In …
Gulf to swoop in following EU-Russia oil ban With the EU set to phase out imports of Russian oil, we think there is a strong chance that the Gulf countries will eventually step in to raise output more quickly, providing a fillip to economic recoveries. …
5th May 2022
Fastest growth in a decade sets up a strong 2022 Saudi Arabia’s economy expanded by a robust 2.2% q/q in the first quarter of the year, which translated into year-on-year growth of 9.6% – the fastest pace recorded since 2011. With oil production to …
3rd May 2022
Tighter global monetary conditions and spillovers from the war in Ukraine have caused public debt problems to worsen in several emerging markets, and the MENA region is not immune to this. Within the region, Tunisia’s public debt position is most fragile …
28th April 2022
Oman to debut income tax in the Gulf Reports suggest that, despite the boost to Oman’s public finances from high oil prices, the government is sticking to fiscal tightening, with a personal income tax likely to be introduced in 2023. Under Sultan Haitham, …
Overview – The Gulf economies will be major beneficiaries from higher energy prices and our growth forecasts sit far above the consensus. Outside the Gulf, higher inflation and tighter fiscal policy will weigh on growth, while balance sheet problems are …
25th April 2022
Egypt looks to tourism to bolster FX revenues Egyptian officials appear to be hoping for a revival of the tourism sector as part of their strategy to improve the external position, but we still think that the currency will need to weaken further. The …
21st April 2022
Saudi Arabia’s economic recovery has strengthened in recent months and, with oil output set to be raised further, the economy will record its fastest rate of growth in over a decade in 2022. Final GDP figures for Q4 confirmed that the Saudi economy grew …
19th April 2022
N. Africa: some benefits from Europe’s energy war The war in Ukraine has prompted the EU to commit to reducing its dependence on Russian gas and, as we’ve highlighted before , Algeria and Egypt stand to be two key beneficiaries. So far, Italy’s Eni S.p.A …
14th April 2022
Inflation to drift higher Saudi inflation rose to 2.0% y/y in March on the back of stronger food and transport prices, and we think it will continue to strengthen over the coming months and peak at around 2.5% y/y in Q3. Data released today showed that …
Egyptian inflation rose to a near-three year high in March and will continue to pick up on the back of the spillovers from the war in Ukraine and last month’s devaluation. We now think interest rates will be hiked by a further 350bp, to 12.75%, by …
11th April 2022
Lebanon has secured a staff-level agreement with the IMF, but we think that it is highly unlikely that policymakers will push through the long list of reforms that are needed to unlock that financing. An end to the country’s crisis is still nowhere in …
8th April 2022
What now for the Egyptian pound? The Egyptian pound has remained relatively stable since last month’s devaluation , which may suggest it has reached its fair value. But we still think policymakers need to move to a more flexible exchange rate and allow …
7th April 2022
Political developments and spillovers from the war in Ukraine have compounded concerns over Tunisia’s public finances and cemented our view that the government will default sooner rather than later. Tunisia’s President Saied has taken further steps in …
6th April 2022
Regional divergence widens on back of war in Ukraine March’s batch of whole economy PMIs were a mixed bag but further highlighted that the spillovers from the war in Ukraine are driving a divergence between the Gulf and non-Gulf economies. In Saudi …
5th April 2022
What does the end of the Expo mean for Dubai? The World Expo in Dubai closes its doors today and, while it has provided a near-term fillip to the economy, we are concerned that it will leave a legacy of overcapacity in key sectors that reignites the …
31st March 2022
The spillovers from the war in Ukraine in the form of higher commodity prices will have contrasting impacts on the Gulf and the rest of the region. We estimate higher energy prices will boost Gulf hydrocarbon export revenues by around 10% of GDP this year …
30th March 2022
Egypt buttering up the IMF? Policy announcements in Egypt this week have been pinned on the spill-overs from the war in Ukraine, but they actually have been some time in the making and may be paving the way for a fresh IMF deal. At a surprise meeting on …
24th March 2022
The spillovers from the war in Ukraine will further drive divergence in economic growth across the Middle East and North Africa. The Gulf economies stand to benefit as oil production is likely to be raised more quickly which, combined with higher oil …
23rd March 2022
The Central Bank of Egypt’s (CBE) decision to hike interest rates by 100bp, to 9.25%, and devalue the pound by 10% against the dollar suggests that policymakers have finally woken up to the worsening external position. The move could pave the way for a …
21st March 2022
Were Saudi Arabia to accept renminbi for its oil exports to China, it would be a symbolic move but it would also run into a number of economic practicalities, especially given that the Kingdom could quickly accumulate large holdings of renminbi. It may be …
18th March 2022
On the verge of Iran nuclear deal 2.0 Media reports seem to suggest a revived Iran nuclear deal could be signed off imminently, which will boost global oil supplies and could put downwards pressure on prices. It may also help to ease geopolitical tensions …
17th March 2022
Central banks in the Gulf will have to follow the US Federal Reserve in raising interest rates by virtue of their dollar pegs, which will weigh on domestic demand and recoveries in non-oil sectors. And higher debt servicing costs could cause concerns in …
16th March 2022
Inflation to increase further Saudi inflation rose to 1.6% y/y in February, and we think that it will continue to strengthen over the coming months on the back of increasing food prices, peaking at around 2.5% y/y in Q3. Data released this morning showed …
15th March 2022
Saudi Arabia has so far resisted pressure from the US to raise oil production in order to dampen prices but, with Russian oil production and exports set to be disrupted, we think that a move in this direction is now more likely than not. While the Kingdom …
11th March 2022
Russian energy embargo to provide fillip to Gulf The news this week that the West will reduce its energy imports from Russia could open the door for some of the Gulf countries to raise oil production output more quickly. This would provide a significant …
10th March 2022
Jump in inflation to prompt rate hike Egypt’s headline inflation rate climbed to a near three-year high of 8.8% y/y in February and it will continue to increase over the coming months on the back of soaring global food and energy prices, as well as the …
After a small hit to activity earlier in the year on the back of the Omicron wave, Saudi Arabia’s economic recovery appears to have strengthened more recently. The Kingdom is not overly exposed directly to the war in Ukraine, but the possibility of a …
8th March 2022
The Russia-Ukraine crisis has already pushed up global wheat prices and Egypt is particularly vulnerable due to its high dependency on imports from both countries. This could lead to a small widening of Egypt’s current account deficit, but – with …
3rd March 2022
Could war in Ukraine spell the end of OPEC+? Wednesday’s OPEC+ meeting was a straightforward affair, but the group will be keeping a close eye on possible sanctions on Russia’s energy exports that could pose a risk to the future of the OPEC+ deal. In a …
Non-hydrocarbon sector recoveries get back on track February’s batch of whole economy PMIs showed that activity in non-hydrocarbon sectors in the Gulf rebounded after the short-lived disruption from the Omicron variant. Meanwhile, the Gulf economies are …
