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Egypt Consumer Prices (Apr.)

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 continue to rise over the rest of this year and prompt the central bank (CBE) to hike interest rates further – we have pencilled in 350bp of hikes by the end of this year, to 12.75%, which is more than the consensus expects. China Drop-In (12th May, 09:00 BST/16:00 SGT): Join our China and Markets economists for a 20-minute discussion about near to long-term economic challenges, from zero-COVID disruptions to US-China decoupling. Register now.
James Swanston Middle East and North Africa Economist
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Middle East Economics Update

SAMA likely has more to do to ease liquidity concerns

Reports that the Saudi Central Bank (SAMA) has injected liquidity into the banking sector appears to be a consequence of a lack of FX intervention (despite high oil prices), tight fiscal policy and strong credit growth. SAMA appears keen to sustain robust lending growth, but that will probably require it to maintain its focus on providing liquidity to banks, rather than draining it, over the coming months. EM Drop-In (Thurs, 7th July): Join our economists for their regular monthly briefing on the hot stories in EMs – and those that aren’t getting the attention they deserve. In this 20-minute session, topics will include the outlook for EM FX markets after the recent sell-offs. Register now.

30 June 2022

Middle East Economics Update

Gulf a bright spot

We think that rising oil production and high global energy prices will result in rapid GDP growth this year and next across the Gulf economies. Growth is likely to be well above consensus expectations.

28 June 2022

Middle East Chart Book

Region’s financial markets routed

Risk-off sentiment and the sell-off in EM financial markets have hit the Middle East and North Africa hard. Having been the top regional performer earlier in the year, the MSCI Arabian Markets Index has fallen by nearly 20% since mid-April. Sovereign dollar bond spreads have widened across the board, particularly in Egypt and in Tunisia – the latter appears to be hurtling toward a default. With developed market central banks set to deliver more hikes over the rest of this year and next, we suspect that equities in the Middle East and North Africa (and EMs more generally) will continue to struggle. Meanwhile, sovereign dollar bond spreads could widen further, and currencies in North Africa are likely to come under greater pressure.

24 June 2022

More from James Swanston

Middle East Economics Update

Egypt’s external strains still a risk despite devaluation

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 move), prompting a fresh build up of external imbalances and the need for further (disorderly) falls in the currency down the line.

9 May 2022

Middle East Data Response

S&P Global PMIs (Apr.)

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. China Drop-In (12th May, 09:00 BST/16:00 SGT): Join our China and Markets economists for a 20-minute discussion about near to long-term economic challenges, from zero-COVID disruptions to US-China decoupling. Register now.

9 May 2022

Middle East Economics Weekly

OPEC+ and the Russian oil embargo, GCC follows Fed

The EU’s plans to phase out imports of Russian oil would increase the chances that the Gulf economies raise oil output more quickly. This would provide a significant fillip to economic recoveries this year. Meanwhile, by virtue of their dollar pegs, central banks in the Gulf followed the US Fed in raising interest rates and will have to continue tightening. Even so, with oil prices very high, it seems more likely that credit growth in the region will strengthen.
EM Drop-In (5th May, 10:00 EDT/15:00 BST): Join Shilan Shah for our latest monthly session on the big macro and markets stories in EMs. This month, Shilan and the team will be talking Russian gas, FX weakness and surging food prices. Register now

5 May 2022
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