Egypt Consumer Prices (Jul.)

The drop in Egyptian inflation to a four year low of 8.7% y/y in July reinforces our view that the central bank will resume its easing cycle at its next meeting with a 100bp cut in the overnight deposit rate, to 14.75%. We expect that to be followed by an additional 100bp of cuts by year end.
William Jackson Chief Emerging Markets Economist
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More from Middle East

Middle East Economics Weekly

Omicron, tourism and the oil market

Low vaccine coverage and large tourism sectors mean that the non-Gulf economies are particularly vulnerable to the emergence of the Omicron variant. Meanwhile, the drop in oil prices and the likelihood that OPEC+ raises oil output more slowly than previously envisaged has increased the downside risks to our GDP growth forecasts for the Gulf.

2 December 2021

Middle East Economics Update

Saudi economy set for a strong end to the year

The economic recovery in Saudi Arabia has picked up pace and should end the year on a strong note. The emergence of the Omicron variant has clouded the outlook, but for now we expect economic growth in the Kingdom to strengthen in 2022 on the back of rising oil output.

2 December 2021

Middle East Chart Book

MENA and the Omicron risks

The Middle East and North African economies are potentially among the most vulnerable to the fallout from the Omicron strain of COVID-19. The North African economies as well as Lebanon and Jordan have low vaccination rates and large tourism sectors, leaving them exposed to the risk of tighter restrictions and curbs on international travel. In the Gulf, vaccination rates are much higher and, Dubai aside, tourism sectors are relatively small. But the fall in energy prices could prompt governments to hold off loosening fiscal policy. And producers may raise oil output more slowly, which would weigh on economic growth.

30 November 2021

More from William Jackson

Latin America Data Response

Brazil IPCA (May)

The further jump in Brazil’s headline inflation rate last month, to 8.1% y/y, makes a 75bp hike in the Selic rate (to 4.25%) next week certain and Copom will probably signal that another 75bp hike is on the cards at the subsequent meeting in August.

9 June 2021

Latin America Data Response

Mexico Consumer Prices (May)

The rise in Mexican core inflation to its highest rate in over three years in May, at 4.4%, appears mainly to be related to temporary factors. Policymakers at the central bank will probably continue to adopt cautious language but so long as core inflation falls back in the next few months, as we expect, Banxico is likely to refrain from raising interest rates.

9 June 2021

Latin America Economics Update

Revising up our Brazil growth forecast

The latest data suggest that Brazil’s economy has been much more resilient to the latest virus waves than we had anticipated and, as a result, we’re revising up our GDP growth forecast for this year to 4.5% (previously 3.0%). The brighter economic outlook means that we now think that the Selic rate will be raised from 3.50% now to 5.50% by the end of the year (previously 4.75%). We remain of the view that Copom will bring the tightening cycle to an end sooner than most currently think.

3 June 2021
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