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Egypt Consumer Prices (Nov.)

Egypt’s headline inflation rate dropped to 5.6% y/y in November and, while we think inflation will rise in the coming months, it is likely to be at the lower end of the central bank’s 7±2% target range on a more sustained basis from Q2 next year. Against that backdrop, Egypt’s central bank is likely to be one of the few in the world that will cut interest rates in 2022 (probably in the second half of the year).
James Swanston Middle East and North Africa Economist
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Middle East Economics Weekly

World Bank food loans, OPEC, SAMA liquidity injection

Egypt and Tunisia received loans from the World Bank this week to help them face rising global food prices, but the loans will not cover all of the increase in imports and alleviate strains in balance sheets. Elsewhere, despite no decision being made at today’s meeting, OPEC+ could remove quotas from September. That would provide a major fillip to GDP growth in the Gulf economies over the next few years. And finally, the Saudi central bank injected funds into the local banking sector to ease liquidity concerns but more may be required in order to support strong credit growth.
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

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

More from James Swanston

Middle East Economics Update

Energy market poses downside risk to the Gulf

OPEC+ left the door open last week to change its oil output policy before the next meeting and, if output is raised more slowly or not at all, this would knock GDP growth back mechanically in the Gulf – plausibly by around 0.5%-pts next year. At the same time, if oil prices drop further than we expect, Oman and Bahrain will have to tighten fiscal policy even further and probably rely on further financial assistance from other Gulf countries.

8 December 2021

Middle East Economics Update

Gulf ends 2021 strongly but Omicron a key threat

November’s batch of whole economy PMIs showed that non-oil sectors in the Gulf continued their recent strong trend, but the emergence of the Omicron variant – and threat of tighter restrictions – presents a clear downside risk to our above-consensus 2022 growth forecasts.

7 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
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