Saudi Arabia GDP (Q2, Flash Estimate)

The 1.1% q/q expansion in Saudi Arabia’s GDP in Q2 was driven by the unwinding of the voluntary oil output cuts and the easing of virus-related restrictions supported domestic activity. With the OPEC+ impasse now resolved oil production will be raised further and remaining virus restrictions are being relaxed, the economic recovery looks set gather pace over the second half of the year.
James Swanston Middle East and North Africa Economist
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Middle East Economic Outlook

Gulf to drive a pick-up in regional growth in 2022

The recovery across the Middle East and North Africa is likely to gather pace this year, due in large part to the Gulf where rising oil output will cause GDP growth to pick up to rates well above current consensus expectations. Recoveries elsewhere are likely to lag behind amid a slow return of tourists and fiscal austerity. In Tunisia, though, fiscal consolidation is unlikely to be enough to avoid a sovereign default. Elsewhere, we think that concerns about Dubai’s corporate debt could resurface this year too.

25 January 2022

Middle East Economics Weekly

Oil prices, UAE drone attack, Gulf monetary tightening

The recent upwards revision to our oil price forecast means that the window for looser fiscal policy in the Gulf will remain open for a little longer than we anticipated. One of the factors driving oil higher this week was the Houthi drone strike in the UAE, which highlighted the risks to the Emirates’ recovery – particularly the tourism sector. Finally, central banks in the Gulf will have to follow the Fed in tightening monetary policy – which now seems likely to start in March. That will add a headwind to non-oil sectors.

20 January 2022

Middle East Economics Weekly

Oil and Gulf fiscal policy, Egypt joins GBI-EM, Tunisia

We think that the recent rally in oil prices is likely to be short lived and, as prices fall back, the window for governments in the Gulf to loosen fiscal policy will shut. Elsewhere, Egypt’s inclusion in JP Morgan’s GBI-EM bond index at the end of the month could boost capital inflows, but also cause external imbalances to increase. Finally, despite some support from Saudi Arabia this week, the Tunisian government will still need to pass much-needed fiscal consolidation to repair its balance sheets. Otherwise, it will continue to edge closer to a sovereign default.

13 January 2022

More from James Swanston

Middle East Economics Update

Egypt: rate cuts still on the cards

The Central Bank of Egypt (CBE) kept its policy rate on hold on Thursday, and we continue to hold a non-consensus view that a fall in inflation later in the year will allow the CBE to resume its easing cycle in Q4.

6 August 2021

Middle East Economics Weekly

UAE vaccine rollout, Egypt and Oman subsidy reversals

The announcement that the price of state-subsidised bread in Egypt will be raised adds to our view that inflation will drift higher and that the central bank will hold off from cutting rates for now. Elsewhere, Oman’s government looks set to reverse its plans to remove electricity subsidies, which may add to concerns about the commitment to repair very weak public finances. Finally, the UAE is expanding its COVID-19 vaccine rollout as the authorities hope to support the non-oil economy and the tourism sector in particular.

5 August 2021

Middle East Data Response

Whole Economy PMIs (Jul.)

July’s whole economy PMIs painted a mixed picture with recoveries in Qatar and the UAE’s non-oil sectors picking up pace, while those in Egypt and Saudi Arabia softening. Strong vaccine rollouts and the relaxation of virus-related measures should pave the way for a strong recovery in the Gulf economies over the rest of this year whereas Egypt’s recovery is likely to lag behind.

3 August 2021
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