Whole Economy PMIs (Aug.)

August’s whole economy PMIs from across the Middle East and North Africa all fell adding to the signs that activity in the region has plateaued amid fiscal austerity and continued virus containment measures. We expect recoveries from the current crisis to remain slow-going.
James Swanston Middle East and North Africa Economist
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Middle East Economics Weekly

SPR release, Turkey exposure, Egypt price adjustments

The US-led release of oil reserves earlier this week did little to bring down the price of oil as President Biden would have hoped and, if anything, could provoke OPEC+ to raise oil production more slowly than its current plans imply. Even so, the move is unlikely to drastically alter the outlook for the Gulf economies. Meanwhile, the spillovers from Turkey’s currency crisis are likely to be contained, although Tunisia's poor external position leave it vulnerable to financial contagion. Finally, Egypt’s government has announced it will cut electricity tariffs which could pose a threat to the fiscal position further down the line.

25 November 2021

Middle East Economics Update

Tunisia’s fragile external position poses risk to dinar

Tunisia’s external position is in a dire state and policymakers have little ammunition available to defend the dinar. We think the currency will depreciate by more than 10% against the euro by the end of next year and the risks lie heavily to the downside.

25 November 2021

Middle East Economics Weekly

Tunisia fiscal policy, Egypt’s private sector, COVID-19

Tunisia’s government upwardly revised its 2021 budget deficit target this week which, coupled with growing signs of it making concessions to appease the UGTT labour union, adds to our view that the public finances will continue to deteriorate and a debt restructuring will be needed. Elsewhere, Egypt government announced plans to scale back its involvement in the economy. While encouraging, there are reasons to be sceptical. And finally, COVID-19 vaccine rollouts in parts of North Africa have picked up the pace and the news of the development of an antiviral pill will provide countries with a further tool to add to the arsenal.

18 November 2021

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Middle East Data Response

Egypt Consumer Prices (Jun.)

Egypt’s headline inflation rate edged up to 4.9% y/y in June and is likely to increase further over the coming months. Against this backdrop, we think the Central Bank of Egypt (CBE) will keep interest rates on hold until later in the year.

8 July 2021

Middle East Data Response

Whole Economy PMIs (Jun.)

June’s whole economy PMIs for the Gulf were a mixed bag, although one common thread was that weaker external demand offset a pick up in domestic demand. Strong vaccine rollouts mean that most virus restrictions will be lifted in the coming months, paving the way for a further pick-up in domestic activity.

5 July 2021

Middle East Economics Weekly

Saudi transport & labour market, Egypt CA deficit

The National Transport and Logistics Strategy launched in Saudi Arabia this week is the latest effort to boost the Kingdom’s non-oil sector, but it will raise more concerns whether resources are being misallocated. Meanwhile, the Kingdom’s unemployment rate fell further in Q1, which has been mostly driven by improving labour market outcomes for Saudi women – an encouraging sign that social reforms are having positive effect. Elsewhere, the widening of Egypt’s current account deficit to its highest level in nearly four years in Q1 reinforces our concerns that the pound is looking overvalued.

1 July 2021
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