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Whole Economy PMIs (Dec.)

Whole economy PMIs for December suggested that activity in Saudi Arabia’s non-oil sector slowed at the end of last year, a sign that fresh fiscal austerity is already starting to take its toll. Meanwhile, price pressures remained weak in Egypt leaving the door open for the central bank to loosen monetary policy further over the next twelve months.
James Swanston Middle East and North Africa Economist
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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.

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23 June 2022

Middle East Economics Update

Egypt public finance risks contained… for now

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More from James Swanston

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Egyptian pound’s rally to go into reverse

The Egyptian pound has appreciated significantly since the devaluation in 2016 and there are signs that the strength of the currency is weighing on the country’s external competitiveness. We forecast a gradual depreciation from around 15.6/$ now to 17/$ by the end of next year, which is a larger fall than most expect. But there is a risk that policymakers have not learnt from their past mistakes and support an overvalued exchange rate for too long, leading to a sharper adjustment further down the line.

15 June 2021

Middle East Data Response

Saudi Arabia Consumer Prices (May)

The rise in Saudi inflation to 5.7% y/y in May is likely to be followed by another increase in June, but the headline rate will fall sharply in July to around 1.0-1.5% y/y as the effects of last year’s VAT hike fade. Inflation will probably remain subdued over the rest of this year and through 2022-23.

15 June 2021

Middle East Economics Weekly

Egypt vaccine, MENA tourism, Iran nuclear talks

Egypt’s domestic vaccine production has got underway, but the country has a very long way to go before it can lift virus-related restrictions on a sustained basis. Egypt and Bahrain were added to the UK’s travel red list, adding to our view that recoveries in tourism sectors in the region will be sluggish. Finally, recent comments from US Secretary of State Antony Blinken have reduced hopes that Iran’s nuclear deal can be revived soon.

10 June 2021
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