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Whole Economy PMIs (Feb.)

February’s batch of whole economy PMIs showed that activity in non-hydrocarbon sectors in the Gulf rebounded after the short-lived disruption from the Omicron variant. Meanwhile, the Gulf economies are relatively well sheltered directly from the war in Ukraine, but activity in Egypt could slow in the coming months and price pressures will continue to build.
James Swanston Middle East and North Africa Economist
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Middle East Economics Update

The economic impact of the Qatar FIFA World Cup

The 2022 Football World Cup that kicks off in November will provide a significant boost to Qatar’s economy in Q4, but we doubt that the economic legacy of the tournament will live up to officials’ expectations. That raises the risk of overcapacity in key sectors and strains in the banking sector.

15 August 2022

Middle East Data Response

Saudi Arabia Consumer Prices (Jul.)

Saudi inflation picked up to 2.7% y/y in July due to strengthening underlying price pressures, but we think that it is now at or close to a peak and will gradually fall back over the rest of this year and next. If anything, the risks are skewed to the downside given the growing likelihood of a cut to the VAT rate.  

15 August 2022

Middle East Economics Weekly

Egypt: PIF steps up investment; CBE rate hike on the cards

Saudi Arabia’s Public Investment Fund has stepped up investments into Egypt this week that will help to ease external financing concerns. At the same time, electricity rationing will begin next week to free up more natural gas (which Egypt relies on for power) for export in an effort to narrow the large current account deficit. However, these measures will only provide a short-term reprieve and a weaker pound and steps to attract more direct investment will be key to putting the external position on a more sustainable footing. Meanwhile, rising inflation is likely to prompt the Central Bank of Egypt to resume its tightening cycle with a 50bp hike, to 11.75%, next Thursday.

11 August 2022

More from James Swanston

Middle East Chart Book

Energy markets present upside risk to the Gulf

The Gulf economies are key beneficiaries from the rise in energy prices caused by the Russia-Ukraine crisis. On an annualised basis, oil at $100pb would increase hydrocarbon export revenues by 7-10%-pts of GDP across the Gulf (relative to 2021). This could open the door for officials to loosen fiscal policy and support non-oil sector recoveries. Meanwhile, we think that OPEC+ will stay the course and raise its production quota by 400,000bpd on Wednesday, which will further benefit the Gulf as higher oil output will strengthen GDP via higher mining output. If anything, global energy prices are likely to rise further if the conflict continues to escalate and the Gulf producers may ramp up output more quickly to stabilise the oil market. These present upside risks to our GDP growth forecasts across the region. EM Drop-In (Thur. 3 March, 15:00 GMT): We’re discussing the impact of Russia-Ukraine on emerging markets in a special 20-minute briefing this Thursday. Registration details.

28 February 2022

Middle East Economics Weekly

What does the Russia-Ukraine crisis mean for MENA?

This morning Russia has launched an invasion of Ukraine and, for oil producers in the Gulf, the further rise in oil prices is positive for their economies. But for others in the region, the combination of a hit to tourism, heightened global risk appetite and higher commodity prices could lead to strains in the balance of payments and the public finances.

24 February 2022

Middle East Economics Update

Egypt’s public finances back under the spotlight

Egypt’s government looks set to continue its commitment to tight fiscal policy and bringing down the public debt ratio. However, we hold concerns over the increasing levels of foreign currency debt that will be vulnerable if, as we expect, the pound weakens over the coming years.

23 February 2022
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