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Whole Economy PMIs (Jan.)

January’s batch of whole economy PMIs suggest that that economic recoveries in the region have struggled to gain more momentum at the start of this year as fresh virus outbreaks have prompted a tightening of containment measures. But vaccination programmes should enable most governments to lift restrictions by the middle of year.
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.

24 June 2022

Middle East Economics Weekly

OPEC+ policy, Egypt’s orthodox shift and FY22/23 budget

Next Thursday's OPEC+ meeting may drop some hints about the future for the group's oil output beyond September and we think that quotas are likely to be lifted. If that’s the case, the Gulf economies would be major beneficiaries. Elsewhere, comments from Egypt’s finance minister suggest that officials are becoming more receptive to a weaker pound, adding to hopes that the move to a more flexible exchange rate is the real deal. A weak currency is a concern given the growing sovereign FX debt burden, but the country’s FY2022/23 budget passed this week does at least highlight a commitment to fiscal austerity.

23 June 2022

Middle East Economics Update

Egypt public finance risks contained… for now

Egypt’s public debt dynamics look increasingly fragile due to a combination of the extremely short average maturity of its debt, rapidly rising yields, and a growing share of debt denominated in foreign currency. That said, for now, there are reasons to think that the sovereign should be able to muddle through. World with Higher Rates - Drop-In (21st June, 10:00 ET/15:00 BST): Does monetary policy tightening automatically mean recession? Are EMs vulnerable? How will financial market returns be affected? Join our special 20-minute briefing to find out what higher rates mean for macro and markets. Register now

20 June 2022

More from James Swanston

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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