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.
James Swanston Middle East and North Africa Economist
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Middle East Economics Weekly

Egypt and UAE inflation, OPEC+, austerity in Algeria

Inflation figures for Egypt showed the headline rate jumped to a 20-month high in September and we think that this will delay a turn towards interest rate cuts. Elsewhere, the UAE emerged from deflation in August amid signs that the property sector has turned a corner. But disappointing news on the number of visitors to the World Expo reinforce our bearish view on the sector. Meanwhile, the rally in oil prices has ratcheted up the pressure on the OPEC+ to raise output quotas, which would most likely involve higher quotas for the Gulf. Finally, Algeria’s turn to fiscal austerity is unlikely to be enough to prevent a sharp devaluation in the coming years.

14 October 2021

Middle East Data Response

Saudi Arabia Consumer Prices (Sep.)

Saudi inflation rose to 0.6% y/y in September and is likely to drift a little higher over the rest of this year. However, we do not envisage a significant pick up in the headline rate and inflation is likely to remain around 1.0-1.5% y/y in 2022-23.

14 October 2021

Middle East Economics Weekly

OPEC+ fallout, Oman’s upgrade, TUI cancellations

The OPEC+ meeting this week triggered a rise in oil prices and, while we expect prices to fall by next year, rising production means that overall oil export revenues for the Gulf economies should increase in 2022. In turn, that will open the window for some governments to loosen fiscal policy. The exceptions to this are Oman and Bahrain. Although Oman had its outlook upgraded by S&P this week, both governments will still need to tighten fiscal policy further. Finally, the decision by travel company TUI to cancelled flights to Tunisia and Egypt until later this month highlights that recoveries in the tourism-dependent economies will be bumpy.

7 October 2021

More from James Swanston

Middle East Economics Weekly

Unrest in Tunisia, Gulf restrictions, Egypt fuel hike

Tunisia’s President Kais Saied’s power grab on Sunday and moves over the course of this week will reinforce concerns about the future of democracy in the country and the likelihood of a sovereign debt restructuring has increased further. Elsewhere, the Gulf countries have taken a strong stance on the need for proof of COVID-19 vaccinations to access domestic services and travel internationally, although we doubt this will have a major impact on recoveries. Finally, the hike in Egyptian fuel prices this week which will push up inflation and delay the start of a monetary easing cycle
 

29 July 2021

Middle East Economics Update

Saudi economy picking up pace

Saudi Arabia’s economic recovery appears to have been quite strong in Q2 and the further easing of virus restrictions and rising oil production means that GDP growth will continue to gather steam over the rest of this year and into 2022.

29 July 2021

Middle East Economics Update

Tunisia: political turmoil further raises debt risks

The decision by Tunisia’s President Kais Saied to sack the prime minister and freeze parliament has raised serious concerns about the future of democracy in the country and couldn’t come at a worse time for the economy, which is already reeling from the effects of the pandemic. Whichever way events unfold over the coming days and weeks, the likelihood of a sovereign debt restructuring – which we have warned about for some time – has increased even further.

26 July 2021
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