Whole Economy PMIs (Sep.)

September’s batch of whole economy PMIs showed that recoveries in non-hydrocarbon private sectors in Saudi Arabia and Qatar gathered pace as domestic activity strengthened on the back of easing virus restrictions. In contrast, recoveries in Egypt and the UAE appear to have eased a touch at the start of Q3.
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

More from James Swanston

Middle East Economics Weekly

Oil rallies, Bahrain VAT hike, Tunisia gets a new PM

The price of oil hit its highest level in nearly three years this week and, combined with rising oil output, will help support an improvement in budget and current account positions in the Gulf. This could open the door for some governments to loosen fiscal policy. Bahrain looks set to be an exception and tighten policy by doubling the rate of VAT. Elsewhere, Tunisia’s President Kais Saied unveiled his prime minister nearly two months after his power grab. Even if a new government is formed soon, there is growing concern that addressing Tunisia’s poor public finances is not on the agenda.

30 September 2021

Middle East Economics Weekly

Qatar gas, Morocco FX purchases, Tunisian turmoil

The continued rise in global gas prices will provide a substantial boost to Qatar's export revenues and provide scope for policymakers to loosen the purse strings to support the economic recovery. Elsewhere, moves by Morocco’s central bank suggest that the currency could appreciate further. Finally, Tunisia’s President Kais Saied's moves on Wednesday add to signs that his power grab is leading to a one-man rule. This will reinforce concerns about the future of Tunisia’s democracy and the government’s capacity to service its debts.

23 September 2021

Middle East Economics Update

Dubai World Expo: near-term boost, debt risks linger

The long-awaited World Expo in Dubai will get underway next Friday and while there is likely to be some boost to the economy, this will be short lived. What’s more, as we have long warned, the Expo could leave high rates of overcapacity in Dubai’s real estate and hospitality sectors in its wake that could ultimately re-ignite concerns about the debts of the Emirate’s government-related entities.

23 September 2021
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