Lebanon quickly approaching a crunch point

The protests in Lebanon (and policymakers’ response) underline that pushing through the austerity needed to stabilise the public finances is politically impossible. With large debt repayments due over the next year, a crunch point is approaching fast. A debt restructuring now appears inevitable and the risk of a messy outcome, involving a devaluation of the pound and severe strains in the banking sector, is rising.
Jason Tuvey Senior Emerging Markets Economist
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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.

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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

Middle East Economics Update

Central Bank of Egypt keeps rates on hold for now

The Central Bank of Egypt (CBE) kept interest rates unchanged at Thursday’s MPC meeting amid rising price pressures. However, we still think that inflation will slow in the final months of this year and re-open the door for the CBE to resume its easing cycle.

17 September 2021

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Iran: nuclear deal, elections and the economy

Negotiators appear to be closing in on an agreement to revive Iran’s nuclear deal which, if revitalised, would provide a substantial lift to Iran’s economy – it could plausibly expand by 8-10% per year in 2021-23. Higher Iranian oil output would act as a drag on global oil prices and could prompt governments in the Gulf countries to keep fiscal policy tight, weighing on their recoveries.

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Emerging Europe Economics Weekly

Erdogan piles on the pressure, Israel’s surprise coalition

Talk this week of rate cuts in Turkey has led to further falls in the lira and, ironically, means that the central bank will stand pat at this month's MPC meeting. In Israel, the coalition proposal formed to topple incumbent PM Benjamin Netanyahu is so fractured we don't think it will lead to major changes in economic policy. Finally, the announcement by Russia's government to de-dollarise its National Wealth Fund assets won't have an economic impact, but it is a clear move ahead of the Biden-Putin summit this month that Russia sees its future as isolated from the West.

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Emerging Europe Data Response

Turkey Consumer Prices (May)

The latest falls in the lira mean that, despite the fall in Turkey’s headline inflation rate to 16.6% y/y last month, the central bank (CBRT)will probably leave interest rates unchanged at this month’s MPC meeting. But the CBRT is likely to fulfil the president’s desire for monetary loosening by August.

3 June 2021
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