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Saudi economic recovery gets back on track

After a small hit to activity earlier in the year on the back of the Omicron wave, Saudi Arabia’s economic recovery appears to have strengthened more recently. The Kingdom is not overly exposed directly to the war in Ukraine, but the possibility of a faster increase in oil production, coupled with the surge in global oil prices, mean that the risks to our already above consensus GDP forecast lie to the upside.
James Swanston Middle East and North Africa Economist
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Middle East Data Response

Egypt Consumer Prices (Jul.)

Egypt’s headline inflation rate picked up to a three-year high of 13.6% y/y in July and we think it will remain above the Central Bank of Egypt’s target range until early 2024. Greater flexibility of the pound has taken some pressure off policymakers to hike interest rates aggressively, but we still think rates will rise a further 150bp, to 12.75%, by the end of this year.

10 August 2022

Middle East Economics Update

Qatar’s LNG boost still a few years away

With Russia tightening its squeeze on supply of gas to Europe, governments are turning their attention to other major gas exporters such as Qatar to try to fill the gap. But Qatar’s gas sector is already operating close to capacity and, while the North Field expansion that comes online from 2025 will boost the country’s LNG capacity by over 60%, this wouldn’t be a panacea for Europe’s gas shortages. In view of the wider interest, we are also sending this MENA Update to clients of our Energy and Emerging Europe Services.

9 August 2022

Middle East Economics Weekly

Egypt’s prolonged IMF talks, OPEC+ fallout

Egypt’s Finance Minister Mohamed Maait argued this week that any financing agreement with the IMF would be much smaller than the $15bn suggested by some analysts but, if anything, the drawn out nature of the talks, coupled with recent policy reforms, could hint that Egypt does not want IMF funding at all. Elsewhere, the decision by OPEC+ to raise oil output quotas by 100,000bpd on Wednesday underwhelmed many – particularly after President Biden’s trip to Jeddah – and suggests the group is taking a more restrained approach to raising output amid the global economic slowdown.

4 August 2022

More from James Swanston

Middle East Economics Update

Egypt, the war in Ukraine and wheat

The Russia-Ukraine crisis has already pushed up global wheat prices and Egypt is particularly vulnerable due to its high dependency on imports from both countries. This could lead to a small widening of Egypt’s current account deficit, but – with subsidies set to be cut back – the biggest impact is likely to come via higher inflation. That will hit household spending and also raises the risk of fresh social unrest.

3 March 2022

Middle East Economics Weekly

OPEC+, Suez Canal toll hike, Moroccan drought

Oil prices have risen even further since yesterday's OPEC+ meeting as investors’ concerns about disruptions to oil supplies from Russia mount. If sanctions are imposed on Russia's energy exports, there is clearly a risk that the current OPEC+ deal will be abandoned and that the Gulf countries will ramp up oil output. Elsewhere, Egypt announced it would hike Suez Canal tolls which will help to raise key FX revenues which may help to ease concerns over the current account deficit. And finally, Morocco is facing its worst drought in 30 years which will not only weigh on the economic recovery, but will also hit the country’s twin budget and current account deficits.

3 March 2022

Middle East Data Response

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.

3 March 2022
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