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What to expect in MENA in 2022

We think that GDP growth in the Gulf will be stronger than most expect this year on the back of rising oil output. Elsewhere, we expect a larger depreciation of the Egyptian pound than most anticipate and, if anything, there is a growing risk of an even sharper adjustment. Meanwhile, Tunisia will continue along the path towards a sovereign default. And bad loans look set to rise in banking sectors in Qatar and the UAE, causing credit conditions to tighten.
James Swanston Middle East and North Africa Economist
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Middle East Economics Weekly

Tunisia rate hike, Saudi budget data, Egypt privatisations

Tunisia’s central bank hiked interest rates this week with policymakers almost certainly having one eye on the country’s fragile external position. But we do not think that this will prevent sharp falls in the dinar and, in turn, a sovereign default. Elsewhere, Saudi Arabia posted its largest budget surplus since 2013 in Q1 on the back of high oil prices and continued tight fiscal policy. If oil prices remain high, though, the proverbial purse strings are likely to be loosened, supporting activity in the non-oil sector. Finally, more details emerged of Egypt’s forthcoming privatisation drive with the government planning to remove itself from a whole swathe of sectors.

19 May 2022

Middle East Economics Update

Saudi set for bumper GDP growth this year

Saudi Arabia’s economy grew at its fastest pace in a decade in Q1 and we think this strength will carry on over the rest of this year. The combination of rising oil output and the increasing likelihood of looser fiscal policy underpin our above-consensus forecast for the Kingdom’s economy to grow by 10% in 2022.

18 May 2022

Middle East Economics Update

Saudi inflation to stay in check, risks lie to downside

Headline inflation in Saudi Arabia rose to 2.3% y/y in April and we think that it will continue to accelerate over the coming months. Unlike in other parts of the emerging world, however, inflation will not surge to multi-year highs and, if anything, the risks to our inflation forecast lie to the downside.

18 May 2022

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Middle East Data Response

Egypt Consumer Prices (Dec.)

Egypt’s headline inflation rate rose to 5.9% y/y in December and it is likely to increase further over the coming months, peaking around the mid-point of the central bank’s target range in Q2. This, coming against the backdrop of Fed tightening and probable downward pressure on the pound, means that interest rate hikes seem increasingly likely towards the end of this year and into 2023.

10 January 2022

Middle East Economics Weekly

OPEC+ meeting, Gulf tightens restrictions, Egypt budget

This week’s OPEC+ meeting turned into a fairly straightforward affair with the group raising output as planned, but if we’re right in expecting oil prices to drop back, the window for governments in the Gulf to loosen fiscal policy will shut. Meanwhile, the emergence of the Omicron variant has prompted the Gulf to tighten restrictions, although South Africa’s experience suggests the ensuing economic impact may be short lived. Elsewhere, Egypt’s budget for FY2022/23 showed officials are set to keep policy tight which will weigh on the recovery.

6 January 2022

Middle East Economics Update

Omicron puts a small bump on the road to recovery

December’s batch of whole economy PMIs showed that activity in non-oil sectors in the Gulf softened due to the uncertainty created by the emergence of the Omicron variant. Restrictions have been tightened in recent weeks, but the experience from other countries is that the economic hit may prove short-lived.

5 January 2022
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