Middle East

Middle East Economics Weekly

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 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

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
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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.

Middle East Economics Weekly

Lebanon finally gets a government, Saudi education plans

The news that Lebanon finally formed a new government this week came as welcome relief amid the country’s economic, political and humanitarian crises. But there are still plenty of big hurdles to clear before the country emerges from its crisis. Elsewhere, the Saudi government is set to launch reform of the Kingdom’s education sector – an area of Vision 2030 we have long argued had been lagging.

Middle East Economics Weekly

Algosaibi deal, Egypt and COVID, UAE Projects of the 50

One of Saudi Arabia’s largest conglomerates, the Algosaibi group, is on the cusp of securing a debt restructuring agreement with its creditors, a sign that recent reforms are helping to speed up bankruptcies. Elsewhere, Egypt’s COVID-19 situation has deteriorated recently and the government looks set to tighten restrictions, which will weigh on the economic recovery. And finally, the UAE's government launched the “Projects of the 50” programme this week that aims to further cement the Emirate's advantage over the rest of the Gulf.

Middle East Economics Weekly

OPEC+ on track, UAE eases restrictions with Expo in sight

This month’s OPEC+ meeting passed without much fanfare as the recent rebound in oil prices prompted the group to push ahead with raising oil output, which will help to lift the Gulf economies further. Meanwhile, the further fall in virus cases in the UAE in recent weeks has prompted officials to ease restrictions as the start of the World Expo nears, but the past week has also brought a reminder that Dubai’s troubles with its large corporate debts are far from over.

Middle East Economics Weekly

Egypt’s COVID outbreak, Tunisia’s president tightens grip

Fears are growing that Egypt is on the cusp of a fresh wave of COVID-19 driven by the Delta variant, but past experience suggests that restrictions will remain light touch and there is growing hope that the vaccine rollout will speed up in the coming months. Elsewhere, Tunisia’s President Kais Saied appears to be tightening his grip on power and leading the country back towards autocracy. As well as the risk that this pushes Tunisia closer to a debt restructuring, the fresh erosion of the country’s institutions will weigh on long-term economic prospects.

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