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Aramco IPO, Lebanon’s emergency, clouds over Dubai

The latest preparations ahead of a listing Saudi Arabia’s state-owned oil company, Aramco, are unlikely to result in a shift in oil policy. Elsewhere, Lebanese policymakers are finally acknowledging the scale of the country’s economic problems, but the markets are probably getting ahead of themselves in thinking that this will result in meaningful action. Finally, evidence is mounting that Dubai’s economy is struggling and we are increasingly concerned that this will lead to renewed debt problems.
Jason Tuvey Senior Emerging Markets Economist
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Middle East Chart Book

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Risk-off sentiment and the sell-off in EM financial markets have hit the Middle East and North Africa hard. Having been the top regional performer earlier in the year, the MSCI Arabian Markets Index has fallen by nearly 20% since mid-April. Sovereign dollar bond spreads have widened across the board, particularly in Egypt and in Tunisia – the latter appears to be hurtling toward a default. With developed market central banks set to deliver more hikes over the rest of this year and next, we suspect that equities in the Middle East and North Africa (and EMs more generally) will continue to struggle. Meanwhile, sovereign dollar bond spreads could widen further, and currencies in North Africa are likely to come under greater pressure.

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More from Jason Tuvey

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Nigeria’s recovery to remain stuck in first gear

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South Africa Consumer Prices (Apr.)

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