Iran tensions hit markets, Tunisia’s external risks mount

Mounting friction between the US and Iran has dominated the news flow this week and weighed on financial markets across the MENA region. Investors seem to be most concerned that Lebanon will get caught in the crosshairs. Meanwhile, data released this week showed that Tunisia’s trade deficit widened markedly in April, underlining the country’s economic vulnerabilities. Finally, recent financial market wobbles and talk of subsidy cuts mean that we now expect Egypt’s central bank to keep interest rates on hold, rather than cut them, at next week’s MPC meeting.