Omicron, tourism and the oil market

Low vaccine coverage and large tourism sectors mean that the non-Gulf economies are particularly vulnerable to the emergence of the Omicron variant. Meanwhile, the drop in oil prices and the likelihood that OPEC+ raises oil output more slowly than previously envisaged has increased the downside risks to our GDP growth forecasts for the Gulf.
Jason Tuvey Senior Emerging Markets Economist
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Middle East Economics Update

Saudi economy on course for strong 2022

Saudi Arabia’s economic recovery has hit a bump in the road over the past month or so as the Omicron variant has caused activity in the Kingdom’s non-oil economy to slow. But the experience from other countries suggests this disruption will be brief and, over 2022 as a whole, we think GDP will grow by 6.5%, which is much stronger than consensus expectations.

26 January 2022

Middle East Economic Outlook

Gulf to drive a pick-up in regional growth in 2022

The recovery across the Middle East and North Africa is likely to gather pace this year, due in large part to the Gulf where rising oil output will cause GDP growth to pick up to rates well above current consensus expectations. Recoveries elsewhere are likely to lag behind amid a slow return of tourists and fiscal austerity. In Tunisia, though, fiscal consolidation is unlikely to be enough to avoid a sovereign default. Elsewhere, we think that concerns about Dubai’s corporate debt could resurface this year too.

25 January 2022

Middle East Economics Weekly

Oil prices, UAE drone attack, Gulf monetary tightening

The recent upwards revision to our oil price forecast means that the window for looser fiscal policy in the Gulf will remain open for a little longer than we anticipated. One of the factors driving oil higher this week was the Houthi drone strike in the UAE, which highlighted the risks to the Emirates’ recovery – particularly the tourism sector. Finally, central banks in the Gulf will have to follow the Fed in tightening monetary policy – which now seems likely to start in March. That will add a headwind to non-oil sectors.

20 January 2022

More from Jason Tuvey

Emerging Europe Data Response

Turkey GDP (Q3 2021)

Turkey’s economy put in another strong performance in Q3 but, as the effects of the recent currency crisis filter through, it is likely to suffer a contraction in Q4. The only crumb of comfort is that the downturn is likely to prove less severe than that which followed the 2018 crisis.

30 November 2021

Emerging Europe Economics Weekly

Lira crisis, MNB hikes, Ukraine-IMF, Romanian politics

This week has been dominated by the collapse in the Turkish lira and all our research on the crisis can be found here. While Turkey’s problems have been driven by a ‘head-in-the-sand’ approach to inflation and falls in the lira, Hungary’s central bank tightened policy further this week amid signs that officials across Central Europe are taking the inflation fight more seriously and becoming less tolerant of currency weakness. Elsewhere, the early signs are that a new grand coalition in Romania does not have the appetite for much-needed austerity. Finally, the latest tranche of IMF funds provide a welcome boost for Ukraine’s economy.
Drop-In: Why is Asia sitting out the global inflation surge? 09:00 GMT/17:00 HKT, Thursday 2nd December https://event.on24.com/wcc/r/3546145/A9D34EF592141BEFCAC819ADB40359D5?partnerref=report

26 November 2021

Emerging Europe Economics Update

Turkey & policy responses during past “sudden stops”

The Turkish lira’s sharp fall yesterday looks similar to the experience of sudden stops elsewhere. In those instances, central banks usually responded with interest rate hikes of around 600bp as well as other regulatory measures, which supported a recovery in currencies. But it seems unlikely that policymakers in Turkey will follow this script.

24 November 2021
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