Russians return to Egypt, Saudi budget deficit narrows

Egypt welcomed back Russian tourists for the first time in six years this week, but any boost to the ailing tourism sector is likely to be limited as other countries maintain travel restrictions to Egypt. Elsewhere, Saudi Arabia’s budget deficit narrowed sharply in Q2 and we think there is scope for policymakers to loosen the purse strings in order to bolster the economic recovery.
James Swanston Middle East and North Africa Economist
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Middle East Economics Weekly

SPR release, Turkey exposure, Egypt price adjustments

The US-led release of oil reserves earlier this week did little to bring down the price of oil as President Biden would have hoped and, if anything, could provoke OPEC+ to raise oil production more slowly than its current plans imply. Even so, the move is unlikely to drastically alter the outlook for the Gulf economies. Meanwhile, the spillovers from Turkey’s currency crisis are likely to be contained, although Tunisia's poor external position leave it vulnerable to financial contagion. Finally, Egypt’s government has announced it will cut electricity tariffs which could pose a threat to the fiscal position further down the line.

25 November 2021

Middle East Economics Update

Tunisia’s fragile external position poses risk to dinar

Tunisia’s external position is in a dire state and policymakers have little ammunition available to defend the dinar. We think the currency will depreciate by more than 10% against the euro by the end of next year and the risks lie heavily to the downside.

25 November 2021

Middle East Economics Weekly

Tunisia fiscal policy, Egypt’s private sector, COVID-19

Tunisia’s government upwardly revised its 2021 budget deficit target this week which, coupled with growing signs of it making concessions to appease the UGTT labour union, adds to our view that the public finances will continue to deteriorate and a debt restructuring will be needed. Elsewhere, Egypt government announced plans to scale back its involvement in the economy. While encouraging, there are reasons to be sceptical. And finally, COVID-19 vaccine rollouts in parts of North Africa have picked up the pace and the news of the development of an antiviral pill will provide countries with a further tool to add to the arsenal.

18 November 2021

More from James Swanston

Middle East Data Response

Egypt Consumer Prices (Jul.)

Egypt’s headline inflation rate rose to an eight-month high in July and is likely to drift higher over the coming months. Against this backdrop, we think the Central Bank of Egypt (CBE) will keep interest rates on hold for much of this year despite the weakness of the economy.

10 August 2021

Middle East Data Response

Saudi Arabia GDP (Q2, Flash Estimate)

The 1.1% q/q expansion in Saudi Arabia’s GDP in Q2 was driven by the unwinding of the voluntary oil output cuts and the easing of virus-related restrictions supported domestic activity. With the OPEC+ impasse now resolved oil production will be raised further and remaining virus restrictions are being relaxed, the economic recovery looks set gather pace over the second half of the year.

9 August 2021

Middle East Economics Update

Egypt: rate cuts still on the cards

The Central Bank of Egypt (CBE) kept its policy rate on hold on Thursday, and we continue to hold a non-consensus view that a fall in inflation later in the year will allow the CBE to resume its easing cycle in Q4.

6 August 2021
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