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Saudi oil output cuts, Egyptian inflation, Tunisian polls

With one eye on the upcoming Aramco IPO and the fiscal position under strain, the odds of the Saudi government pushing for deeper oil production cuts are shortening. Meanwhile, the decline in Egyptian inflation to a six-year low in August supports our long-held view that inflation and interest rates would fall sharply. Finally, the first round of voting in Tunisia’s presidential election takes place on Sunday, but whoever forms the next government faces an uphill battle to restore macroeconomic stability.
Jason Tuvey Senior Emerging Markets Economist
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Middle East Economics Weekly

Egypt’s prolonged IMF talks, OPEC+ fallout

Egypt’s Finance Minister Mohamed Maait argued this week that any financing agreement with the IMF would be much smaller than the $15bn suggested by some analysts but, if anything, the drawn out nature of the talks, coupled with recent policy reforms, could hint that Egypt does not want IMF funding at all. Elsewhere, the decision by OPEC+ to raise oil output quotas by 100,000bpd on Wednesday underwhelmed many – particularly after President Biden’s trip to Jeddah – and suggests the group is taking a more restrained approach to raising output amid the global economic slowdown.

4 August 2022

Middle East Data Response

PMIs (Jul.)

July’s batch of PMIs were a mixed bag, but the readings reinforce our view that activity in non-oil sectors in the Gulf remains strong. Meanwhile, there were further signs that price pressures are easing. EM Drop-In (4th August, 10:00 ET/15:00 BST): Join our monthly online session on the big issues in emerging markets. In this 20-minute briefing, the team will be answering your questions about debt risks amid global tightening, the latest on the inflation outlook and much more. Register now. ​

3 August 2022

Middle East Economics Update

Egyptian pound has a lot further to fall

Spillovers from the war in Ukraine have caused Egypt’s large current account deficit to widen this year and, with the country struggling to attract stable forms of external financing, officials will need to stick to their shift to a flexible exchange rate in order to restore macroeconomic stability. The result is that we think the pound will need to weaken to around 25/$ (from 18.9/$ now) by the end of 2024. EM Drop-In (4th August, 10:00 ET/15:00 BST): Join our monthly online session on the big issues in emerging markets. In this 20-minute briefing, the team will be answering your questions about debt risks amid global tightening, the latest on the inflation outlook and much more. Register now.

1 August 2022

More from Jason Tuvey

Emerging Europe Economics Weekly

Lira touches new low, CEE bond yield divergence

It's been a rocky week for the Turkish lira amid more changes at the central bank and political upheaval regarding a possible link between politicians and organised crime. This, coming alongside high inflation, has reduced the chances of an interest rate cut at the next meeting in June. Meanwhile, local currency bond yields have diverged in Central Europe recently, but we don't think this will continue and see scope for further rises in yields over the coming years, particularly in Czechia.

28 May 2021

Africa Economics Update

Nigeria’s recovery to remain stuck in first gear

The pick-up in Nigeria’s GDP growth in Q1 was driven in large part by the oil sector and rising oil output will support a further acceleration in growth over the coming quarters. But FX restrictions, limited fiscal support and a very slow vaccine rollout mean that the recovery is likely to remain stuck in the slow lane.

24 May 2021

Africa Data Response

South Africa Consumer Prices (Apr.)

The jump in South Africa’s headline inflation in April, to 4.4% y/y, was driven by energy price effects but there were signs that broader price pressures are starting to build. But even so, we think that the Reserve Bank will keep rates on hold for longer than investors currently expect in order to support the economy.

19 May 2021
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