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Saudi oil output rebounds, expat levy, Thomas Cook

Saudi Arabia has managed to get the bulk of its oil output back online following the Abqaiq attacks but, with oil prices drifting back towards $60pb, the debate may quickly shift to the need to extend (voluntary) oil output cuts. Meanwhile, the government’s decision to assume the cost of an expat levy for the industrial sector suggests that it is prioritising short-term growth over some of the country’s deeper structural issues. Elsewhere, any impact from the collapse of Thomas Cook on tourism sectors in North Africa is unlikely to be long-lasting.
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

Middle East Economics Update

Iran: nuclear deal, elections and the economy

Negotiators appear to be closing in on an agreement to revive Iran’s nuclear deal which, if revitalised, would provide a substantial lift to Iran’s economy – it could plausibly expand by 8-10% per year in 2021-23. Higher Iranian oil output would act as a drag on global oil prices and could prompt governments in the Gulf countries to keep fiscal policy tight, weighing on their recoveries.

7 June 2021

Emerging Europe Economics Weekly

Erdogan piles on the pressure, Israel’s surprise coalition

Talk this week of rate cuts in Turkey has led to further falls in the lira and, ironically, means that the central bank will stand pat at this month's MPC meeting. In Israel, the coalition proposal formed to topple incumbent PM Benjamin Netanyahu is so fractured we don't think it will lead to major changes in economic policy. Finally, the announcement by Russia's government to de-dollarise its National Wealth Fund assets won't have an economic impact, but it is a clear move ahead of the Biden-Putin summit this month that Russia sees its future as isolated from the West.

4 June 2021

Emerging Europe Data Response

Turkey Consumer Prices (May)

The latest falls in the lira mean that, despite the fall in Turkey’s headline inflation rate to 16.6% y/y last month, the central bank (CBRT)will probably leave interest rates unchanged at this month’s MPC meeting. But the CBRT is likely to fulfil the president’s desire for monetary loosening by August.

3 June 2021
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