UAE vaccine rollout, Egypt and Oman subsidy reversals

The announcement that the price of state-subsidised bread in Egypt will be raised adds to our view that inflation will drift higher and that the central bank will hold off from cutting rates for now. Elsewhere, Oman’s government looks set to reverse its plans to remove electricity subsidies, which may add to concerns about the commitment to repair very weak public finances. Finally, the UAE is expanding its COVID-19 vaccine rollout as the authorities hope to support the non-oil economy and the tourism sector in particular.
James Swanston Middle East and North Africa Economist
Continue reading

More from Middle East

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

Whole Economy PMIs (Jul.)

July’s whole economy PMIs painted a mixed picture with recoveries in Qatar and the UAE’s non-oil sectors picking up pace, while those in Egypt and Saudi Arabia softening. Strong vaccine rollouts and the relaxation of virus-related measures should pave the way for a strong recovery in the Gulf economies over the rest of this year whereas Egypt’s recovery is likely to lag behind.

3 August 2021

Middle East Economics Weekly

Unrest in Tunisia, Gulf restrictions, Egypt fuel hike

Tunisia’s President Kais Saied’s power grab on Sunday and moves over the course of this week will reinforce concerns about the future of democracy in the country and the likelihood of a sovereign debt restructuring has increased further. Elsewhere, the Gulf countries have taken a strong stance on the need for proof of COVID-19 vaccinations to access domestic services and travel internationally, although we doubt this will have a major impact on recoveries. Finally, the hike in Egyptian fuel prices this week which will push up inflation and delay the start of a monetary easing cycle

29 July 2021

Middle East Economics Update

Saudi economy picking up pace

Saudi Arabia’s economic recovery appears to have been quite strong in Q2 and the further easing of virus restrictions and rising oil production means that GDP growth will continue to gather steam over the rest of this year and into 2022.

29 July 2021
↑ Back to top