War re-escalation risk grows, Saudi GDP, Egypt inflation

The recent tit-for-tat strikes between the US and Iran haven't derailed talks over ending the war. But the risk of a miscalculation is growing, which could trigger a return to the intense hostilities of the early stages of the conflict. Meanwhile, although the final estimate of Saudi Q1 GDP data showed that the economy held up better than we had expected during the initial outbreak of the war, the Kingdom is still likely to record a steep contraction in GDP this year. Elsewhere, the fall in Egypt’s headline inflation rate in May will give the central bank confidence that, for now at least, it doesn’t need to follow many of its EM peers in hiking interest rates.