Saudi Arabia GDP (Q1, Flash Estimate)

Saudi Arabia’s economy recorded a slight contraction in Q1 as the impact of the Kingdom’s additional voluntary output cut more than offset a further rebound in non-oil sectors. With oil output cuts now being eased and the vaccination programme gathering pace, the economic recovery should get back on track over the rest of this year.
Jason Tuvey Senior Emerging Markets Economist
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Middle East Economics Weekly

Lebanon and Tunisia face a tough task to tackle crises

The IMF confirmed this week that technical talks with Lebanon have restarted. But even before any sort of deal is reached, the government has the tough task of restructuring its defaulted Eurobond debt. And any lending from the Fund will come with a long list of reforms that will be difficult to implement. Elsewhere, Tunisia’s government has also begun talks with the IMF in hopes of securing a fresh deal and is reportedly in talks with the Gulf over financing too. But without reforms to address the deteriorating public finances, this funding would only kick the can down the road and delay a debt restructuring.

21 October 2021

Middle East Economics Update

What does the energy price surge mean for the Gulf?

Higher oil and gas revenues are likely to prompt a modest shift to looser fiscal policy in the large Gulf economies, although Bahrain and Oman will still need to stick to austerity. Meanwhile, if OPEC+ were to raise production quotas more quickly in response to the surge in global energy prices, that would pose a major upside risk to our above-consensus GDP growth forecasts.

20 October 2021

Middle East Economic Outlook

Gulf to outperform

Economic recoveries in the Gulf will continue to gather pace over the coming year on the back of successful vaccine rollouts and higher oil output, and our GDP growth forecasts lie above the consensus. Outside the Gulf, though, recoveries are likely to be slower, particularly in the more tourism-dependent economies. We think a sovereign default in Tunisia is more likely than not, and we have long-standing worries about public debt in Bahrain and Oman as well as Dubai’s corporate debts.

19 October 2021

More from Jason Tuvey

Emerging Europe Economics Update

Turkey’s inflation risks mount, CBRT to delay rate cuts

Turkish inflation hit a two-year high in June and recent domestic energy price hikes will cause it to rise even further over the next couple of months. High inflation and signs of a quick recovery from May’s lockdown mean that the central bank will probably delay the start of its easing cycle until later this year. We now expect the one-week repo rate to be lowered to 17.00% by end-2021 (previously 14.00%).

7 July 2021

Emerging Europe Data Response

Turkey Consumer Prices (Jun.)

The fresh rise in Turkey’s headline inflation rate to 17.5% y/y in June, coupled with signs of a strong rebound in activity after May’s three-week lockdown, means that an interest rate cut in the next couple of months is increasingly unlikely. An easing cycle is now more likely to commence later this year when inflation looks set to fall sharply.

5 July 2021

Emerging Europe Economics Weekly

Turkey dollarisation, Ukraine-IMF, Russia & Poland rates

Turkey’s central bank took steps this week to tackle deposit dollarisation in the banking sector, although these efforts will fail to make headway in the absence of a stronger commitment to rein in high inflation. Meanwhile, Ukraine’s government still has work to do to secure the next tranche of its IMF loan, but the economy can muddle through without help from the Fund for some time. Finally, other developments this week suggest that Poland’s central bank may stick to its recent dovish rhetoric while Russia looks like it could accelerate the pace of monetary tightening.

2 July 2021
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