A dive into Saudi Arabia’s balance of payments

A rise in oil prices has supported an improvement in Saudi Arabia’s current account position, which should be in surplus over the coming years. That, combined with signs that the sovereign wealth fund is slowing its international investments, will help to limit any further decline in the Kingdom’s foreign exchange reserves. The result is that the dollar peg is unlikely to come under pressure any time soon.
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

Erdogan disappointed as CBRT stands pat

Turkey’s central bank (CBRT) left interest rates on hold at 19.00% today and, with inflation likely to remain elevated over the coming months and the economy having bounced back quickly from May’s lockdown, an easing cycle is unlikely to commence until the tail end of 2021.

12 August 2021

Emerging Europe Data Response

Turkey Industrial Production & Retail Sales (Jun.)

Turkey’s industrial production and retail sales figures for June confirm that the economy bounced back quickly from May’s three-week lockdown. This, coming alongside the further jump in inflation in July, means that the central bank is likely to stand pat at the MPC meeting later today.

12 August 2021

Emerging Europe Data Response

Turkey Consumer Prices (Jul.)

The further jump in Turkey’s headline inflation rate to 19.0% y/y in July is unlikely to trigger an interest rate hike but it will delay the start of an easing cycle until the back end of this year. China slowdown webinar: Join us on Thursday, 5th August for a special webinar assessing the impact of China’s economic slowdown on the global recovery. Neil Shearing will lead a discussion with economists from across our economics and markets services to assess whether investors should brace for fresh volatility with China poised for a structural deceleration. Register here for sessions at 0900 BST/1600 HKT or 1100 ET/1600 BST.

3 August 2021
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