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Omicron, tourism and the oil market

Low vaccine coverage and large tourism sectors mean that the non-Gulf economies are particularly vulnerable to the emergence of the Omicron variant. Meanwhile, the drop in oil prices and the likelihood that OPEC+ raises oil output more slowly than previously envisaged has increased the downside risks to our GDP growth forecasts for the Gulf.
Jason Tuvey Senior Emerging Markets Economist
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Middle East Economics Update

What Sheikh Khalifa’s passing means for the UAE

The passing of the UAE’s President Sheikh Khalifa bin Zayed al Nayhan today is unlikely to alter the economic outlook with GDP set to grow rapidly amid stronger oil output and looser fiscal policy. That said, the next president will face several challenges, including the country’s relationship with OPEC+, ensuring the UAE remains the region’s leading financial and logistics hub and dealing with Dubai’s debts.

13 May 2022

Middle East Economics Weekly

Egypt’s budget, UAE welfare, Lebanon election

Egypt’s draft budget reiterated the government’s commitment to keeping fiscal policy tight but, with debt servicing costs rising sharply and the currency set to weaken, there are increasing concerns over Egypt’s debt dynamics. Elsewhere, the UAE unveiled an unemployment insurance scheme this week that will benefit both Emiratis and non-Emiratis as officials seek to ward off competition for the country's role as the region's financial and trading hub. Finally, elections in Lebanon this weekend are unlikely to provide fresh impetus to efforts to secure IMF financing. EM Drop-In (17th May): Do current EM debt strains point to a repeat of the kinds of crises seen in the 1980s and 1990s? Join our special briefing on EM sovereign debt risk on Tuesday. Register now.  

12 May 2022

Middle East Data Response

Egypt Consumer Prices (Apr.)

Egypt’s headline inflation rate jumped to a near-three year high of 13.1% y/y in April on the back of the spillovers from the war in Ukraine and effects of the devaluation of the pound. Inflation will continue to rise over the rest of this year and prompt the central bank (CBE) to hike interest rates further – we have pencilled in 350bp of hikes by the end of this year, to 12.75%, which is more than the consensus expects. China Drop-In (12th May, 09:00 BST/16:00 SGT): Join our China and Markets economists for a 20-minute discussion about near to long-term economic challenges, from zero-COVID disruptions to US-China decoupling. Register now.

10 May 2022

More from Jason Tuvey

Emerging Europe Data Response

Turkey GDP (Q3 2021)

Turkey’s economy put in another strong performance in Q3 but, as the effects of the recent currency crisis filter through, it is likely to suffer a contraction in Q4. The only crumb of comfort is that the downturn is likely to prove less severe than that which followed the 2018 crisis.

30 November 2021

Emerging Europe Economics Weekly

Lira crisis, MNB hikes, Ukraine-IMF, Romanian politics

This week has been dominated by the collapse in the Turkish lira and all our research on the crisis can be found here. While Turkey’s problems have been driven by a ‘head-in-the-sand’ approach to inflation and falls in the lira, Hungary’s central bank tightened policy further this week amid signs that officials across Central Europe are taking the inflation fight more seriously and becoming less tolerant of currency weakness. Elsewhere, the early signs are that a new grand coalition in Romania does not have the appetite for much-needed austerity. Finally, the latest tranche of IMF funds provide a welcome boost for Ukraine’s economy.
Drop-In: Why is Asia sitting out the global inflation surge? 09:00 GMT/17:00 HKT, Thursday 2nd December https://event.on24.com/wcc/r/3546145/A9D34EF592141BEFCAC819ADB40359D5?partnerref=report

26 November 2021

Emerging Europe Economics Update

Turkey & policy responses during past “sudden stops”

The Turkish lira’s sharp fall yesterday looks similar to the experience of sudden stops elsewhere. In those instances, central banks usually responded with interest rate hikes of around 600bp as well as other regulatory measures, which supported a recovery in currencies. But it seems unlikely that policymakers in Turkey will follow this script.

24 November 2021
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