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The overnight strikes by Israel on Iran mark a major escalation in the conflict in the region and, with the oil market tighter than it was a few months ago, the risks to oil prices look more balanced than we’d previously thought (rather than skewed to the …
13th June 2025
The most frequent question we received from clients during recent meetings in the Gulf was whether lower oil prices would lead to a sharp slowdown in Saudi Arabia’s non-oil sector akin to that in 2014-16. We do expect fiscal consolidation to lead to …
5th June 2025
May’s batch of PMIs across the Gulf point to a softer Q2 for non-oil sectors and the backdrop of lower oil prices will likely result in less fiscal support and weaker confidence that add to the economic headwinds. In contrast, Egypt’s improved external …
4th June 2025
In this Update, we answer several key questions about how the US Court of International Trade (CIT) tariff ruling might affect the US and other economies. The outlook may now rest on the decision of the Republican-stacked Supreme Court. The upside risks …
29th May 2025
The latest low-profile data suggest that Saudi Arabia’s non-oil economy has started to lose momentum. And with the shift to a more aggressive oil output policy causing oil prices to fall, further fiscal consolidation is in the pipeline, which will weigh …
28th May 2025
Credit growth in the UAE has boomed, fuelling a sharp rise in property prices, particularly in Dubai. Prices are now at risk of a correction which, in the past, has fed into banking and debt worries in the UAE. But there are reasons to think that banks …
20th May 2025
The recent climbdown has left the effective US tariff rate on the rest of the world at around 15% as opposed to the 27% which was threatened at the height of this year’s trade war. While this is still the highest since the 1930s, it is unlikely to cause a …
13th May 2025
Global Trade Stress Monitor …
The US and China have each suspended for 90 days all but 10% of their Liberation Day tariffs and cancelled other retaliatory tariffs. This is a substantial de-escalation. However, the US still has much higher tariffs on China than on other countries and …
12th May 2025
Saudi Arabia has shifted back towards an oil policy of aggressively raising oil output to recapture market share and the Kingdom’s strong balance sheet means that it can “live with a prolonged period of low oil prices” as officials have suggested. Oil …
8th May 2025
Oil prices have now fallen by about 18% since ‘Liberation Day’, and one could make the case for them being in oversold territory – particularly if US tariffs are rowed back further, as we expect. But further signs that Saudi Arabia is willing to push oil …
1st May 2025
Saudi Arabia’s economy enjoyed a relatively strong start to the year underpinned by its non-oil sector. But while GDP growth will accelerate this year as oil output rises, the coinciding slip in oil prices is already resulting in a firmer turn to fiscal …
28th April 2025
The Central Bank of Egypt (CBE) decided to cut interest rates on Thursday and we think monetary conditions will be loosened a lot further than most expect over the course of this year. That said, administered price hikes and spillovers of the US-China …
22nd April 2025
The recently-announced fiscal plan in Bahrain is a welcome shift towards fiscal consolidation, but there’s a high risk of slippage and the public debt dynamics are alarming. Although other Gulf states would almost certainly step in if Bahrain faced major …
14th April 2025
President Trump’s trade war has created material downside risks for the global economy. Our forecasts assume that tariffs on most countries outside China will stay at 10% and retaliation by other governments will be moderate. In this scenario, global GDP …
10th April 2025
Some oil producers, such as the UAE and Kuwait, should be able to easily weather a period of low oil prices. But a sustained decline in prices would be a bigger challenge for Saudi Arabia, which would need to tighten fiscal policy, and producers with weak …
9th April 2025
Oil prices have now fallen well below the level needed to balance current accounts across much of the Gulf, which may raise concerns about the sustainability of the region’s dollar pegs. And, indeed, there are some tentative signs of pressure on pegs. …
March’s batch of PMIs across much of the Middle East and North Africa came in softer as worries about a global trade war weighed on activity. Those concerns will have only mounted in the wake of President Trump’s tariff announcement last week. And with …
7th April 2025
President Trump’s tariffs, retaliation by China, and OPEC+’s decision to accelerate the pace of oil output increases have caused the price of Brent crude to tumble to its lowest level in four years. If the Gulf states persist with the production plans set …
4th April 2025
We hosted two online Drop-In sessions on 3 rd April to discuss the fallout from President Trump’s Liberation Day tariff announcement. (See a recording here .) This Update contains answers to some of the questions that we received and links to several more …
3rd April 2025
Spillovers from the war in Gaza and threats of cuts to foreign assistance from the US have thrown the spotlight onto Jordan’s shaky balance of payments and public finances. For now, we think that the dollar peg will remain intact, and a sovereign default …
2nd April 2025
In this Update, we answer several key questions about how the announced 25% tariffs on US imports of autos and parts might affect the global economy and the US itself. Mexico, Slovakia and Korea are most exposed with up to 1.6% of GDP at risk. But the …
27th March 2025
A combination of stronger oil output and a thriving non-oil economy will support stronger growth in the UAE’s economy this year, helping it to retain its crown as the fastest growing economy in the Gulf. The UAE has continued to abide by OPEC+ policy, in …
25th March 2025
February’s batch of PMIs across the Gulf were generally softer and we think that non-hydrocarbon sectors in the Gulf will record weaker growth this year. In contrast, Egypt’s economy appears to be recovering from its slowdown last year induced by shift …
5th March 2025
The news that Aramco, Saudi Arabia’s state-owned oil company, will cut its dividend payout this year will put a dent in the Kingdom’s public finances and, together with a likely decline in the state’s oil revenues, may ratchet up pressure for more fiscal …
4th March 2025
OPEC+’s plan to increase oil output by 2.2m barrels per day over the next 18 months or so risks saturating the global market and highlights the downside risks to our already below-consensus oil price forecasts. Despite ongoing tensions within OPEC+ about …
The events of the past two weeks have called into question whether the US is severing ties not just with adversaries such as China but also allies, including Canada, Mexico and the European Union. This would radically alter the shape of the fractured …
Qatar’s economy will be stuck in the slow lane for much of 2025 as non-hydrocarbon activity slows and LNG output remains constrained. But the North Field will start to come online from Q4 and provide a sizeable boost to growth, which is likely to reach …
26th February 2025
Saudi Arabia’s real estate sector is in the midst of a boom and affordability among Saudi citizens for housing is becoming increasingly stretched, which may tempt the authorities to loosen lending criteria in a bid to meet their Vision 2030 targets for …
19th February 2025
Saudi Arabia’s economic growth will accelerate this year as the Kingdom starts to unwind oil production cuts from April. But while the Kingdom’s non-oil sector started the year on a strong footing, tight fiscal and monetary policy will weigh on growth …
11th February 2025
The renewable rollout in Saudi Arabia is set to accelerate on the back of cheap solar panel imports from China. Given that Saudi Arabia is one of a few countries that directly burns crude oil for electricity, this could add further downward pressure on …
5th February 2025
India’s outbound tourism market is poised to become one of the world’s largest over the coming years. The Maldives and the UAE are arguably the biggest beneficiaries, though Oman and Thailand are well placed to take advantage too. Other EMs – particularly …
27th January 2025
Egypt’s economy has struggled over the past year due to the effects of a weak pound, high inflation, and tighter fiscal and monetary policy, but there have been signs recently that a recovery is taking hold. We expect GDP growth will strengthen, and by …
22nd January 2025
Saudi Arabia’s government has been the largest EM issuer of hard currency debt over the past few years and this Update considers what will happen to the Kingdom’s public debt burden under different scenarios for oil prices. The overall conclusion is that …
20th January 2025
The improvement in Egypt’s macroeconomic stability since March’s policy shift has resulted in a surge in capital inflows on a similar scale to that which followed the 2016 devaluation. But if signs emerge that the authorities are delaying reforms, there’s …
8th January 2025
The Cold War was defined by geopolitical blocs – the Soviet or Eastern bloc against the Western bloc. Geopolitics retreated with the collapse of the Soviet Union. The period from the early-1990s to the early-2010s was instead an era of globalisation: most …
7th January 2025
Saudi Arabia’s constrained approach to oil policy is here to stay until April and, coupled with the turn to fiscal consolidation, means growth will pick up by less than others expect in 2025. The final estimate of Saudi GDP showed that the pace of …
19th December 2024
The fall of Syria’s President Bashar al-Assad has been warmly received by many, at least outside Russia and Iran, but a key lesson from the other Arab Spring countries is that hopes for a shift towards a liberal, Western-style democracy are likely to be …
9th December 2024
While today’s decision by OPEC+ to delay the unwinding of some of its oil production cuts until April 2025 buys the group some time, the backdrop of weak global oil demand means that it could easily find itself back in a similar position in three months’ …
5th December 2024
While energy market fundamentals point to oil prices falling a bit further and prices of European natural gas and Asian LNG remaining higher than before the Russia-Ukraine war, the uncertain geopolitical backdrop is a major wildcard for energy markets. Of …
3rd December 2024
We held an online session on US import tariffs on 26th November. (See a recording here ). In this Update we answer the questions we were most asked. What are Trump’s motives for threatening tariffs and will he follow through? Trump has spoken about using …
29th November 2024
The economic impact of the Israel-Hezbollah ceasefire hinges on whether the deal holds and whether it sets the stage for a broader de-escalation of the regional conflict. If it does, that would allow Lebanon’s shattered economy to recover and ease fiscal …
27th November 2024
President-elect Donald Trump’s first threatened tariffs since the election are designed to extract concessions on drug trafficking and illegal border crossings, which means it may be possible for the countries targeted – Canada, Mexico and China – to head …
26th November 2024
Morocco’s weaker economic performance this year is likely to be a blip. Buoyed by low and stable inflation, looser monetary policy, and a burgeoning manufacturing sector, we expect Morocco’s economy to grow by around 5% in 2025 and 2026, which is faster …
21st November 2024
It seems likely that the US will step up sanctions enforcement on Iran’s oil trade, though the oil market should be able to absorb this. The much greater risk for oil prices is a more dramatic shift in the pro-Israel/anti-Iran stance that broadens the …
12th November 2024
A victory for Donald Trump in the US election would probably result in higher US Treasury yields and a stronger dollar. That’s an environment in which central banks in EMs with strained balance sheets (notably Turkey) could hike rates and others that are …
24th October 2024
Saudi Arabia’s economy is making a steady recovery as solid growth in the non-oil sector offsets low oil production. Growth will continue to pick up over the coming quarters, but the drivers will change. Oil output is set to rise, potentially sharply, …
The boom in bank lending in Qatar in the 2010s has unwound so far in a relatively orderly manner. Banks are well capitalised and are able to absorb a far greater rise in non-performing loans than we have seen. Still, there are lingering vulnerabilities …
22nd October 2024
We held an online Drop-In session last week to discuss progress on Saudi Arabia’s Vision 2030 reform programme and the implications for the Kingdom’s economic outlook. (An on-demand recording is available here and an in-depth Focus here .) This Update …
15th October 2024
Although the focus in the oil market has shifted to geopolitical risks and potential short-term supply disruptions, just as importantly, we think the possibility that Saudi Arabia could open the floodgates has increased in recent weeks alongside reports …
14th October 2024
