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OPEC+ fallout highlights rising Saudi-UAE tensions The failure of OPEC+ to reach an agreement over new output quotas has raised the risk that the deal collapses and the Gulf states ramp up production. This would mechanically lift GDP growth this year and …
8th July 2021
CBE to keep rates on hold for now as inflation drifts higher Egypt’s headline inflation rate edged up to 4.9% y/y in June and is likely to increase further over the coming months. Against this backdrop, we think the Central Bank of Egypt (CBE) will keep …
Gulf non-oil sectors set for stronger recovery over H2 June’s whole economy PMIs for the Gulf were a mixed bag, although one common thread was that weaker external demand offset a pick up in domestic demand. Strong vaccine rollouts mean that most virus …
5th July 2021
Saudi’s Transport & Logistics Strategy to fall short The National Transport and Logistics Strategy launched this week by Saudi Crown Prince Mohammed bin Salman is the latest effort to boost the non-oil sector, but it raises more concerns over whether …
1st July 2021
Saudi inflation is set to fall sharply in July as last year’s VAT hike falls out of the annual comparison. While there will be some upwards inflation pressure from the re-opening of the economy and global supply shortages, a weak recovery in demand is …
Saudi Arabia’s economic recovery seems to have got back on track in Q2 and, as virus restrictions are eased further and oil production cuts are scaled back, a strong second half of the year lies in store. The final Q1 GDP figures confirmed that the Saudi …
29th June 2021
Kuwaiti budget could be a sign of things to come Kuwait’s FY2021/22 budget that was approved this week added to signs from the Gulf that high oil prices are prompting a shift to looser fiscal policy. In a feisty parliamentary session on Tuesday, the …
24th June 2021
The price of oil has continued to rise and will help to improve balance sheets in the Gulf. With oil prices at $75pb, all Gulf economies with the exceptions of Bahrain and Oman are likely to be running current account surpluses, having run deficits in …
Virus numbers have fallen in the past few months in the MENA region and a rapid vaccine rollout should allow most of the Gulf economies, as well as Morocco, to lift restrictions further over the second half of the year. Elsewhere in the region, where the …
21st June 2021
The Central Bank of Egypt (CBE) announced it kept interest rates on hold on Thursday evening and, with inflationary pressures building, the CBE is likely to refrain from cutting rates in the near term. Even so, very high real interest rates and the …
18th June 2021
Hajj restrictions to delay the Saudi recovery The Saudi government confirmed this week that the Hajj pilgrimage will be at very limited capacity, which will weigh on the Kingdom’s economic recovery. Saudi has barred all foreign pilgrims from attending …
17th June 2021
The Egyptian pound has appreciated significantly since the devaluation in 2016 and there are signs that the strength of the currency is weighing on the country’s external competitiveness. We forecast a gradual depreciation from around 15.6/$ now to 17/$ …
15th June 2021
Rise in inflation to be short-lived The rise in Saudi inflation to 5.7% y/y in May is likely to be followed by another increase in June, but the headline rate will fall sharply in July to around 1.0-1.5% y/y as the effects of last year’s VAT hike fade. …
Egypt’s vaccine rollout still has a long way to go Egypt’s vaccine production has got underway which, the authorities hope, will allow the vaccination programme to speed up. But there is still a long way to go to achieve anything close to herd immunity …
10th June 2021
Inflation rises, but rate cuts are coming Egypt’s headline inflation rate rose to 4.8% y/y in May, the fastest pace recorded so far this year. But it remained below the lower bound of the central bank’s (CBE’s) target range, supporting our view that …
Negotiators appear to be closing in on an agreement to revive Iran’s nuclear deal which, if revitalised, would provide a substantial lift to Iran’s economy – it could plausibly expand by 8-10% per year in 2021-23. Higher Iranian oil output would act as a …
7th June 2021
Rising oil prices to open door for fiscal loosening? Oil prices hit their highest level in more than two years this week and, combined with higher oil output over the rest of this year, will help to rein in large twin budget and current account deficits …
3rd June 2021
Non-oil sector recoveries to pick up the pace in H2 May’s batch of whole economy PMIs were a mixed bag suggesting that economic recoveries in the Gulf are struggling to gather momentum for the time being. But, with vaccination programmes strengthening and …
Saudi Arabia’s economy suffered a small downturn in Q1 and the recovery so far this quarter has been slow-going. But, with the vaccine roll out picking up pace and restrictions being relaxed, coupled with rising oil output, the recovery is likely to …
2nd June 2021
Bahrain and COVID-19: a canary in the coalmine? The surge in COVID-19 cases in Bahrain has forced the government to tighten restrictions to curb the spread of the virus, which will delay its recovery and highlights that vaccination programmes elsewhere …
27th May 2021
Headline inflation rates have increased in almost all countries in the region since the turn of the year reflecting a combination of price pressures as economies re-open, higher food inflation and tax changes, as well as unfavourable base effects created …
Strong vaccine rollouts in the Gulf and Morocco have allowed for an easing of travel-related restrictions but there is still a long way to go and recoveries in tourism sectors are likely to be slow-going. And in the rest of the region, struggling …
26th May 2021
Iran nuclear deal edges closer If reports suggesting that the Iran nuclear deal will be revived (perhaps as soon as next week) prove right, the lifting of sanctions would probably weigh on oil prices as Iran ramps up production, but geopolitical tensions …
20th May 2021
Egypt’s natural gas sector struggled last year as the slump in regional energy prices caused production and exports to fall. But the re-opening of key LNG infrastructure in recent months and prospects for rising exports into Europe will help to improve …
Inflation to continue to drift higher, but set to fall sharply in H2 Saudi inflation rose to 5.3% y/y in April and, while we expect the headline rate to rise further over the rest of this quarter, it is set to fall sharply to 1.5-2.0% from July as the …
UAE property sector turnaround? The downturn in the UAE’s real estate sector appears to have bottomed out. But we still hold concerns that increasing supply will exacerbate overcapacity and put further strain on banks’ balance sheets. This week, property …
13th May 2021
Saudi Arabia’s budget deficit narrowed in the first quarter of the year on the back of higher non-oil revenues and a sharp reduction in capital spending. Higher oil revenues will support a further reduction in the shortfall in the coming quarters and it …
11th May 2021
Fresh downturn in Q1, but cause for optimism 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 …
10th May 2021
Inflation falls, raising possibility that CBE moves sooner to cut rates Egypt’s headline inflation rate fell to a seven-month low of 4.1% y/y in April, leaving it well below the lower bound of the central bank’s (CBE’s) target range. We think the headline …
Tunisia: still a long way to go in IMF negotiations Tunisia’s government has jump started talks with the IMF over a fresh financing package but it may prove difficult to secure. If the talks fall apart, Tunisia would be pushed towards a messy balance of …
6th May 2021
The UAE has been one of the global leaders in its vaccine rollout thanks to the aggressive procurement of vaccines, numerous vaccination centres and wide eligibility. Containment measures have been kept looser than in the likes of the UK and Israel and …
5th May 2021
Saudi Arabia’s economy is likely to have suffered a fresh downturn in Q1 on the back of oil production cuts and tighter virus containment measures. But with the vaccine roll out picking up pace and oil output rising from May, the recovery is likely to …
4th May 2021
Saudi Arabia’s Crown Prince Mohammed bin Salman (MbS) gave a rare TV interview this week to mark five years since the launch of the Vision 2030 reform plans. There were four points to take away. The first is that recent fiscal tightening may be reversed. …
29th April 2021
The Central Bank of Egypt (CBE) opted to keep interest rates on hold at its meeting today and, with inflation likely to rise over the coming months, we think policymakers will keep rates unchanged until Q4. But if the recent weakness of inflation …
28th April 2021
The Gulf economies, as well as Morocco, lead the way when it comes to COVID-19 vaccination programmes in the region. The UAE, Bahrain, and Qatar have provided at least one dose to more than half of their population, while Morocco, Saudi Arabia and Kuwait …
Overview – A strong vaccine rollout in the Gulf, particularly in the UAE and Bahrain, and Morocco should mean that containment measures are eased soon, paving the way for sustained economic recoveries. But the rest of the region will lag behind, …
27th April 2021
Saudi privatisation drive picking up pace The Saudi government is speeding up its privatisation drive, which will help to finance the budget deficit. But the authorities’ continued reliance on the Public Investment Fund (PIF) to drive investment risks …
22nd April 2021
Iran nuclear deal talks off to a bumpy start Hopes of a positive start to talks on reviving the Iran nuclear deal were dampened after Iran announced plans to increase uranium enrichment, highlighting that negotiations have a long way to go. If the deal is …
15th April 2021
Inflation slows further, set to fall sharply in H2 Saudi inflation fell to 4.9% y/y in March and, while the headline rate is likely to rise in Q2, we expect it to fall sharply to 1.5-2.0% from July as the effects of last year’s VAT hike fade. Data …
The UAE banking sector’s non-performing loan ratio has hit its highest level since 2005, although banks’ high level of profitability coming into the crisis has helped to shield them so far. And strong capital buffers mean that they look well positioned …
14th April 2021
Royal intrigue in Jordan The royal turmoil in Jordan this week couldn’t come at a worse time for the economy and, if allegations of corruption spur unrest, this would raise serious fears over the country’s poor external and budget positions. But the IMF …
8th April 2021
Soft price pressures increase chances of rate cut Egypt’s headline inflation rate held steady at 4.5% y/y in March, leaving it below the lower bound of the central bank’s (CBE’s) target range. There is a growing chance that, with the economy still …
Shareek program aims to boost Saudi investment Saudi Arabia launched a new investment drive this week that aims to boost the role of the private sector in the economy over the next decade. But, while this may drive diversification efforts, there is a risk …
1st April 2021
Saudi Arabia’s tightening of COVID-19 restrictions has weighed on activity in the non-oil sector and the voluntary oil output cut has hit the hydrocarbon sector too. But, with the vaccine rollout accelerating and oil production likely to increase soon, …
30th March 2021
The recent rise in COVID-19 cases in the region adds to reasons to think that a recovery in tourism is some way off. Governments across the world seem, in any case, appear increasingly reluctant to open up to international travel amid fears of importing …
25th March 2021
Oman more proactive with austerity than Bahrain Recent developments have highlighted the contrasting efforts of Bahrain and Oman in addressing their fragile public finances and placing balance of payments positions on a more sustainable footing. In both …
Despite the recent rise in bond yields, we think that Egypt’s public debt ratio will resume its downward trend in the coming years. Since the start of the year, Egypt’s local currency bond yields have risen by 40bp, on average, across the yield curve, …
24th March 2021
Lebanon’s crisis deepens The long-running crisis in Lebanon hit a fresh low this week as the currency collapsed and the government scaled back subsidies. With the formation of a new government nowhere in sight, the crisis shows no signs of turning around …
18th March 2021
Tunisia’s public finances have deteriorated further during the COVID-19 crisis and, with the government unlikely to be able to push through much-needed fiscal austerity, a debt restructuring looks increasingly likely in the coming years. Tunisia has been …
Inflation dips, but set to rise again over the coming months Saudi inflation dropped to an eight-month low of 5.2% y/y in February and while, it is likely to rise again over the next few months, we expect it to fall sharply to 1.5-2.0% from July as the …
15th March 2021
