Filtered by Subscriptions: Middle East & North Africa Economics Use setting Middle East & North Africa Economics
Oman is one of the most vulnerable economies in the Gulf to a period of ultra-low oil prices but we think that financial support from its neighbours will avert the need to abandon the dollar peg. Even so, the government is ramping up fiscal austerity more …
18th May 2020
The Central Bank of Egypt’s decision to keep interest rates unchanged today was not a major surprise given that efforts to prop up the pound have taken precedence over supporting the economy. If the IMF manages to persuade the central bank to loosen its …
14th May 2020
Egypt, Lebanon and the IMF Egypt and Lebanon took further steps towards securing IMF support this week, but finalising a deal will prove much harder for the latter than the former. Earlier this week, the IMF approved Egypt’s request for emergency …
The austerity measures announced by the Saudi government today reinforce our view that it will rely on fiscal consolidation rather than a devaluation to make the adjustment to cheap oil. The measures mean that households may end up bearing a larger burden …
11th May 2020
Saudi: capital spending to bear brunt of austerity Comments from Saudi officials reinforce our view that a devaluation is unlikely and fiscal policy will make the adjustment to low oil prices. Capital spending is likely to shoulder the burden of the cuts. …
7th May 2020
There seems to be a lot of confusion as to exactly how Saudi Arabia uses its reserves to finance twin budget and current account deficits. In this Update , we shed some light on the matter. Oil prices have recovered some lost ground over the past week or …
5th May 2020
Activity severely weak, slow recoveries to follow as lockdowns eased Whole economy PMIs from across the Middle East and North Africa were at, or close to, record lows in April as efforts to contain the coronavirus outbreak severely dented economic …
The announcement that Lebanon will formally seek financial assistance from the IMF should help to avoid a more disorderly outcome from the country’s current debt crisis. However, we hold reservations about parts of the rescue plan set out by the …
1st May 2020
The early signs from the Middle East and North Africa are that efforts to contain the coronavirus and the collapse in oil prices are dealing a heavy economic blow. Whole economy PMIs plunged to record lows in March, flight cancellations are widespread and …
30th April 2020
Saudi can weather hit from low oil prices Figures released this week provided the first signs of the hit to Saudi Arabia’s balance sheet from lower oil prices. But we remain comfortable in our view that the dollar peg will stay intact. Data published by …
Overview – Efforts to contain the coronavirus mean that the economies of the Middle East and North Africa will suffer their steepest downturn this year since the early 1980s. Draconian social distancing measures and travel restrictions are likely to have …
28th April 2020
Egypt has become the latest emerging market to turn to the IMF for assistance and one of the priorities for the Fund is likely to be for the central bank to loosen its grip on the pound. That said, there is unlikely to be a repeat of the 50% fall in the …
27th April 2020
Saudi chooses austerity over devaluation Comments from Saudi Arabia’s finance minister late yesterday add further weight to our view that fiscal consolidation rather than a devaluation will be relied on to make the adjustment to low oil prices. The latest …
23rd April 2020
Pressure is mounting on Saudi Arabia’s dollar peg and, while there is some opaqueness over the full size of the Kingdom’s FX reserves, we estimate that the authorities could prop up the riyal at current ultra-low oil prices for more than five years. This …
22nd April 2020
The collapse in oil prices has led to renewed pressure on dollar pegs in the Gulf and, while there could be some positive effects on balance sheets from devaluations, the costs would be politically unpalatable. The upshot is that we think that …
21st April 2020
Efforts to contain the coronavirus will cause Dubai’s economy to contract sharply, exacerbating overcapacity in key sectors and making it more difficult for the Emirate’s government-related entities (GREs) to service their large debts. Our own database …
20th April 2020
Oil price war over, but a sign of things to come? Saudi officials may be dismissing the recent price war as blip in their oil policy but, if anything, we think that it might represent a dry run of what will become the norm in the coming decades. OPEC, and …
16th April 2020
The deal struck by OPEC and other oil producers to cut oil output sharply over the coming months will help to put a floor under oil prices, but the reduction in output simply adds to the reasons to expect a sharp downturn in the Gulf economies this year. …
14th April 2020
Gulf governments tap bond markets for financing Qatar and Abu Dhabi’s dollar bond sales this week, raised $10bn and $7bn respectively, and several other Gulf countries are likely to follow suit as governments seek funds in the face of low oil prices. The …
9th April 2020
Soft price pressures increase pressure for more rate cuts The slight fall in Egyptian inflation in March to 5.1% y/y leaves the headline rate well below the central bank’s target range which, coupled with the economic hit from the draconian measures to …
Egypt’s central bank is intervening to prop up the pound, but the experience from the previous decade is that such efforts ultimately prove futile. If policymakers try to support the pound for an extended period, this risks repeating the problems that, in …
8th April 2020
Surveys hit record lows as economies shut down March’s batch of whole economy PMIs showed that efforts to contain the coronavirus outbreak have resulted in a sharp decline in activity in the region’s non-oil sectors. Containment measures have escalated …
6th April 2020
Saudi to play hardball over output deal Oil prices have surged amid hopes that Saudi Arabia and Russia will thrash out a deal to cut oil output, but recent developments suggest that the Kingdom will dig in and demand that the rest of OPEC+ share the …
2nd April 2020
Brent crude is closing in on $20pb and, if there are no signs of a recovery in the coming months, the chances that Saudi Arabia pushes for fresh oil output cuts will grow. Meanwhile, we are approaching the point at which financial support for Oman needs …
31st March 2020
The coronavirus has spread rapidly throughout the Middle East and North Africa in recent weeks and has prompted governments across the region to impose increasingly draconian containment measures. These measures, along with the collapse in oil prices, …
27th March 2020
Coronavirus policy response ramps up Confirmed COVID-19 cases in the region have more than doubled in the past week and, at the same time, governments have ramped up containment measures. While these will help to slow the spread of the virus, they will …
26th March 2020
Governments across the Middle East and North Africa have taken increasingly draconian steps over the past couple of weeks to contain the coronavirus outbreak and, as a result, there will be much more economic damage than we had previously thought. We now …
25th March 2020
Saudi Arabia doubling down on oil policy, for now Oil prices have continued to plunge this week and strains on the Gulf economies are mounting. Saudi Arabia’s decision to deepen fiscal austerity is a sign that policymakers have no imminent plans to shift …
19th March 2020
Efforts to contain the coronavirus outbreak look set to hit tourism sectors across the MENA region hard. The North African economies, as well as Dubai, Lebanon and Jordan, are most vulnerable and the direct hit will knock at least 2-3% off GDP this year. …
The collapse in oil prices over the past week has put pressure on the Gulf’s dollar pegs, but we think that a wave of devaluations is extremely unlikely. Large foreign exchange savings provide substantial buffers and the likes of Bahrain and Oman, which …
16th March 2020
Efforts to contain the coronavirus will weigh heavily on non-oil sectors across the MENA region over the coming weeks and months. Dubai is the most vulnerable and this could ultimately ignite fears over the Emirates’ large debt burden. The most obvious …
The aftermath of the oil price collapse The region has been thrown into turmoil over the past week amid the collapse in oil prices and the rising fears of the economic hit from coronavirus. The announcement by Saudi Arabia last weekend that it would …
12th March 2020
The fact that the fall in oil prices will cause Saudi Arabia’s government to run a large budget deficit has prompted suggestions that it might have to shift oil policy to prop up prices. But the current account deficit is likely to play a larger role than …
10th March 2020
Coronavirus fears and inflation fall bring rate cut back onto the table The sharp fall in Egyptian inflation in February to 5.3% y/y puts it well below the lower bound of the central bank’s target range. Coupled with mounting fears over the coronavirus …
The sharp fall in oil prices today will push current account and budget positions into deficit across the Gulf, but these can be financed from large savings for some time. Dollar pegs should stay intact and the Gulf won’t backtrack on plans to raise …
9th March 2020
The news that Lebanon’s government won’t repay a $1.2bn Eurobond maturing has caused bond prices across the curve to fall and all eyes will now turn to the government’s plans to restructure its debts. A swift deal is looking increasingly difficult to …
Lebanon’s government is set to decide tomorrow on whether to repay a $1.2bn Eurobond maturing on Monday. Whatever the decision, a debt restructuring inevitably lies in store and the government will probably try to concentrate losses on holders of …
6th March 2020
Governments up policy support as virus spreads The coronavirus outbreak in the region has intensified and governments are stepping up policy support in order to deal with the economic fallout, particularly in the UAE. And OPEC+ looks set to deepen oil …
5th March 2020
The spread of the coronavirus has prompted us to lower our 2020 GDP growth forecasts for the MENA region by 0.5-2.0% and the risks remain skewed to the downside. The UAE is the most vulnerable economy and the fallout threatens to ignite concerns over …
3rd March 2020
Coronavirus impact weighs on non-oil activity in the Gulf February’s whole economy PMIs suggests that activity in non-oil sectors in the Gulf has weakened amid the coronavirus outbreak. Efforts to contain the virus have escalated since the survey took …
In light of the accelerating spread of the coronavirus – and the economic disruption that is likely to follow – we are pulling down our GDP growth forecasts for Q1 and Q2 of this year. Growth is likely to rebound over the second half of the year, but most …
2nd March 2020
Our GDP Tracker suggests that the downturn in Saudi Arabia’s economy deepened in Q4 of last year and, while the worst has probably now passed, the downside risks to the outlook are mounting. Saudi Arabia’s quarterly GDP data are published with a …
27th February 2020
Saudi halts pilgrimages amid COVID-19 fears Saudi Arabia’s decision to temporarily halt religious pilgrimages to the Kingdom adds another downside risk to our already below-consensus forecast for economic growth this year. Amid rising fears over the …
The past month has brought more bad news on Dubai’s economy. Markit’s Dubai PMI hit a four-year low in January and efforts to contain the coronavirus pose a threat to the Emirate’s transport and tourism sectors. And the real estate sector remains in the …
25th February 2020
The Central Bank of Egypt’s (CBE) decision to keep interest rates unchanged last night for a second consecutive meeting suggests that policymakers are more concerned by the recent uptick in inflation than we had originally thought. As a result, we’ve …
21st February 2020
Lebanon nearing default It is looking increasingly likely that Lebanon’s government will default on a Eurobond payment in March. And while the government is now turning to the IMF to work through its crisis, time is running out to secure external …
20th February 2020
Current account positions in the largest MENA economies (particularly in the Gulf, but also Egypt) have improved over the past few years. But deficits elsewhere remain large. And Algeria, Tunisia and, to a much greater extent, Lebanon face sharp currency …
19th February 2020
Inflation continues to edge higher Saudi inflation rose for a twelfth consecutive month in January and, while we expect a fresh slowdown in the non-oil sector to keep a lid on underlying price pressures, further hikes to local fuel prices are likely to …
18th February 2020
Hopes for deeper output cuts wane The unexpected rise in Saudi oil production last month may be a sign that the authorities are no longer willing to bear the brunt of oil output cuts, reducing the chances of a deal to lower output further in response to …
13th February 2020
Lebanon’s new government appears to be warming to the idea of going to the IMF, which would reduce the risk of a disorderly debt default that causes severe strains in the local banking sector. But even if the authorities go to the Fund, any deal is still …
