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Morocco’s economy has slowed this year. But this is almost entirely a result of weakness in the agricultural sector, and we expect growth to strengthen in 2019. Moreover, as Morocco continues to integrate into global manufacturing supply chains, we remain …
6th August 2018
Reports that Saudi Arabia’s sovereign wealth fund is looking for alternative sources of financing suggest that the government is moving further away from its flagship sale of a stake in Aramco. This adds to the signs that momentum behind the Vision 2030 …
2nd August 2018
Egypt’s public finances are still in a poor state but the government has made progress in cutting the budget deficit in recent years and the debt ratio is now falling. The pace of fiscal consolidation will slow in the coming years, which will support a …
1st August 2018
Our GDP Tracker suggests that economic growth in Saudi Arabia plateaued in the first two months of Q2. But rising oil output is now providing a boost to the recovery and we expect that GDP growth will strengthen markedly in the second half of 2018. … …
31st July 2018
Financial markets across the MENA region have shrugged off the latest escalation of tensions between the US and Iran, although we doubt that this resilience will last. Meanwhile, news that Egypt will sign contracts to hedge oil prices will improve the …
26th July 2018
Saudi inflation fell to 2.1% y/y in June as the effects of last year’s “sin” taxes faded and housing inflation fell deeper into negative territory. But there are signs that broader price pressures are picking up on the back of stronger economic growth. We …
25th July 2018
The improvement in Egypt’s balance of payments position over the past eighteen months should be sustained, providing some support to the pound. Accordingly, inflation should resume its downward trend later this year, allowing the central bank to resume …
24th July 2018
The raft of quarterly GDP data released over the past month confirmed that the MENA region rebounded at the start of this year and more timely figures suggest that the recovery is gathering momentum. Saudi Arabia pulled out of recession and Egypt’s …
19th July 2018
The recent tumble in oil prices has raised the pressure on Bahrain to secure financial support from the rest of the Gulf and for the government to outline its fiscal consolidation plans. We still think that the dollar peg will remain intact, but growth is …
The recovery in the MENA region will be stronger than most anticipate over the coming quarters. The Gulf economies are set to benefit from rising oil output and fiscal stimulus, while Egypt’s cyclical upturn also has further to run. Fragile balance sheets …
17th July 2018
Reports that Saudi Arabia will scrap the Aramco IPO would, if confirmed, deal a symbolic blow to the Kingdom’s reform plans, but the economic impact should be limited. And the news flow on arguably more important (but lower-profile) reforms has been …
12th July 2018
Our GDP Tracker suggests that Saudi Arabia’s economy slowed a touch in April, but we think that this will prove temporary. Growth is likely to pick-up sharply over the coming months as the Kingdom ramps up oil production and fiscal stimulus supports …
11th July 2018
Egyptian inflation jumped to 14.4% y/y last month on the back of recent administered price hikes, but we still think that the next move in interest rates will be down. … Egypt Consumer Prices …
10th July 2018
The economic agenda laid out by Egypt’s new cabinet this week suggests that, despite the improvement in the budget position over the past couple of years, it will continue to tighten fiscal policy. Accordingly, the IMF deal should stay on track. But the …
5th July 2018
The sharp rise in the Egyptian government’s foreign currency debt over the past few years is not yet a major cause for concern – the risk of a destabilising fall in the pound appears to be low and the authorities are making progress with fiscal …
4th July 2018
Last month’s PMI data for the Gulf provide further evidence that growth in non-oil sectors is strengthening, supported by higher oil prices and recent fiscal stimulus measures. Elsewhere, Egypt’s survey suggests that activity improved in June but price …
3rd July 2018
Saudi Arabia’s economy pulled out of recession in Q1 and we expect the recovery to gain momentum over the coming quarters, supported by fiscal stimulus and a jump in oil output. … Saudi emerges from recession, recovery to gather …
2nd July 2018
The Egyptian central bank’s decision to leave interest rates on hold (rather than lower rates) was a response to recently-announced subsidy cuts that will push up inflation. But the easing cycle is likely to resume at September’s MPC meeting. And we still …
28th June 2018
The announcement on Wednesday that Bahrain is in talks with the other Gulf countries over financial support reinforces our view that, despite recent worries in the markets, its dollar peg won’t be abandoned. … Bahrain gets Gulf support, new gas discovery …
Saudi inflation edged down for a fourth consecutive month to 2.3% y/y in May on the back of falling housing and utilities prices. Recent signs that growth in the non-oil economy is starting to strengthen again, however, suggest that price pressures will …
27th June 2018
The sell-off in Bahrain’s financial markets this week reflects fears that it is struggling to secure external financing to plug its large twin budget and current account deficits. We still think that the other Gulf countries will ultimately come forward …
26th June 2018
Revisions to OPEC’s oil output agreement will lead to a rise in supplies from the Gulf over the coming months, providing a direct boost to economic growth. Higher production will, however, depress oil prices and thus limit spillovers to the Gulf’s non-oil …
25th June 2018
Hikes to fuel prices announced by the Egyptian government over the past week mean that the central bank will refrain lowering interest rates at its upcoming meeting. Meanwhile, growing tensions within OPEC ahead of the cartel’s meeting on Friday create a …
21st June 2018
The OPEC meeting scheduled to start on Friday will probably result in a compromise to increase oil output and this could provide a boost to Saudi GDP growth of around 1%-pt. Frictions within the group mean there’s a real risk that the talks break down, …
20th June 2018
MSCI’s upcoming decision on whether to include Saudi Arabia in its benchmark emerging market equity indices has been billed as a game changer for the Kingdom’s stock market, but past experience suggests that a lot of the optimism is probably overdone. …
19th June 2018
The past month has brought further signs that governments across the Gulf are responding to higher oil prices by ramping up spending. Both Abu Dhabi and Dubai, the two largest emirates that make up the UAE, have announced stimulus packages. Details still …
15th June 2018
A further sharp fall in Egyptian inflation last month has strengthened the case for further interest rate cuts. But policymakers seem hesitant to loosen policy against the backdrop of upcoming subsidy cuts, so the easing cycle probably won’t be resumed …
11th June 2018
One year after the diplomatic crisis surrounding Qatar first erupted, the economy appears to have weathered the storm. An escalation of the crisis remains the key threat to the economic outlook, but assuming this is avoided, Qatar should record a modest …
7th June 2018
Ongoing protests in Jordan have already prompted the resignation of the prime minister and King Abdullah seems to be taking further steps to defuse the situation. The new tax law which triggered the protests looks set to be watered down or scrapped, but …
6th June 2018
Our GDP Tracker suggests that the Saudi economy emerged from recession in Q1. More timely data indicate that a raft of public sector bonuses is finally providing some support to the non-oil sector. … Saudi economy returned to growth in …
5th June 2018
Last month’s PMI data for the Gulf suggest that after a soft start to the year, growth in the non-oil sector is picking up. Egypt’s PMI suggests that pipeline price pressures are subdued, supporting our view that the central bank will resume its easing …
Government debt across the Gulf has risen sharply over the past few years, but only in the smaller countries of Bahrain and Oman do we consider it to be a major source of concern. Financial support from their richer neighbours should prevent full-blown …
1st June 2018
The US administration’s decision to pull out of the Iran nuclear deal, coming alongside the recent EM sell-off, means that it has been a terrible month for financial markets across the Middle East and North Africa. Equity markets have slumped and dollar …
30th May 2018
Egypt’s economy has weathered the fallout from the pound’s devaluation in late-2016 and, as fiscal consolidation slows and inflation and interest rates drop back, growth should remain robust over the next couple of years. We expect that the economy will …
23rd May 2018
The recent rally in oil prices has already prompted governments across the Gulf to shift away from the harsh austerity of recent years. But long-term oil price expectations are still low and the authorities have shown greater prudence in recent decades, …
18th May 2018
The Egyptian central bank’s decision to keep interest rates on hold, rather than cut them again, comes on the back of a pick-up in underlying price pressures as well as the recent sell-off in EM currencies. But we think this marks only a pause in the …
17th May 2018
Financial markets in the Middle East & North Africa have underperformed those in the rest of the emerging world over the past week following President Trump’s decision to pull the US out of the Iran nuclear deal. Equity markets have been the hardest hit, …
The further fall in Egyptian inflation in April – to 13.1% y/y – should be enough to prompt the central bank to continue its easing cycle next week. We have pencilled in another 100bp reduction in the overnight deposit rate, and still expect more easing …
10th May 2018
President Trump’s decision to pull the US out of the nuclear deal with Iran is likely to prompt a fresh downturn in Iran’s economy but, as things stand, the economic impact on the rest of the MENA region shouldn’t be severe. That said, the decision will …
9th May 2018
Saudi Arabia’s budget deficit widened in Q1 compared with a year earlier as a raft of public sector bonuses more than offset the boost to revenues from the introduction of a new value-added tax. That said, the recent rally in oil prices means that the …
8th May 2018
Last month’s PMI data showed that Saudi Arabia’s economy continued to weaken as a result of austerity measures introduced at the start of this year, but we think that this slowdown will be temporary. Elsewhere, the surveys provide further evidence that …
3rd May 2018
The Saudi economy appears to have returned to positive growth in the first few months of this year as a fading drag from the oil sector has more than offset a modest slowdown in the rest of the economy. … Saudi economy pulling out of …
2nd May 2018
There’s a growing chance that US President Donald Trump will refuse to waive sanctions on Iran later this month. In this Update , we answer five key questions on the sanctions and the nuclear deal, as well as the potential impact on the oil market, Iran’s …
1st May 2018
Dollar bond yields have risen across the MENA region over the past month and we think this process has further to run. Underlying US Treasury yields look set to creep up as the Fed raises interest rates by more than the markets anticipate. And if oil …
26th April 2018
The Lebanese authorities have suggested that they will soon undertake another “financial engineering” exercise in an effort to boost the central banks’ FX reserves and reduce the government’s debt servicing costs. In this Watch, we explain the process and …
25th April 2018
The recent jump in oil prices to $75pb has been fuelled in part by reports that the Saudi authorities have expressed a desire for prices of $100pb. But we don’t think a fundamental shift in Saudi oil policy is on the cards and, in any case, the …
24th April 2018
Saudi inflation edged down to 2.8% y/y last month, although it was still much higher than the rates recorded last year due to the impact of tax hikes and subsidy cuts. The early evidence suggests that households are struggling in the face of higher …
The narrowing in Egypt’s current account deficit has further to run, supported by a recovery in the tourism sector and strong export growth. This will help to limit downward pressure on the pound and provide room for the central bank to continue its …
19th April 2018
The recovery in the Middle East and North Africa should continue over the coming months but growth is likely to be weaker than most anticipate. The rebound is being led by the Gulf as the drag from last year’s oil output cuts fades and fiscal austerity …
Mounting tensions surrounding the conflicts in Syria and Yemen have rattled financial markets in the MENA region, but the associated rally in oil prices should limit the economic fallout for the Gulf. A chemical weapons attack on the Syrian city of Douma …
12th April 2018
