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The further decline in Egyptian inflation last month, to 13.3% y/y, means the central bank will continue its easing cycle when it next meets in mid-May. We have pencilled in another 100bp reduction in interest rates and still expect more easing than most …
10th April 2018
The UAE’s economy should recover this year as the drag from the oil sector fades and preparations for the 2020 World Expo are stepped up. Even so, we still think that growth will be weaker than most anticipate over our forecast horizon. … UAE set for …
5th April 2018
The downturn in Saudi Arabia deepened at the end of last year, but the latest figures suggest that the economy returned to positive growth at the beginning of 2018. … Saudi economy starting a slow …
4th April 2018
March’s PMI data for the Gulf suggest that austerity measures are continuing to dampen growth in the non-oil sectors in the region. However, conditions should improve over the coming months as the impact of rises in public sector bonuses filters through …
3rd April 2018
A victory for Egypt’s President al-Sisi in this week’s presidential election was never in doubt and attention will now shift to any changes to key policymaking positions. Mr. al-Sisi begins his second term just as the economy is enjoying a cyclical …
29th March 2018
Saudi Arabia’s stock market has jumped in recent weeks on the back of growing hopes that it will be upgraded to “emerging market” status by the index compiler FTSE Russell. But past experience shows that similar decisions have had little lasting impact on …
27th March 2018
Pressure is building on the Tunisian dinar and our central scenario is that the IMF will push the authorities to loosen their grip on the currency in the near future. This is likely to result in a 10% drop in the currency against the euro by the end of …
22nd March 2018
Egypt’s President al-Sisi is certain to emerge victorious in next week’s election and will begin his second term just as the economy is about to enjoy a cyclical upturn in growth. Beyond the next few years, though, reforms will be needed to raise Egypt’s …
21st March 2018
Inflation in Saudi Arabia edged down to 2.9% y/y last month but it remained much higher than the rates recorded in late-2017 due to the impact of recent tax hikes and subsidy cuts. We expect inflation to hover around 3% y/y for the remainder of this year. …
Saudi Arabia’s Crown Prince Mohammed bin Salman (known as MbS) is in the midst of a global tour, which has highlighted the challenges facing his Vision 2030 economic reforms as well as ongoing geopolitical tensions in the region. Reports suggest that the …
15th March 2018
Qatar’s banking sector has weathered the worst of the impact of the blockade. But tight external financing conditions and a need to deleverage mean that credit growth will provide less of a prop to the economy than it has done over the past decade. … …
14th March 2018
Reports that the initial public offering of Saudi Arabia’s national oil company, Aramco, will be delayed until next year are not a major surprise given the complexity of the transaction. The delay probably increases the chances of the OPEC oil output …
12th March 2018
Public debt-to-GDP ratios in Bahrain and Oman are on a worrying path and we expect the pace of austerity to be stepped up over the coming years to slow the rise in debt. However, that will come at the expense of weaker GDP growth, which is likely to fall …
8th March 2018
The further sharp fall in Egyptian inflation last month, to 14.4% y/y, should be enough to persuade the central bank to cut interest rates by a further 100bp at its monetary policy meeting this month. We continue to expect inflation and rates to fall by …
It looks like Saudi Arabia’s economy turned the corner in late 2017 and, while the early data from the start of this year have been disappointing, a recovery should still get underway. … Saudi economy moving towards …
6th March 2018
Last month’s PMI readings for the Gulf suggest that the imposition of austerity measures at the start of this year is still weighing on non-oil sectors in the region. But we think that the impact will start to fade over the coming months as governments …
5th March 2018
Saudi Arabia’s new bankruptcy law, which was approved by King Salman last month, will make it easier to deal with the fallout from corporate failures and, through improving access to credit, support the development of small and medium-sized enterprises …
1st March 2018
The Gulf’s dollar pegs mean that further rate hikes by the US Federal Reserve will be imported into the region, keeping a lid on credit growth and pushing up government borrowing costs. This is unlikely to derail the economic recovery but it is another …
27th February 2018
The sharp rise in Saudi inflation in January was almost entirely the result of various austerity measures that came into effect at the start of this year. That said, a change to the base year of the data has depressed the inflation figures compared with …
26th February 2018
The recent changeover at the helm of Tunisia’s central bank has raised hopes of a shift towards more orthodox policymaking. But the new governor is likely to run in to resistance from the government and there are few signs so far that he is about to make …
22nd February 2018
The drop in Egyptian inflation over the past six months has largely reflected the unwinding impact from the pound’s devaluation in late-2016. But there are a couple of additional reasons to think that inflation will fall further and then stay low compared …
21st February 2018
The Central Bank of Egypt embarked on an easing cycle last week and we expect inflation and interest rates to fall by more than most anticipate over the next couple of years. Accordingly, the recent decline in Egyptian local currency bond yields probably …
20th February 2018
The Egyptian central bank’s easing cycle, which started last night, is likely to result in larger interest rate cuts than most anticipate. We expect an additional 650bp of rate cuts by the end of 2019. … Egypt’s easing cycle to be larger than most …
16th February 2018
Egypt defied the recent turmoil in global financial markets and issued $4bn of international bonds earlier this week. The sale was three times oversubscribed and the issuance was split into three tranches – $1.25bn was sold at a 5-year maturity, $1.25 at …
15th February 2018
Bank lending to Egypt’s private sector has been weak for a number of years as the government has leaned on local banks to purchase government bonds, crowding out credit to the rest of the economy. But fiscal consolidation, coupled with a loosening of …
14th February 2018
The latest data suggest that the worst of the downturn in the Saudi economy had passed in late 2017 and a recovery should get underway over the coming months. The limited evidence so far suggests that the anti-corruption purge launched in November has had …
12th February 2018
The further sharp decline in Egyptian inflation in January, to 17.1% y/y, paves the way for the central bank to embark on an easing cycle at its monetary policy meeting next week. And further ahead, we maintain our long-held view that inflation and …
8th February 2018
The Egyptian government has finally made inroads into its large budget deficit and we expect the shortfall to narrow further over the coming years. But the public finances remain in a poor state and there’s a clear threat that the fiscal consolidation …
7th February 2018
Last week, Egypt’s President al-Sisi inaugurated the Zohr gas field which, combined with the onset of production from a number of other fields, will provide a sizeable boost to GDP growth over the next few years and also help to rein in the country’s …
6th February 2018
The drop in PMIs in the Gulf last month appears to reflect the impact of recent austerity measures, including the introduction of a new value-added tax, at the start of this year. But conditions should improve over the coming months, particularly in Saudi …
5th February 2018
The spread of interbank interest rates in the Gulf over those in the US has narrowed to its lowest level since 2008. While we correctly argued in 2016 that spreads would begin to narrow, we think that the process has now gone too far. If oil prices drop …
31st January 2018
Growth in the Middle East and North Africa slowed to its weakest pace since the global financial crisis in 2017, but the region is set for a recovery over the next twelve months. The rebound in growth is likely to be driven by the Gulf, where the drag …
30th January 2018
The recent rally in oil prices has led governments in the Gulf to move away from the harsh austerity of recent years. Earlier this month, Saudi Arabia announced a raft of bonuses for public sector workers, while Bahrain’s government has put any further …
25th January 2018
The latest data from Qatar reinforce the picture that the economy has weathered the diplomatic crisis with regional powers. That said, hopes for a resolution to the crisis have been dashed by events over the past month and certain sectors of the economy – …
24th January 2018
Saudi Arabia’s economy should pull out of recession this year as the drag from the oil sector fades and fiscal policy is loosened. But the relief is likely to prove short-lived and, in contrast to the consensus view that the economy will continue to …
23rd January 2018
Saudi inflation remained subdued at the end of last year but the recent introduction of a new value-added tax and a raft of administered price hikes will push inflation up sharply, to more than 6% y/y, over the coming months. That’s higher than most …
The announcement on Friday by Morocco’s central bank that it will move to a more flexible exchange rate regime has raised concerns that the dirham will follow the path of currencies in the rest of North Africa, where similar policy shifts have been …
15th January 2018
The Saudi government looks set to loosen fiscal policy this year which should support a pick-up in economic growth. However, as we explain in this Watch, households won’t be net beneficiaries from this. The introduction of a new household allowance and …
12th January 2018
A further sharp drop in Egyptian inflation in December means that the central bank is likely to embark on an easing cycle at the next monetary policy meeting in February. We expect inflation and interest rates to fall further than most anticipate over the …
10th January 2018
The announcement in Saudi Arabia over the weekend that the government will pay bonuses to civil servants and military personnel means that fiscal policy will be slightly looser this year than had been envisaged in the 2018 budget and more supportive than …
8th January 2018
December’s PMI data suggest that non-oil sectors in the Gulf ended last year on a fairly strong note. And while Egypt’s PMI slipped back last month the survey showed that price pressures there have continued to ease, supporting our view that the central …
4th January 2018
Further sharp falls in Egyptian inflation in the coming months are likely to prompt the central bank to embark on a monetary easing cycle. We expect the benchmark interest rate to be cut to 13.25% by end-2018 and 11.25% by end-2019, from 18.75% at …
3rd January 2018
If the recent protests in Iran rumble on or even spread, the resulting disruptions to activity are likely to weigh on the country’s economy but the fallout for the rest of the MENA economies, as well as global oil markets, should be limited. Moreover, if …
2nd January 2018
The easing of political tensions in the region in recent weeks has reduced concerns about the sustainability of dollar pegs, supporting our view that fears of devaluations in the Gulf looked misplaced. That said, we think Lebanon’s dollar peg still looks …
21st December 2017
The Saudi budget released this afternoon showed that the government has already started to loosen fiscal policy and will continue to do so in 2018. This is a more accommodative stance than we had expected and so we have revised up our GDP growth forecasts …
19th December 2017
Political commentary in the region has focussed on the recent upheaval in Saudi Arabia, but one development that has received little attention is the downfall of the militant group, Islamic State (IS, also known as Daesh). Iraq’s Prime Minister, Haider …
The recent rise in oil prices has raised some hopes that Saudi Arabia’s 2018 budget – to be announced next week – will unveil a shift towards looser fiscal policy to support the economy. However, we think those hopes are likely to be dashed and policy …
14th December 2017
Saudi politics has been a staid affair for decades, but Crown Prince Mohammed bin Salman’s launch of an anti-corruption crackdown and his ratcheting up of tensions with Iran herald a period of greater uncertainty. The crackdown is likely to deal a …
12th December 2017
The sharp fall in Egyptian inflation in November primarily reflected the unwinding of the impact of last year’s depreciation of the pound and paves the way for the central bank to cut interest rates at its meeting later this month. We have pencilled in a …
11th December 2017
The recent political upheaval in Saudi Arabia has cast fresh doubts over the government’s plans to sell a stake in the state-owned oil company, Aramco. Fears that the sale will be scrapped altogether are probably overdone but, given the general …
7th December 2017
