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November’s PMI data suggest that Saudi Arabia’s non-oil sector has so far shrugged off recent political upheaval. Meanwhile, Egypt’s economy appears to have strengthened as firms continue to benefit from the improvement in external competitiveness. … …
5th December 2017
OPEC’s decision to extend its oil production cuts until the end of 2018 was widely expected and indicates that the Gulf countries are content with oil prices at around $60pb. Despite the deal, the drag on GDP growth from oil output cuts should ease in …
1st December 2017
The Middle East and North Africa has been gripped by political turmoil over the past few weeks. The most high-profile development was the launch of an anti-corruption crackdown in Saudi Arabia, led by Crown Prince Mohammed bin Salman (MbS), which has …
30th November 2017
The worst of the hit to Qatar’s economy from its diplomatic crisis with neighbouring countries has now passed but the early signs suggest the recovery will be slow and uneven. Indeed, certain sectors of the economy – such as tourism and real estate – are …
29th November 2017
Saudi Arabia’s economic downturn appears to have deepened in Q3 on the back of a steeper year-on-year fall in oil production. That said, even if OPEC decides to extend its oil production cuts at its meeting later this week, the oil sector’s drag on the …
27th November 2017
The escalation of tensions between Saudi Arabia and Iran has raised fresh concerns about the region’s dollar pegs. While a devaluation in Lebanon is not out of the question, there are good reasons to think that dollar pegs in the Gulf will remain intact. …
23rd November 2017
Saudi inflation remained in negative territory in October but inflation is likely to jump next year as the government introduces a new value-added tax and pushes ahead with a fresh round of subsidy cuts. … Saudi Arabia Consumer Prices …
21st November 2017
The Tunisian authorities have recently introduced a range of new measures in an effort to tighten their grip on the currency. However, Egypt’s experience suggests that such policies do more harm than good for the economy and simply lead to a sharper …
The political crisis in Lebanon has raised fears that the authorities will be forced to devalue the pound. One thing that has often been overlooked, though, is the risk that this could force the government to default on its large foreign currency debts. … …
17th November 2017
Today’s decision by the Central Bank of Egypt to keep interest rates on hold was not a major surprise given that the recent falls in inflation have been fairly modest. But data to be released in the coming weeks should show inflation dropping back more …
16th November 2017
Reports that Bahrain’s government has requested financial support from its Gulf neighbours has raised fresh questions over the sustainability of the country’s dollar peg. We expect this financing to be forthcoming, but in return the authorities will be …
14th November 2017
The anti-corruption crackdown in Saudi Arabia and mounting tensions between the Kingdom and Iran have unnerved investors this week, although the impact has been more acute in financial markets in the rest of the region than it has been within Saudi Arabia …
9th November 2017
The further drop in Egyptian inflation in October, to 30.8% y/y from 31.6% y/y in September, is welcome but probably not enough for the central bank to cut interest rates at its meeting next week. We expect the first rate cut to come in December. … Egypt …
Events in Saudi Arabia since the weekend have potentially significant, but also complex, implications both for domestic policymaking and the wider region. In this Update, we try to make sense of recent developments by answering five key questions. … Five …
8th November 2017
The deterioration in relations between Lebanon and Saudi Arabia in recent days has raised fresh concerns over the sustainability of Lebanon’s dollar peg. While the country has substantial FX reserves, these would be quickly eroded in the event of severe …
7th November 2017
The arrests of prominent officials and businessmen in Saudi Arabia over the weekend has been welcomed in some quarters as a step towards tackling corruption in the Kingdom and is another sign that Crown Prince Mohammed bin Salman is consolidating power. …
6th November 2017
Tomorrow will mark one year since Egypt’s central bank announced that it would move to a floating exchange rate. As we explain in this Watch, a weaker pound has yet to support a major improvement in the current account position and the recent surge in …
2nd November 2017
Oil prices broke through $60pb this month, up by a third since the middle of the year, but this has failed to provide a fillip to financial markets in the Gulf. In contrast, markets in Egypt have performed well – its equity market was the region’s best …
31st October 2017
The rise in oil prices since the middle of the year could boost the Gulf’s oil export revenues by around $100bn, equal to 5% of regional GDP, on an annual basis. That would push current account positions into surplus in most countries and make major …
30th October 2017
Our GDP Tracker suggests that Saudi Arabia’s economy contracted at a steeper pace in Q3 than in Q2. However, the worst may soon be over. … Saudi downturn deepens in Q3, but close to a …
25th October 2017
Plans announced today by the Saudi government to construct a huge new economic city, called Neom, have grabbed the headlines but the Kingdom has poor form when it comes to implementing mega-projects. Moreover, it may divert policymakers’ attention away …
24th October 2017
Recently-released GDP data confirmed that the blockade on Qatar dealt a blow to its economy in June, but more timely data suggest that the worst has now passed. That said, any recovery is likely to be slowgoing and we expect growth to be weaker the most …
The raft of GDP data released over the past month showed that growth across the Middle East & North Africa continued to slow in Q2. Our weighted-average measure of regional GDP expanded by 1.4% y/y in Q2, down from 2.0% y/y in Q1 and its slowest pace …
20th October 2017
Egypt’s manufacturing sector has been one of the main beneficiaries from a weaker pound but the recent rapid pace of growth will be difficult to sustain in the absence of a significant pick up in investment. … Egypt: investment key to sustaining …
18th October 2017
Saudi inflation stayed in negative territory in September, but with fresh subsidy cuts and the introduction of a new value-added tax on the horizon, we expect it to jump to 4.0-4.5% in the coming months. … Saudi Arabia Consumer Prices …
17th October 2017
Oil policy in the Gulf has been thrust back into the spotlight after the Saudi government disclosed details of Aramco’s export allocations for November. But there is less to this than meets the eye and, while it appears increasingly likely that OPEC will …
12th October 2017
The marked improvement in Saudi Arabia’s current account position over the past year has eased fears that the riyal will be devalued. However, a large chunk of the improvement has been due to weaker imports and lower remittances, a reflection of the heavy …
11th October 2017
Egyptian inflation edged down further in September and we expect it to fall sharply in the coming months, prompting the central bank to start cutting interest rates. … Egypt Consumer Prices …
10th October 2017
The spotlight has turned back on to Iran’s nuclear deal in recent days with President Trump expected to refuse to certify that Iran is still compliant with the accord. There remains a lot of uncertainty over how events will pan out, but in this Update we …
6th October 2017
Growth across the Middle East and North Africa has slowed further this year, but it should recover in 2018 and 2019. In the Gulf, the drag on GDP growth from this year’s oil production cuts will fade. Nonetheless, the recovery will be slow-going. Fiscal …
5th October 2017
September’s PMI data suggest that non-oil sectors in the Gulf slowed a touch in September, although the surveys remained above their mid-year lows. Meanwhile, Egypt’s PMI suggests that its recovery slowed on the back of weaker external demand. … Whole …
3rd October 2017
Official GDP data show that the contraction in Saudi Arabia’s economy worsened in Q2 and our GDP Tracker suggests that downturn deepened further at the start of Q3. We expect a recovery to get underway in 2018-19, but it is likely to be weaker than most …
2nd October 2017
The statement accompanying last night’s decision by Egypt’s central bank to leave interest rates on hold suggests that, with inflation now falling, policymakers are trying to downplay expectations that monetary easing will quickly follow. Accordingly, a …
29th September 2017
Saudi Arabia returned to the international bond market this month in order to plug its twin budget and current account shortfalls. A total of $12.5bn of dollar debt was issued, split into three tranches – $3bn was sold at a five-year maturity, $5bn at …
28th September 2017
Financial markets in the Gulf economies have performed poorly in the past few weeks despite the sharp rise in oil prices. Equity markets have actually fallen back and, in some countries, dollar bond spreads over US Treasuries have widened. Investors may …
27th September 2017
The Saudi government’s decision to lift the ban that prohibits women from driving in the Kingdom is clearly a positive step for women’s rights and could potentially have a significant economic impact by increasing the very low female labour force …
The latest evidence suggests that the hit to Qatar’s economy from the diplomatic crisis with regional powers is starting to fade. Even so, a quick diplomatic solution to the crisis appears increasingly remote and, against this backdrop, we expect growth …
21st September 2017
Saudi inflation remained in negative territory in August but with the government gearing up for a fresh round of subsidy cuts as well as the introduction of a new value-added tax, inflation is likely pick up sharply to 4.0-4.5% early next year. … Saudi …
20th September 2017
The worst of the downturn in Saudi consumer spending appears to have passed, but there’s no sign yet that the reversal of civil service benefit cuts earlier this year has boosted the recovery. With austerity set to resume in 2018, we expect household …
19th September 2017
Kuwait’s balance sheet is the strongest in the GCC, but ongoing austerity and slow implementation of the latest development plan mean it is likely to be among the region’s weaker performers in 2018-19. … Kuwait: strong balance sheet, but weak …
14th September 2017
After a dreadful few years, Egypt’s tourism sector has shown tentative signs of a recovery. Government hopes that the sector can quickly return to its pre-2011 heyday are well wide of the mark, but a pick-up in tourist receipts should still help to narrow …
13th September 2017
The drop in Egyptian inflation last month, to 31.9% y/y, confirms that it has now passed its peak. We expect it to fall sharply towards the end of the year which should bring interest rate cuts on to the agenda. … Egypt Consumer Prices …
11th September 2017
Reports that the Saudi government is planning to dilute its reform plans may be the first sign that the power and influence of Crown Prince Mohammed bin Salman is starting to wane and that broader opposition to reform is building. There’s a clear risk …
7th September 2017
Egypt’s budget deficit has narrowed sharply over the past year and the high public debt-to-GDP ratio should start to fall back soon. However, the authorities have already missed some of the fiscal targets outlined by the IMF back in January. For now, …
6th September 2017
August’s whole economy PMIs for the MENA region suggest that recoveries in non-oil sectors in the Gulf have regained some momentum, while Egypt’s economy has picked up on the back of stronger external demand. … Whole Economy PMIs …
Changes at the top of the royal family have paved the way for King Salman’s son, Mohammed bin Salman, to accede to the throne, with some suggesting that an abdication and succession could take place in the next month or so. In this Watch, we take a closer …
30th August 2017
The diplomatic crisis between Qatar and regional powers seems to be in deadlock. Saudi Arabia and its allies revised their demands in July to something that appeared to be more palatable for Doha, but the Qatari authorities have refused to enter into …
24th August 2017
Equity markets across most of the emerging world have risen over the past month but those in the Middle East and North Africa have fallen back, continuing their underperformance this year. Stocks in the Gulf have struggled against the backdrop of …
23rd August 2017
Our GDP Tracker suggests that the downturn in the Saudi economy deepened in the second quarter and we expect GDP to fall at an even steeper pace over the second half of the year. Over 2017 as a whole, we expect the economy to contract by 1.0%. … Saudi …
22nd August 2017
The Central Bank of Egypt brought its tightening cycle to an end last night. With inflation likely to fall sharply over the next six-to-nine months, we expect that the MPC will start to ease monetary policy by the end of the year. Ultimately, we think …
18th August 2017
