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The early evidence suggests that the diplomatic crisis between Qatar and regional powers dealt a damaging, but apparently brief, blow to Qatar’s economy. … Qatar’s diplomatic crisis: the economic hit so …
15th August 2017
Egyptian inflation rose to its highest rate since 1986 in July, but it has been pushed up by a number of one-off factors that will fade over the next six-to-nine months. Indeed, we think inflation has now peaked and will begin to fall more quickly than …
10th August 2017
July’s ‘whole economy’ PMIs for the MENA region suggest that recoveries in the nonoil sectors of the Gulf economies resumed at the start of Q3, while conditions in Egypt’s economy appear to have improved markedly. … Whole Economy PMIs …
3rd August 2017
Our GDP Tracker suggests that the pace of contraction in Saudi Arabia’s economy eased between March and April. However, that is likely to be temporary, and we expect Saudi GDP to fall at a steeper pace in the second half of the year than in the first …
2nd August 2017
There is growing evidence that the diplomatic crisis between Qatar and regional powers has (at least temporarily) hurt Qatar’s economy, but there are also signs that tensions in the country’s financial markets have eased more recently. … Strains in …
31st July 2017
A large chunk of the recent widening of Morocco’s current account deficit to around 5% of the GDP can be explained by a one-off jumps in import, mainly related to the expansion of capacity in the country’s export sector. Accordingly, we don’t think there …
28th July 2017
Egypt’s central bank appears to have been intervening in the foreign exchange market to prevent the pound from strengthening, but we think the forces putting upward pressure on the currency will soon start to fade. We remain comfortable with our view that …
26th July 2017
Diplomatic efforts have failed to bring an end to the stand-off between Qatar and the so-called Anti-Terror Quartet (Saudi Arabia, UAE, Egypt and Bahrain). Encouragingly, though, there are signs that tensions are easing and that the groundwork is being …
21st July 2017
Saudi inflation remained in negative territory last month, although the introduction of new “sin” taxes on sugary drinks and tobacco caused the rate of decline ease. And there are reasons to think that outright deflation may not last much longer. … Saudi …
18th July 2017
Saudi Arabia’s official foreign exchange reserves have continued to decline sharply, despite the marked improvement in the current account position over the past year or so. This has raised concerns in some quarters but, as we explain in this Watch, it …
17th July 2017
A threat by regional powers to expel Qatar from the Gulf Cooperation Council (GCC) has sparked fears that the group could be disbanded. A complete breakup of the GCC seems highly unlikely but, even if we are wrong, there are good reasons to think that the …
12th July 2017
Egyptian inflation inched up to 29.8% y/y in June and recent subsidy cuts will cause it to rise a bit further in the next few months. Even so, as the effects of last year’s sharp drop in the pound start to unwind towards the end of 2017, inflation will …
10th July 2017
The Egyptian central bank’s surprise decision late last night to hike its benchmark overnight deposit rate by 200bp, to 18.75%, was largely a response to recently-announced subsidy cuts, which will temporarily push up inflation. However, the accompanying …
7th July 2017
The slowdown in the Middle East and North Africa should bottom out in the second half of this year and growth is likely to strengthen in 2018-19. In the Gulf, the hit to headline GDP growth from OPEC-agreed oil output cuts will start to fade next year as …
5th July 2017
June’s PMI data suggest that Saudi Arabia’s non-oil economy has lost a bit of steam, but this probably partly reflected a deterioration in sentiment on back of last month’s dip in oil prices. The recent reversal of civil service benefit cuts should …
4th July 2017
Political developments have dominated the news in the MENA region this month. In Qatar, financial markets have sold off amid a diplomatic spat with regional powers. So far, though, the broader economic impact appears to have been limited. Qatar’s oil and …
30th June 2017
Saudi Arabia’s economy recorded its first outright contraction since the global financial crisis in Q1, driven by the impact of oil production cuts. The contraction is likely to deepen over the rest of year and, while the economy should return to growth …
The recent elevation of Saudi Arabia’s Mohammed bin Salman to crown prince has raised hopes of a renewed impetus to push through his Vision 2030 reform programme. But, while the scope of the programme is impressive, it will face numerous implementation …
27th June 2017
Saudi Arabia’s equity market has rallied on the back of MSCI’s decision to put the country on its “watch list” for an upgrade to Emerging Market status, but there are a few reasons to think that the optimism may be overdone. … Saudi markets rally as MSCI …
21st June 2017
The decision by Saudi Arabia’s King Salman to promote his son, Mohammed bin Salman (MbS), to crown prince provides some clarity on the line of succession. That being said, many of the barriers to the government’s economic reform drive remain in place and …
Recent comments from the IMF and ratings agencies have put the focus back on the weak balance sheets of the Gulf’s two smallest economies, Bahrain and Oman. We have warned for some time that both countries faced a sizeable adjustment to low oil prices …
15th June 2017
Saudi inflation stood in negative territory for a fifth consecutive month in May, but with subsidy cuts in the pipeline outright deflation is unlikely to last much longer. … Saudi Arabia Consumer Prices …
14th June 2017
Concerns over the impact on Qatar from its diplomatic spat with neighbouring countries have largely focussed on trade ties, but we think investors should be keeping a closer eye on Qatar’s banking sector. While a full-blown crisis seems unlikely, external …
13th June 2017
The diplomatic spat between Qatar and its neighbours has sparked fears that it may be forced to devalue the riyal, but we think this is highly unlikely. In particular, the country’s strong balance sheet means that the authorities are well-placed to …
8th June 2017
The drop in Egyptian inflation in May supports our view that last month’s surprise interest rate hike will be a one-off. That said, rate cuts are unlikely to come on to the agenda until the turn of the year. … Egypt Consumer Prices …
The recent spat between Qatar and regional powers has escalated over the past 24 hours, but there are good reasons to think that the impact on these economies and global energy markets will be limited. … Economic fallout from Qatar diplomatic spat likely …
5th June 2017
May’s PMI data suggests that recoveries in the Gulf’s non-oil sectors have lost a bit of momentum, but we don’t think this marks the start of a sharp downturn. Elsewhere, the PMIs brought further evidence that Egyptian firms are benefitting from a boost …
Stock markets across the Middle East and North Africa have struggled over the past month, continuing their relative underperformance since the start of the year. This largely reflects weakness in Gulf equities following a dip in oil prices; those in the …
31st May 2017
OPEC’s decision this month to roll over its oil output cuts displayed a rare sense of cohesion from the cartel, but there are signs that de-facto leader Saudi Arabia is seeking an eventual end to intervention. The extension of the cuts to the end of March …
30th May 2017
Our GDP Tracker suggests that Saudi Arabia’s economy stagnated in March as oil production cuts continued to trim headline growth. Encouragingly, though, the non-oil economy strengthened further and the early signs are that this continued in Q2. … Oil …
OPEC’s decision to rollover its oil output cuts didn’t come as a surprise, but the fact that calls for deeper cuts never even made it on to the table suggests that the Gulf economies are resistant to bolder action. While the cuts will continue to trim …
25th May 2017
We were in Dubai last week for meetings with clients and local contacts. In this Update, we summarise three key takeaways from our visit. … Dubai: notes from the …
24th May 2017
The Egyptian central bank’s surprise decision late last night to hike its benchmark interest rate by 200bp, to 16.75%, appears to the result of pressure from the IMF. The move is likely to be a one-off and we expect the next change in interest rates to be …
22nd May 2017
Egypt’s new investment law is a positive step towards improving the dire business environment. But greater efforts, particularly in raising domestic savings, are needed if investment is to reach the levels that historically have supported strong and …
16th May 2017
This month’s dip in oil prices means that it is almost certain OPEC will agree to an extension to its oil output cuts into the second half of this year. But we think Saudi Arabia and the other Gulf countries are likely to resist calls for even deeper …
11th May 2017
New quarterly public finance figures released by the Saudi government today show a sharp narrowing in the budget deficit at the start of this year, supported by higher oil revenues. The data also suggest that the large spending cuts implemented over the …
The further rise in Egyptian inflation last month, to 31.5% y/y, was driven entirely by stronger food price pressures. We think inflation is now close to a peak and today’s figures are unlikely to prompt the central bank to hike interest rates at its …
10th May 2017
The recent fall in oil prices has reignited fears over the outlook for the Gulf, but as we explain in this Watch these countries are in a better position now to weather a period of low oil prices than at any point over the past three years. One important …
8th May 2017
The recent recovery in the UAE’s non-oil sector is set to continue over the coming years, supported by easing fiscal austerity, robust global economic growth and a step up in preparations for the 2020 World Expo. Overall, our GDP growth forecasts are …
4th May 2017
April’s PMI data suggest that non-oil sectors in the Gulf have continued to recover from last year’s austerity-led slump. Elsewhere, the PMIs brought further evidence that Egypt is feeling the benefits from a boost to external competitiveness. … Whole …
3rd May 2017
Fears that low oil prices would force the Gulf countries to devalue their currencies have continued to fade over the past month. However, one country in the region where the authorities have loosened their grip on the currency is Tunisia. The dinar has …
26th April 2017
Our GDP Tracker suggests that Saudi Arabia’s economy continued to slow in February on the back of oil production cuts. On a more positive note, the recovery in the non-oil sector has strengthened and is likely to gain momentum following the government’s …
The Saudi government’s decision to reinstate benefits for civil servants appears to be a U-turn on one of the more unpopular austerity measures, rather than the start of a wholesale reversal of recent belt tightening. We still expect the headline budget …
24th April 2017
Recent comments from Saudi Arabia’s Oil Minister, Khalid al-Falih, suggest that OPEC is edging towards an agreement to extend its oil production cuts when it meets in Vienna next month. Having ruled out an extension earlier in the year, Mr. al-Falih has …
21st April 2017
Saudi inflation stood in negative territory for a third consecutive month in March, but we continue to think a long and damaging bout of deflation should be avoided. … Saudi Arabia Consumer Prices …
18th April 2017
Budget positions across the Gulf should improve over the next couple of years – and many will return to surplus – supported in large part by higher oil prices. As a result, governments across the region are likely to ease up on fiscal austerity, while the …
13th April 2017
The Egyptian government has probably made sufficient progress to pass the upcoming review of its IMF programme and receive the second tranche of its US$12bn loan. Investors are likely to welcome this, but we think there will be bigger hurdles for the …
11th April 2017
Egyptian inflation rose further in March, to 30.9% y/y, but we think it’s close to peaking and the central bank is unlikely to tighten monetary policy further. Indeed, as inflation starts to fall back later in the year, the next move in interest rates is …
10th April 2017
The recent dip in Saudi inflation into negative territory following a period of weak growth has raised broader concerns about the threat of deflation in the Gulf. Our core inflation measures for the region are generally very low and we expect this to …
6th April 2017
March’s PMI data show that the recovery in the Gulf’s non-oil sectors continued at the end of Q1. There’s little sign that the fall in oil prices last month has hit sentiment. Meanwhile, the surveys suggest that while Egypt’s economy has picked up …
4th April 2017
