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The Egyptian central bank’s decision to leave interest rates unchanged today confirmed that policymakers are looking through the recent surge in inflation but, while inflation should start to fall soon, any loosening of monetary policy is still some way …
30th March 2017
The recent dip in oil prices has prompted the usual drop in equity markets across the Gulf, but bond markets have fared better. In fact, spreads on the region’s dollar bond have actually narrowed over the past month. Despite a small rally yesterday, oil …
Saudi Arabia’s economy picked up in the final quarter of 2016, supported by stronger growth in both the oil and non-oil sectors. Cuts to oil output on the back of the OPEC deal will trim headline growth this year but the recovery in the non-oil sector …
29th March 2017
The recent drop in oil prices, from around US$56pb at the start of March to just over US$51pb at present, is unlikely to be a major cause for alarm in the Gulf. For one thing, oil prices are still above their average of US$45pb recorded last year. …
Today’s decision by the Saudi authorities to lower the tax rate applied to Aramco is unlikely to have any impact on the Kingdom’s day-to-day public finances. Instead, it simply reflects a shift in the channels through which oil revenues accrue to the …
27th March 2017
Our GDP Tracker suggests that Saudi Arabia’s economy slowed at the start of this year, which was entirely due to oil production cuts. There has been better news on the non-oil economy, where easing fiscal austerity has supported an improvement in recent …
The recent dip in oil prices has raised concerns in some quarters that the Saudi authorities may devalue the riyal, but we find this highly unlikely. Indeed, the probability that the dollar peg will be abandoned is lower now than at any time since fears …
23rd March 2017
Saudi inflation was in negative territory for a second consecutive month in February, but there are signs that deflation may not last much longer. … Saudi Arabia Consumer Prices …
22nd March 2017
Household consumption in Saudi Arabia slowed sharply last year in the face of fiscal austerity and, while low-level indicators suggest that the worst may now be over, there’s little sign of a strong pick-up. … Saudi consumer spending continues to …
21st March 2017
Headline GDP growth in the Gulf looks is likely to slow to an eight-year low of 1.5% in 2017. However, this will be entirely the result of oil production cuts as countries comply with last year’s OPEC deal. The good news is that the region’s non-oil …
20th March 2017
Saudi Arabia has continued to comply with its side of November’s OPEC agreement and recent comments from policymakers suggest that the Kingdom’s opposition to extending the deal beyond June is easing. While this increases the chances of the deal being …
14th March 2017
The sharp slowdown in credit growth in Saudi Arabia is likely to reach a trough soon. However, as we explain in this Watch, a weak economic outlook and higher interest rates mean that lending growth is unlikely to return to the rapid rates recorded over …
13th March 2017
Egyptian inflation jumped again in February but it is probably now close to peaking and is likely to start falling in the second half of the year. This, coupled with signs that the balance of payments position is improving, means that it is unlikely the …
9th March 2017
Egypt’s balance of payments data for Q4 released today show only a modest narrowing in the current account deficit, but digging a little deeper there are signs that the 50% drop in the pound against the dollar since early November is helping to place the …
8th March 2017
Our GDP Tracker suggests that the Saudi economy strengthened in the final quarter of 2016 as the drag from fiscal austerity eased. Headline GDP growth is likely to slow sharply in the first half of this year on the back of oil production cuts, but we …
6th March 2017
February’s batch of PMI data suggests that the Gulf’s non-oil sectors have continued to strengthen, supporting our view that growth may be a little stronger than most expect this year. … Whole Economy PMIs …
The recent dip in Saudi inflation into negative territory has raised concerns in some quarters that the country could be at risk of a long and damaging period of deflation. There are good reasons to think that such a scenario will be avoided, but sluggish …
2nd March 2017
Oman and, for the first time, Kuwait are expected to sell dollar bonds in the coming weeks, continuing the raft of issuances from the Gulf countries over the past year. Kuwait’s strong balance sheet means that it should be able to sell debt at low yields …
28th February 2017
Tunisia’s economy picked up over the course of 2016 and, while growth is likely to strengthen a little further over the next couple of years, we expect it to remain sluggish at 2-3%. … Tunisia’s economy set for a slow recovery in …
23rd February 2017
Consumer prices in Saudi Arabia fell in year-on-year terms in January as food prices continued to decline at a steep pace and the effects of last year’s subsidy cuts dropped out of the annual comparison. However, with fresh subsidy cuts on the cards in …
21st February 2017
The latest activity data suggest that non-oil sectors in the two largest Gulf economies, Saudi Arabia and the UAE, are starting to recover from their slumps in early 2016. Both countries have been major beneficiaries from the OPEC deal in November to cut …
20th February 2017
The decision by Egypt’s central bank to leave its policy interest rate on hold despite the rise in inflation to a 30-year high last month means that additional monetary tightening is no longer on the cards. We have taken the 150bp of rate hikes that we …
16th February 2017
Weaker import demand and a pick-up in foreign investment have pushed the Egyptian pound up by 15% against the US dollar in the past couple of weeks, and we think the rally may have a little further to run. Even so, the pound will remain much weaker than …
14th February 2017
The sharp rise in oil prices means that, despite implementing a larger-than-pledged oil output cut, Saudi Arabia has been a big beneficiary from the recent OPEC agreement. But with compliance likely to wane in the coming months and signs that non-OPEC …
13th February 2017
The rise in Egyptian inflation in January to a 30-year high of 28.1% y/y makes it even more likely that the central bank will raise interest rates at its monetary policy meeting on Thursday. We now expect a 100bp hike in the overnight deposit rate. … …
The recent sharp slowdown in private sector credit growth, coupled with falling real estate prices, has ignited concerns that Qatar’s credit boom of the past few years is quickly unravelling. For now, we think severe strains in the banking sector should …
9th February 2017
Algeria’s economy held up better than expected last year as a rebound in the hydrocarbon sector offset weakness in the non-hydrocarbon sector. However, the adjustment to low oil prices is far from over and a further depreciation of the dinar and more …
8th February 2017
January’s batch of PMI data suggests that the Gulf’s non-oil sectors have continued to strengthen. Meanwhile, amid high inflation and a big fiscal squeeze, Egypt’s economy is still struggling. … Whole Economy PMIs …
6th February 2017
The spotlight in the region’s currency markets over the past couple of years has been on the threat of large devaluations but, as we explain in this Focus, the risks in Morocco appear to lie in the other direction. With the authorities pushing ahead with …
3rd February 2017
An early morning tweet from President Trump suggests that his attention may now shift to Iran and its infamous nuclear deal. In this Update, we explain what has happened, the chances of the deal being scrapped and what it means for the rest of the region. …
2nd February 2017
The recent decline in Saudi interbank rates reflects fading fears that the riyal will be devalued and easing liquidity shortages in the banking system. We still expect Saudi interbank rates to rise over the coming years, although this will be due to …
30th January 2017
Egypt’s recent economic reforms received a warm welcome from investors earlier this month, as the country successfully issued US$4bn of international bonds. The sale was almost double the amount that the Egyptian authorities had originally targeted and …
26th January 2017
The big fiscal squeeze that the Egyptian government has signed up for as part of its IMF deal will, if fully implemented, bring the debt ratio down. However, the authorities are likely to struggle to meet the targets set by the Fund and we suspect that …
The recent pull-back in US Treasury yields has prompted several MENA sovereigns to push ahead with their plans to issue dollar debt. With the Fed likely to hike interest rates more aggressively in 2017-18, these governments may be sensing a final …
23rd January 2017
Saudi inflation fell further at the end of last year as the decline in food prices steepened. Inflation is likely to ease a little further in the first few months of 2017, but fresh subsidy cuts will start to push it up again by the middle of the year. … …
Our GDP Tracker suggests that the Saudi economy was on an improving trends towards the end of last year. But we expect growth to be slower this year compared with 2016 as weakness in the oil sector more than offsets a recovery in the non-oil economy. … …
19th January 2017
The conditions attached to Egypt’s IMF loan, details of which were released earlier today, suggest that a significant fiscal squeeze is in the pipeline this year, while monetary policy will remain tight. This supports our view that the economy will slow …
18th January 2017
The latest data show that Saudi Arabia’s balance of payments position improved markedly towards the end of 2016 and, with oil prices likely to grind higher this year, this trend looks set to continue. Accordingly, any remaining fears that policymakers …
The appreciation of the US dollar since the end of last year has prompted renewed concerns over the sustainability of currency pegs in the Gulf, but we think these fears are overdone. Oil prices are the key determinant of the devaluation threat and we …
13th January 2017
Yesterday’s inflation data from Egypt made for grim reading and we think the headline rate is likely to peak at around 27% in the coming months, prompting further interest rate hikes. Price pressures should start to ease around the middle of the year as …
11th January 2017
The 50% drop in the pound against the US dollar and fresh subsidy cuts pushed Egyptian inflation up further last month to its second-highest rate in a quarter of a century. With inflation likely to rise even further in the coming months, we think the …
10th January 2017
Saudi Arabia’s economy is likely to grow at its slowest pace since the global financial crisis this year. However, this will largely reflect weakness in the oil sector. In contrast, with austerity taking a breather, the non-oil sector should embark on a …
9th January 2017
Saudi Arabia’s recent budget suggested that fiscal consolidation will take a breather this year and, while the “Fiscal Balance Program” points to austerity resuming from 2018, it is likely to be less harsh than in the past couple of years. Perhaps more …
5th January 2017
December’s batch of PMI data suggest that the Gulf economies ended 2016 on a brighter note, supported by a boost sentiment from higher oil prices and signs that the worst of the drag from fiscal austerity may be over. … Whole Economy PMIs …
4th January 2017
Saudi Arabia’s budget suggests that, following a significant improvement in the public finances over the past couple of years, the fiscal stance will be broadly neutral in 2017. This supports our view that the economy should embark on a gradual recovery …
22nd December 2016
Saudi Arabia’s Finance Minister, Mohammed al-Jadaan, will deliver his maiden budget later this month, which is likely to reinforce the government’s commitment to tighter fiscal policy in order to adjust to low oil prices. That said, we think there’s scope …
19th December 2016
Saudi inflation fell to 2.3% y/y in November, its lowest rate this year. We expect inflation to settle at 2.0-2.5% in 2017, compared with an average of around 3.5% this year, which should support a modest recovery in consumer spending. … Saudi Arabia …
The rise in oil prices following the recent OPEC deal to cut output has supported financial markets across the Gulf over the past month. Stock markets have perked up and spreads of dollar bonds over US Treasuries have narrowed, limiting the overall rise …
15th December 2016
The recent agreement reached by OPEC and other oil producers to cut output has prompted speculation of a major shift in Saudi Arabia’s oil policy, but we remain cautious. After all, the Kingdom has agreed to a cut in production that is not drastically out …
14th December 2016
The Middle East & North Africa region will struggle again next year, recording its weakest economic growth since the global financial crisis in 2009. Fiscal policy will have to be tightened in most places in order to rein in twin budget and current …
12th December 2016
