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Egyptian inflation surged to 19.4% y/y in November following the float and subsequent 50% drop in the pound against the US dollar, as well as fresh subsidy cuts. Inflation looks set to rise even further in the coming months which is likely to prompt …
8th December 2016
Our GDP Tracker suggests that Saudi Arabia’s economy stabilised in Q3 and was on an improving trend towards the end of the quarter, supported by stronger growth in the oil sector. … Saudi economy holds steady in …
7th December 2016
The small drop in Egypt’s PMI last month suggests that the economy hasn’t deteriorated significantly following the pound’s float and subsequent 50% fall against the US dollar. But with inflation set to rise sharply and monetary and fiscal policy …
5th December 2016
Interbank interest rates in Saudi Arabia have edged down over the past month as investor sentiment towards the Kingdom has improved and policy moves have helped to ease liquidity constraints at banks. Nonetheless, with the US Federal Reserve set to hike …
29th November 2016
The 50% fall in the Egyptian pound against the US dollar since the central bank floated the currency at the start of November will cause economic growth to slow sharply in the coming quarters. Interest rates have already been hiked by 300bp and we think …
28th November 2016
Two weeks on from Donald Trump’s victory in the US Presidential election and we’re starting to get a sense of the likely shape and priorities of his administration. The inherent contradictions in Mr. Trump’s foreign policy make it difficult to decipher …
23rd November 2016
The oil cartel, OPEC, is likely to reach some sort of face-saving deal to cut oil output at its meeting next week, but we think claims that Saudi Arabia has abandoned its strategy of protecting its share of the oil market are wide of the mark. As we argue …
22nd November 2016
Saudi inflation eased for a fourth consecutive month in October, recording its lowest rate this year as food prices fell at a steeper pace and the effect of administered price hikes continued to fade. … Saudi Arabia Consumer Prices …
21st November 2016
Today’s decision by Egypt’s central bank to keep its key interest unchanged at 14.75% is probably a pause in the tightening cycle. We think the fall in the pound since it was floated will push inflation above 20% y/y in the coming months, prompting an …
17th November 2016
The latest figures from our Saudi GDP Tracker suggest that the Kingdom’s economy stabilised in Q3, supported by stronger growth in the oil sector. Some more timely indicators have raised fresh concerns over the health of the economy but, with the pace of …
16th November 2016
The sharp fall in the Egyptian pound since it was floated earlier this month should help to narrow the country’s current account deficit and support a pick-up in private capital inflows. If backed up by further economic reforms, this should eventually …
15th November 2016
Egyptian inflation dipped for a second consecutive month in October. But the 45% fall in the pound against the US dollar over the past week, as well as additional fuel subsidy cuts, means inflation is likely to climb above 20% in the coming months. … …
10th November 2016
The 45% fall in the Egyptian pound against the US dollar over the past week has probably taken it beyond its “fair value”, so we wouldn’t be surprised to see a small rebound in the coming days and weeks. … Where next for the Egyptian …
The Central Bank of Egypt’s decision to float the pound last week, coming alongside a raft of subsidy cuts, means inflation is likely to climb to more than 20% in the coming months. The impact is likely to be temporary and inflation should start to ease …
7th November 2016
The decision this morning by the Central Bank of Egypt (CBE) to finally adopt a floating exchange rate regime is a positive step and moves the government closer to securing a US$12bn financing package from the IMF. There will inevitably be fresh pain for …
3rd November 2016
The decision to replace Saudi Arabia’s finance minister is unlikely to mark a shift in the Kingdom’s approach to dealing with the fallout from lower oil prices. While the outgoing finance minister had become increasingly unpopular due to the austerity …
1st November 2016
The past month has been dominated by Saudi Arabia’s inaugural international bond sale and, in the first few days of trading, yields on the bonds have edged down in line with those in the rest of the Gulf. Meanwhile, the Egyptian pound has fallen further …
27th October 2016
The Egyptian government has inched closer to an IMF financing package over the past month after securing a US$2bn deposit from Saudi Arabia. This makes up a third of the bilateral financing that the Fund has demanded as a prerequisite of the deal. The …
26th October 2016
Saudi inflation dropped to its lowest rate this year in September as food prices fell at a steeper pace and the effect of administered price hikes earlier this year continued to fade. We expect inflation to ease further over the next 12-18 months. … Saudi …
24th October 2016
Banks in Saudi Arabia have coped well so far with the fallout from lower oil prices and we think the sector is in a strong position to confront the ongoing economic headwinds over the coming years. … Saudi banks should continue to weather economic …
Saudi Arabia’s record-breaking US$17.5bn sale of international bonds will finance around a third of next year’s budget deficit and almost all of the current account shortfall, so the Kingdom’s foreign exchange reserves are unlikely to fall much beyond …
19th October 2016
Saudi Arabia’s upcoming international bond issuance and the recent OPEC agreement have put the spotlight back on to the country’s adjustment to low oil prices. One point that is often overlooked is that the government has made significant progress on …
18th October 2016
Clinton’s housing proposals will not give homeownership much of a boost. The focus on down payments ignores the fact that it is the need for a high credit score which is preventing many Americans from buying. And even if the proposals do help more people …
12th October 2016
Saudi Arabia’s economy didn’t perform as badly as we had feared in Q2 and our GDP Tracker suggests that things have stabilised at the start of Q3. That said, more timely data and recent policy announcements have raised concerns that the economy may …
10th October 2016
Egyptian inflation dipped to 14.1% y/y in September, but this is unlikely to mark the start of a downward trend. Policymakers are edging to closer to an IMF deal, so a fresh devaluation of the pound and further subsidy cuts are looking increasingly …
Some analysts have argued that Egypt won’t devalue the pound until the country has a sustainable source of capital inflows, but we think this misses the point. The country is unlikely to experience a substantial pick-up in foreign investment until the …
6th October 2016
The drop in PMIs from the Gulf last month will raise concerns that the worst of the economic slowdown may not yet have passed. Meanwhile, the PMIs brought further evidence that Egypt’s economy is struggling and that price pressures continue to build. … …
5th October 2016
The 1.4% y/y Q2 GDP growth in Saudi Arabia reported by the local statistics authority was significantly stronger than we had expected. But we find this difficult to square with the weaker low-profile data as well as anecdotal reports. Accordingly, while …
30th September 2016
Last night’s OPEC deal to cut output is short on details, although our sense is that it’s unlikely to be a game-changer for Saudi Arabia, even if it shoulders most of the burden of the fall in production. The deal does show that the Saudi authorities have …
29th September 2016
Yields on Egyptian dollar bonds have edged down over the past month as the government has moved closer to securing an IMF deal. One of the likely lending conditions, however, is that the authorities adopt a more flexible exchange rate. We think this is …
27th September 2016
The sharp fall in Saudi inflation in August was driven by a drop in food inflation, although there were signs that the weakness of the economy is curtailing underlying price pressures. We expect inflation to ease further over the next 12-18 months. … …
26th September 2016
The decision by Egypt’s central bank to keep its key interest unchanged at 11.75% today, despite the recent sharp rise in inflation, suggests that large rate hikes are only likely once an IMF deal is in place and the pound has been devalued. We think …
22nd September 2016
There have been signs in recent weeks that the sharp slowdown in the Saudi economy caused by fiscal austerity may have prompted the authorities to look at alternative solutions to deal with the collapse in oil prices. In particular, officials have …
Saudi Arabia’s upcoming international bond sale has sparked a lot of investor interest and we estimate that the Kingdom will manage to sell its 10-year debt for a relatively low yield of 3.50-3.75%. Moreover, the issuance should go a long way to financing …
20th September 2016
The slowdown in Saudi Arabia’s economy has prompted the authorities to soften their opposition to a deal to freeze oil output. While a deal is more likely than it was earlier this year, there are several reasons, including ongoing tensions with Iran, to …
14th September 2016
The Middle East and North African economies have slowed sharply this year and growth is likely to be much weaker than the consensus expects in 2017-18. Growth in the Gulf will remain sluggish as the adjustment to low oil prices continues. Dollar pegs will …
13th September 2016
The further sharp rise in Egyptian inflation, to 15.5% y/y in August, is likely to prompt the central bank to hike interest rates at its meeting later this month. With further subsidy cuts on the cards and the pound set to fall again, the inflation …
8th September 2016
Saudi Arabia’s upcoming Eurobond issuance has thrust the country’s finances back under the spotlight. Overall, the hit from lower oil prices has been significant – annual oil export revenues are down by around US$200bn – but large savings and a low debt …
6th September 2016
The dip in Egypt’s PMI last month suggests that, while financial markets have welcomed the announcement of an IMF deal, business sentiment doesn’t appear to have received a boost. Meanwhile, PMIs from the Gulf were a mixed bag but, in general, support our …
5th September 2016
We think the Egyptian pound could fall by as much as 25% against the US dollar, to 12.0/US$, by end-2017 if the authorities shift to a more flexible exchange rate as part of its prospective IMF deal. … Egyptian pound could fall 25% if central bank loosens …
1st September 2016
The Egyptian authorities seem close to securing an IMF deal, but the conditions attached to lending have been a stumbling block to a bailout in the past and opposition has already started to emerge this time around. In this Update, we take a closer look …
31st August 2016
Our GDP Tracker suggests that the slump in Saudi Arabia’s economy has deepened, with output falling by more than 2% y/y in June. A recovery is likely to get underway over the rest of this year and in 2017-18, but it is likely to be slow-going. … Slump in …
30th August 2016
Financial markets in Egypt have rallied over the past month after the government reached an agreement with the IMF over a US$12bn financing package. Equities have risen, spreads on dollar-denominated bonds have narrowed and the pound has strengthened on …
25th August 2016
Saudi inflation edged down in July to its lowest rate this year, at 3.8% y/y, and further ahead the weakness of economic activity means that headline inflation will fall further over the next twelve to eighteen months. … Saudi Arabia Consumer Prices …
22nd August 2016
The UAE’s economy is likely to record its slowest growth since 2010 this year, but the country’s strong balance sheet means that it should embark on a recovery in 2017-18. Indeed, we expect it to be one of the Gulf’s best performing economies in the …
The past month has brought further evidence that non-oil sectors in the Gulf are suffering as low oil prices have started to hit home. The picture is most stark in Saudi Arabia, where official data showed that the non-oil economy contracted by 0.7% y/y in …
18th August 2016
Our GDP Tracker suggests that Saudi Arabia’s economy is suffering heavily under the weight of fiscal austerity, with output contracting by around 2% y/y as of May. IMF and consensus expectations for growth of more than 1% this year are well wide of the …
17th August 2016
July’s high inflation reading in Egypt, of 14.0% y/y (the same as in June) confirmed that March’s devaluation of the pound is continuing to pass through into higher consumer prices. Against this backdrop, we still think it’s likely that the central bank …
10th August 2016
The sharp improvement in last month’s ‘whole economy’ PMIs in the Gulf suggest that the slowdown seen in the first half of the year may now have bottomed out. … Whole Economy PMIs (Jul. …
3rd August 2016
Egypt’s financial markets have responded extremely positively to the news that the government is close to securing an IMF deal, although at this stage few details about the negotiations are actually known. In this Watch, we shed some light on Egypt’s …
2nd August 2016
