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News that Egypt is on the brink of receiving an IMF deal (and the subsequent easing of pressure on the pound) provided the central bank with a window of opportunity to pause its tightening cycle today, but we still think further interest rate hikes are …
28th July 2016
Most stock markets in the Gulf have edged up over the past month, but their performance looks poor compared with the rises seen elsewhere in the emerging world. Meanwhile, expectations of another devaluation of the Egyptian pound have continued to build. …
26th July 2016
Speculation has mounted in recent weeks that the Egyptian pound could be on the cusp of (another) devaluation. The initial rumours were sparked by the central bank governor, Tarek Amer, who suggested that his predecessors’ decision to keep the pound …
25th July 2016
The Egyptian pound has been held steady since March’s devaluation, but persistent strains in the balance of payments mean that it needs to fall further. Recent shifts towards more orthodox policymaking suggest that this is likely to happen sooner rather …
19th July 2016
Saudi Arabia’s current account position deteriorated at the start of this year due to lower oil prices, but even taking this into account the underlying balance of payments position improved. We expect this trend to continue over the coming quarters, …
14th July 2016
The relative strength of the PMI readings from Saudi Arabia have prompted some to argue that the economy is holding up well. However, our GDP Tracker suggests that the economy is struggling and we expect it to record very weak, if any, growth this year. … …
12th July 2016
Rumours have circulated again that Egypt is seeking a deal with the IMF and, as we argue in this Watch, an agreement is now looking more likely than at any point in the past five years. A financing package would help to plug the holes in Egypt’s balance …
5th July 2016
Data released over the weekend, showing that Saudi GDP growth slowed in Q1 (particularly in the non-oil private sector), highlights the impact that fiscal austerity is already having on the economy. And more timely data suggest that growth has weakened …
4th July 2016
The return of several countries to the IMF for financial support over the past month underlines the severity of long-standing balance of payments problems in parts of the region. In Jordan and Tunisia, recently-agreed IMF deals will help these countries …
30th June 2016
This year looks set to be the toughest for the economies of the Middle East and North Africa in almost three decades. The Gulf countries will continue to tighten fiscal policy in response to low oil prices. While this should ensure that dollar pegs remain …
29th June 2016
Egyptian financial markets have been hit in the past month amid ongoing concerns over the country’s balance of payments position. Equities have fallen, spreads on dollar bonds have widened and downward pressure on the pound remains strong. … Egyptian …
22nd June 2016
Our GDP Tracker suggests that tighter fiscal policy is taking a heavier toll on the economy than even we had anticipated. We will revisit our forecasts soon, but the short point is that expectations for growth of anything more than 0.5% this year now seem …
21st June 2016
Saudi inflation edged down for a second consecutive month in May, although it remained elevated due to the energy and water tariff hikes earlier in the year. Further ahead, with economic growth slowing sharply, we think underlying price pressures should …
20th June 2016
Today’s 100bp rate hike in Egyptian interest rates was larger than even our own above-consensus forecast and, with inflation likely to rise further in the coming months and the central bank willing to tighten policy aggressively, we’ve pencilled in …
16th June 2016
Speculation has mounted in recent weeks that Saudi Arabia will devalue the riyal. For our part, we have long argued that policymakers would be loath to abandon the dollar peg. And, as we explain in this Watch , there are strong economic reasons to expect …
14th June 2016
Egyptian inflation jumped to 12.3% y/y in May as the impact of March’s devaluation of the pound continued to feed through into price pressures, while a decision by the government to hike medicine prices last month also played a role. Today’s figures, …
9th June 2016
Saudi Arabia’s “National Transformation Plan” represents a credible effort by the authorities to flesh out some of their policies as they look to overhaul the Kingdom’s economy over the coming years. In particular, the government provided more details on …
7th June 2016
PMIs from the Gulf picked up in May, but we suspect that this can be largely explained by a boost to sentiment on the back of the further recovery in oil prices. Meanwhile, the data provided further evidence that price pressures in Egypt are building …
6th June 2016
This week’s OPEC meeting in Vienna is likely to pass without any major surprises. Policymakers should be a little happier heading into the meeting than they were at the previous one in December – after all, oil prices broke through US$50pb last week for …
31st May 2016
Equity markets across the Gulf have struggled over the past month, in spite of a further recovery in oil prices. At the same time, speculation has increased that Saudi Arabia will devalue the riyal, but we maintain our long-held view that this will only …
30th May 2016
In spite of the backdrop of the recent recovery in oil prices, which broke through US$50pb today for the first time this year, speculation has mounted that Saudi Arabia will devalue its currency. We maintain our long-held view that policymakers will rely …
26th May 2016
Egypt’s tourism sector has had a torrid time in recent months and last week’s crash of an EgyptAir plane has (although the cause is still unknown) reinforced security concerns. Overall, we think tourism receipts could be down by around US$5bn (close to 2% …
Inflation in Saudi Arabia edged down last month, but it still remained elevated due to the energy and water tariff hikes earlier in the year, as well as the recent hike in tobacco import duties. These factors will keep the headline rate high this year. …
25th May 2016
Growth in the Tunisian economy is likely to pick up in the coming quarters following a difficult 2015, but we think the recovery will, in the near-term, be weak. Medium-term prospects are brighter and a combination of IMF-backed reforms and improving …
23rd May 2016
Economic growth in the Gulf countries has slowed sharply in recent months and this has raised concerns of negative spillovers into the other MENA economies. In this Watch , we argue that, for most countries, the gains from lower oil prices – the trigger …
17th May 2016
Egyptian inflation jumped to 10.3% y/y in April as the impact of March’s devaluation of the pound started to feed through into the wider economy. We expect inflation to rise further over the coming months which is likely to prompt the central bank to hike …
10th May 2016
The government reshuffle in Saudi Arabia announced over the weekend is unlikely to herald a major shift in economic policy, although it may strengthen the Kingdom’s commitment to its oil market strategy. Moreover, while the moves are a positive step in …
9th May 2016
Our GDP Tracker suggests that Saudi Arabia’s economy continued to slow sharply at the start of this year, with the non-oil sector suffering under the weight of fiscal austerity. The risks to our long-held forecast for growth of 1.5% this year lie firmly …
5th May 2016
Since March’s devaluation, Egypt’s central bank has been hesitant to let the pound fall further, but pressures are building and we think a further devaluation is on the cards. We expect the pound to reach at least 9.50/US$ by the end of this year. … …
4th May 2016
April’s PMI data suggest that Egypt’s economy has continued to struggle and provided the first sign that inflation pressures are building following March’s devaluation of the pound. Meanwhile, the decline in the surveys from the Gulf support our view that …
3rd May 2016
Saudi Arabia’s ambitious plans to overhaul its economy have grabbed the headlines in recent days, but the past month has seen a number of other Gulf countries announce further measures to deal with the fallout from low oil prices. Qatar has followed in …
29th April 2016
The Central Bank of Egypt (CBE) kept its overnight deposit rate at 10.75% today as it awaits further evidence of the impact on inflation from last month’s devaluation of the pound. With inflation set to rise and the pound likely to weaken in the coming …
28th April 2016
Saudi Arabia’s Deputy Crown Prince Mohammed bin Salman has created a buzz with his ambitious plans to transform the Kingdom’s economy, but we would caution against getting carried away. The authorities have made considerable progress in tightening fiscal …
The Saudi government’s “Vision 2030” plan outlined today has been welcomed by the local financial markets, but it provided few fresh details on the reform agenda and missed key issues such as education reform. We were hoping for more, although we will …
25th April 2016
Inflation in Saudi Arabia remained elevated at 4.3% y/y in March due to the electricity and water tariff hikes earlier in the year and, more recently, last month’s hike in tobacco import duties. These factors will keep the headline rate high this year …
Financial markets across the Gulf have performed well over the past month, supported by the continued recovery in oil prices. Meanwhile, Egyptian markets have been buoyed by last month’s decision by the central bank to devalue the pound. Speculation that …
21st April 2016
The Egyptian government seems to be increasingly reliant on the central bank to finance the budget deficit. If this persists, inflation is likely to remain elevated and downward pressure on the pound will continue to build. … Egypt: CBE’s deficit …
20th April 2016
Saudi Arabia’s insistence that Iran agree to freeze oil production scuppered any chance of a deal in Doha at the weekend and suggests that the Kingdom is in no mood to abandon its oil market strategy. And with this coming alongside the latest comments by …
18th April 2016
Our GDP Tracker suggests that Saudi Arabia’s economy slowed sharply at the start of this year as the impact of fiscal austerity weighed heavily on the non-oil sector. Meanwhile, today’s decision by Fitch to downgrade the Kingdom’s sovereign credit rating …
12th April 2016
Qatar has been one of the best performing economies in the MENA region over the past decade and one of the key drivers of this has been the rapid growth of bank lending. However, we are concerned that the credit boom looks increasingly unsustainable and …
11th April 2016
Egyptian inflation edged down to 9.0% y/y in March, but we think the inflation figures are yet to fully capture the impact of the devaluation of the pound in the same month. Indeed, we expect inflation to rise in the coming months. … Egypt Consumer …
The Egyptian government faces a tough task in meeting its budget deficit target for the upcoming fiscal year and, worryingly, there seems to be a growing sense that the authorities are wavering on their commitment to fiscal consolidation. We don’t foresee …
7th April 2016
The sharp fall in March’s ‘whole economy’ PMI for Egypt is the first sign that the recent devaluation of the pound will, in the near-term, weigh on the economy. Meanwhile, we suspect that the modest improvement in the surveys from the Gulf reflects a …
5th April 2016
Data released today confirmed that Saudi GDP growth held steady at 3.6% y/y in the final quarter of last year but we think the economy will slow sharply this year and even further in 2017. … Saudi Arabia GDP …
4th April 2016
Comments today by Saudi Arabia’s Deputy Crown Prince Mohammed bin Salman in an interview with Bloomberg confirm our view that Saudi policymakers are comfortable with a period of low oil prices. What’s more, his comments on the privatisation of Aramco and …
1st April 2016
The Egyptian central bank’s decision to devalue the pound this month ended months of growing speculation that a move in the currency was on the cards. In the near term, this will bring some pain. The central bank has already jacked up interest rates in an …
30th March 2016
The Egyptian central bank’s decision to (finally) devalue the pound this month has raised hopes of an improvement in the country’s balance of payments position and faster growth, resulting in a jump in the local equity index and a decline in dollar bond …
29th March 2016
The recent devaluation of the Egyptian pound will create winners and losers within the country through its impact on balance sheets. Households and commercial banks stand to gain from a rise in the pound value of their foreign currency assets, but the …
24th March 2016
The storm created by low oil prices will finally make its presence felt in the Gulf this year and we expect this to be the start of an extended period of slow growth. A wave of devaluations is highly unlikely and, although the Gulf countries have agreed …
23rd March 2016
