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The further rise in Egyptian inflation to 9.7% y/y in October was driven almost entirely by an increase in the food component, which is highly volatile. Stripping out food prices, inflation actually eased back last month. … Egypt Consumer Prices …
10th November 2015
Mounting evidence that the Russian plane crash in Egypt’s Sinai Peninsula was caused by a bomb planted by an affiliate of Islamic State is almost inevitably going to deal a hammer blow to Egypt’s tourism sector. The resulting loss in foreign currency …
9th November 2015
Substantial foreign exchange reserves mean that most of the Gulf economies can afford to adjust gradually to a prolonged period of cheap oil. Kuwait and the UAE are in the strongest position, but Bahrain and Oman will probably need to undertake a sharp …
5th November 2015
Despite recent media reports espousing the resilience of Saudi consumers in the face of lower oil prices, a number of indicators suggest that household spending in the Kingdom has softened in recent months. With a fiscal squeeze in the pipeline, we expect …
4th November 2015
October’s ‘whole economy’ PMIs for the MENA region suggest that economic activity slowed in the Gulf at the start of Q4. As the policy adjustment to cheap oil gets underway, we expect growth to weaken further, and by more than the consensus expects. …
3rd November 2015
The decision by Standard & Poor’s to downgrade Saudi Arabia’s sovereign credit rating on Friday night is hardly surprising in light of the deterioration in the fiscal position this year and lack of a clear agenda to rein in the budget deficit. However, …
2nd November 2015
A renewed focus on Egypt’s external position appears to have been the main reason why the central bank kept the benchmark overnight deposit rate unchanged at 8.75% today, rather than lower rates. The impending change in central bank governor has clouded …
29th October 2015
The past month has brought the clearest signs yet that a fiscal squeeze in Saudi Arabia is looming. According to leaked memos, the Ministry of Finance has ordered government entities to halt new projects, freeze hiring and postpone purchases of new cars …
The Egyptian pound was devalued, albeit modestly, over the past few weeks and, while the central bank has brought this process to a halt, we think a further fall in the currency is likely over the coming months. Meanwhile, the region’s equities have fared …
26th October 2015
Saudi Arabia’s peg to the US dollar is coming under increasing scrutiny but we think fears that the authorities will devalue the riyal are overdone. The Kingdom’s substantial foreign exchange reserves provide a substantial buffer and, if history is any …
21st October 2015
Several Gulf countries have turned to their foreign exchange reserves in an effort to finance budget and current account deficits caused by last year’s slump in oil prices, but there seems to be persistent confusion about the exact mechanics of reserve …
Our GDP Tracker suggests that Saudi Arabia’s economy slowed in August and, with a fiscal squeeze looking increasingly likely, growth looks set to weaken further over the coming quarters. We continue to think that the consensus is too optimistic on growth …
20th October 2015
For the third time this year the Central Bank of Egypt has loosened its grip on the pound and the currency is likely to fall further over the coming days. We expect it to reach 8.25/US$ by the end of this year and 8.50/US$ by end-2016, although past …
19th October 2015
Egyptians are scheduled to return to the polls this month to elect a new parliament, which is likely to emerge as a body that is largely aligned with President al-Sisi. As we explain in this Watch, in the short-term this may well be interpreted by …
15th October 2015
Saudi Arabian inflation rose to 2.3% y/y in September, its highest rate this year. But with the economy set to slow and global commodity prices likely to stay low, we expect inflation to remain relatively subdued for the foreseeable future. … Saudi …
14th October 2015
The conflict in Syria has taken a heavy toll on Lebanon’s economy over the past few years – the country is hosting more than a million refugees, the key tourism sector is suffering, and the political situation has taken a turn for the worse. With a …
12th October 2015
We think recent concerns that a withdrawal of government deposits from commercial banks will result in a liquidity crunch across the Gulf are overdone. Policymakers have plenty in their toolkit to avoid such a scenario. … Gulf likely to avoid bank …
8th October 2015
The jump in Egyptian inflation to 9.2% y/y in September was driven almost entirely by a rise in the volatile food component. While we do expect inflation to fall back again, last month’s data mean an interest rate cut at the next MPC meeting now looks …
September’s whole economy’ PMIs point to renewed weakness in the Gulf economies at the end of Q3. Elsewhere, there is further evidence that Egypt’s economy has stabilised following a weak first half of the year. … Whole Economy PMIs …
5th October 2015
Financial markets across the MENA region have been hit over the past few months, but there are at least signs that growth has stabilised in key economies. After a disappointing first half of the year, timely data indicate that both the UAE and Egypt have …
30th September 2015
Growth in the Gulf economies has held up well this year, but policymakers cannot delay the adjustment to low oil prices much longer. Tighter fiscal policy looms. Large savings and low debt levels mean that this is likely to be a gradual process, and …
29th September 2015
The fact that Saudi Arabia is drawing down its foreign exchange reserves should come as little surprise given that the Kingdom is running a current account deficit and also facing sizeable capital outflows. This is likely to be the state of play for some …
28th September 2015
In a mixed month for the MENA region’s equity markets, Egypt’s EGX30 proved to be the best performer despite the launch of a corruption investigation within the cabinet. In contrast, Saudi Arabia’s TADAWUL dropped back even though oil prices recovered …
24th September 2015
Algeria was ill-prepared to confront a period of low oil prices and, as we warned might happen, the authorities have reacted by letting the dinar weaken, while a sharp fiscal squeeze is now on the cards. These measures will help to rein in the county’s …
23rd September 2015
The decision by the Egyptian central bank (CBE) to keep its benchmark overnight deposit rate unchanged at 8.75% today was probably a close call and we suspect that policymakers were swayed from cutting rates as they, along with many other EM central …
17th September 2015
Our GDP Tracker suggests that Saudi Arabia’s economy continued to grow by over 5% y/y at the start of Q3. However, this is likely to be as good as it gets for some time – we expect growth to slow over the rest of this year and by more than the consensus …
16th September 2015
The Gulf’s commitment to dollar pegs mean that rate hikes by the US Federal Reserve will be imported to the region, adding to the headwinds facing economic growth. But this is a secondary concern compared with a prolonged period of low oil prices. … Fed …
15th September 2015
We have argued for some time that Egypt needs to devalue the pound and there are signs that policymakers are (belatedly) coming round to this view. We expect the currency to reach 8.25/US$ by the end of next year, from 7.83/US$ at present. … Devaluation …
10th September 2015
A further drop in Egyptian inflation in August to 7.9% y/y, its lowest rate in more than two years, means that an interest rate cut at this month’s MPC meeting is looking increasingly likely. Meanwhile, inflation in Saudi Arabia remained subdued. … Egypt …
The whopping increase in Egypt’s current account deficit in the last fiscal year is likely to grab the headlines. But there is more to this than meets the eye. It largelyreflects an accounting issue related to the way the Gulf States provided financial …
9th September 2015
The recent announcement by Italian energy group Eni that it has discovered a “super giant” gas field off the coast of Egypt has been billed as a game changer for the country. However, as we explain in this Watch, while the economic benefits are likely to …
8th September 2015
With oil prices still languishing at multi-year lows, Saudi Arabia’s budget position – which looks set to post a shortfall of close to 20% of GDP this year – has come under increasing scrutiny in recent months. However, there seems to be some confusion …
7th September 2015
August’s ‘whole economy’ PMIs suggest that the slump that the surveys had been pointing to in recent months has now reversed. Similarly, there is early evidence that Egypt’s economy may have turned the corner. … Whole Economy PMIs …
3rd September 2015
After a difficult few years, the outlook for Morocco is finally brightening. We think the country could be one of the best performing economies in the emerging world over the coming years. … Five reasons why we’re upbeat on the outlook for …
1st September 2015
Egypt’s economy has slowed sharply and by more than we expected over the first half of this year. But we think some of the constraints on growth will start to lift in the coming quarters. … What’s behind the apparent weakness in Egypt’s …
26th August 2015
The drop in oil prices over the past couple of months is unlikely to cause policymakers in the GCC countries to panic. The region’s large reserves mean that most countries are under little immediate pressure to tighten fiscal policy and we think it is …
25th August 2015
Equity markets across the MENA region have been hit hard over the past month against the backdrop of the general turmoil in global financial markets and a fresh drop in oil prices. … MENA equity markets take a …
24th August 2015
The past month has brought further signs of diverging attitudes in the Gulf to dealing with the fiscal headache caused by low oil prices. If media reports are to be believed, the UAE looks set to follow up last month’s deregulation of fuel prices by …
20th August 2015
Our GDP Tracker suggests that Saudi Arabia’s economy continued to grow by over 5% y/y at the end of Q2, supported by strong growth in the oil sector. However, with Iranian oil set to return to the market,the boost to consumer spending from the “accession …
18th August 2015
Reports that the UAE is planning to introduce a sales tax, coming soon after some fuel prices were deregulated, add to the impression that it is taking fiscal consolidation more seriously than the rest of the Gulf. These measures are likely to weigh on …
13th August 2015
Saudi Arabian inflation remained unchanged at 2.2% y/y last month and, overall,price pressures appear to be subdued. We think this is likely to remain the case overthe next 18 months or so. … Saudi Arabia Consumer Prices …
The sharp fall in Egyptian inflation to a 13-month low of 8.4% y/y in July was due toboth lower food inflation and the unwinding of last year’s energy price hikes. Withinflation now back in single-digits, and likely to remain so, we think interest …
10th August 2015
Media reports suggesting that the Saudi central bank will issue bonds in greater volumes over the rest of this year have raised fresh concerns about the government’s seemingly relaxed response to the fall in oil prices. But as we explain in this Watch , …
6th August 2015
Last month’s ‘whole economy’ PMIs provide early signs that activity in the Gulf strengthened at the start of Q3. Elsewhere, although Egypt’s PMI edged down in July, it still points to stronger growth than at the start of the year. … Whole Economy PMIs …
4th August 2015
The new Suez Canal, due to be inaugurated this week, could in theory bring major economic benefits to the Egyptian economy. However, the government’s projections appear to be based on implausibly optimistic assumptions about world trade and we think the …
3rd August 2015
The Egyptian central bank kept its benchmark O/N deposit rate unchanged at 8.75% late last night, but with inflation set to fall sharply, rate cuts are likely to come back onto the cards. We have pencilled in a 50bp cut, to 8.25%, with the most likely …
31st July 2015
Equity markets in the Gulf have performed better than might have been expected this month, given the fresh fall in global oil prices. Meanwhile, Egyptian stocks,bonds and the currency have all fared poorly. … Gulf markets weather fall in oil …
28th July 2015
The fresh fall in oil prices has turned attention back to fiscal positions in the Gulf, with the UAE’s government the latest to announce measures to rein in spending. The UAE plans to deregulate fuel prices and, while details are sketchy at the moment, …
27th July 2015
This week’s announcement that Italian energy group Eni has discovered gas reserves in the Nile Delta provides the first concrete evidence that the Egyptian government’s energy reforms are starting to pay off. With several other major energy companies …
23rd July 2015
Our GDP Tracker suggests that growth in Saudi Arabia accelerated further, to around 5.5% y/y in May, supported by strong growth in the oil sector. But with Iranian oil likely to return to the market and fiscal policy set to become less supportive, we …
21st July 2015
