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The recent nuclear agreement between Iran and the P5+1 has rekindled investors’ interest in the Islamic Republic. In this Focus, we take a closer look at the outlook for Iran’s economy and explain that, while growth could be quite strong over the next few …
16th July 2015
The long-awaited announcement that Iran has secured an agreement over its nuclear programme will have implications for the wider Middle East. In short, the economic impact is likely to be small, although the UAE may be a beneficiary from a revival in …
14th July 2015
Saudi Arabia’s budget deficit is likely to reach an eye-watering 17.5% of GDP this year and the government has now turned to the bond market in order to help plug the gap. Some have argued that debt issuance is aimed at slowing the pace at which the …
13th July 2015
The sharp fall in Egyptian inflation last month, to 11.4% y/y, confirmed that May’s surprise jump was a one-off. And with the headline rate likely to fall further in July, we think interest rate cuts could come back onto the agenda. Elsewhere, the modest …
9th July 2015
The Central Bank of Egypt has loosened its grip onthe pound over the past week and we think the currency probably needs to fall by at least another 5% in order to restore external competiveness. Butgiven the CBE’s past history with managing the exchange …
8th July 2015
The drop in Saudi Arabia’s ‘whole economy’ PMI to a record low last month suggests that growth has slowed in the second quarter. Elsewhere, after a disappointing start to the year, Egypt’s economy is finding its feet again. … Whole Economy PMIs …
6th July 2015
The pick-up in Saudi GDP growth in the first quarter of this year, to 2.4% y/y, was supported by a rebound in the oil sector and robust activity in the non-oil sector. These data confirm our view that that lower oil prices wouldn’t cause activity in Saudi …
2nd July 2015
The plunge in oil prices over the past year has forced Saudi Arabia to dip into its foreign exchange reserves, but one point that is often overlooked is that the Kingdom’s external position had been deteriorating for some time before that. In particular, …
The formal opening up of Saudi Arabia’s stock market earlier this month was adamp squib, as equities remained flat. Elsewhere, stocks in Egypt have been the worst-performers over the past month, while growing concerns that Qatar may be stripped of the …
25th June 2015
There seems to be a lot of confusion as to exactly how Saudi Arabia is using its foreign exchange reservesto finance twin budget and current account deficits. In this Update, we shed some light on the matter. … A primer on how Saudi Arabia uses its FX …
Egypt’s public finances are gradually improving, but the recent watering down of tax and spending measures combined with the relatively unambitious targets set out in a recent draft budget has raised concerns about the government’s commitment to fiscal …
24th June 2015
The slowdown in Egypt’s economy since the start of the year has been disappointing, but there are at least encouraging signs that the government’s reform programme is starting to bear fruit. Indeed, inward direct investment reached $2.9bn in Q1, its …
18th June 2015
Our GDP Tracker suggests that Saudi Arabia’s economy grew by 5.0% y/y in April, supported by a rebound in oil production and robust growth in the non-oil sector. But activity is likely to soften in the coming quarters and we expect GDP growth to slow to …
17th June 2015
The Gulf economies have weathered the storm created by low oil prices relatively well this year, with foreign exchange reserves having been drawn down to sustain spending. Large savings mean that this can continue for some time. The upshot is that …
15th June 2015
The Central Bank of Egypt left interest rates unchanged today, but we expect a rate cut later in the year, despite the recent pick-up in inflation. … Central Bank of Egypt holds rates as inflation remains …
11th June 2015
Inflation in Saudi Arabia edged up to 2.1% y/y in May, but price pressures are still subdued. Against the backdrop of slower growth and weak commodity prices, we expect this to remain the case for the foreseeable future. … Saudi Arabia Consumer Prices …
The move by Saudi Arabia to open up its stock market to foreign investors from next week is a step in the right direction. But, as we explain in this Watch , we think some of the optimism about its impact is overdone. … Optimism over opening up of …
10th June 2015
The jump in Egyptian inflation to 13.1% y/y in May was almost entirely driven a sharp rise in food inflation and, as a result, we don’t expect it to have an impact on the MPC’s rate decision tomorrow. But equally, it means that the chances of the CBE …
This week’s OPEC meeting is likely to see the Gulf countries, led by Saudi Arabia, once again shrug off calls from some of the cartel’s smaller members to cut oil production in order to shore up oil prices. As we’ve argued before, the Gulf States are in a …
4th June 2015
The latest ‘whole economy’ PMIs from the MENA region continue to suggest that the Gulf economies are holding up well in the face of low oil prices. However, the boost to Saudi Arabia’s economy from the recent “accession bonus” now appears to have faded. …
3rd June 2015
Reports in the Egyptian media that the government is set to open discussions on a $6bn financing package with the IMF are likely to prove premature. For now, the authorities seem content to undertake reforms at their own pace while relying on financial …
2nd June 2015
It has been a quiet month for financial markets in the Middle East, with most stock markets treading water and bond yields staying low. The one exception is the Egyptian equity index, which rose sharply this month following the government’s decision to …
28th May 2015
The latest activity data suggest that the MENA region’s two largest economies, Saudi Arabia and Egypt, have headed in opposite directions at the start of 2015. After recording strong growth last year, Egypt’s economy has slowed in recent months. This …
27th May 2015
The steady recovery in oil prices over the past couple of months will clearly be welcomed by the MENA region’s oil producers and provides some encouragement for the Gulf countries that their oil strategy is working. However, as we explain in this Watch , …
21st May 2015
Our GDP Tracker suggests that Saudi Arabia’s economy strengthened further in March as the oil sector returned to growth and consumer spending remained buoyant. But we expect this rebound to fizzle out, particularly as the effects of the recent “accession …
19th May 2015
Inflation in Saudi Arabia held steady at 2.0% y/y in April as further weakness in food price pressures was offset by a pick-up in rental inflation. Looking ahead, we expect headline inflation to remain subdued for the rest of this year. … Saudi Arabia …
18th May 2015
We think concerns that Saudi Arabia is drawing down its savings to maintain spending in the face of lower oil prices misses the point that these buffers were built up precisely for a time like this. Indeed, the Kingdom’s strong balance sheet has allowed …
14th May 2015
The sharp fall in oil prices since the middle of last year has thrust the Gulf’s dollar pegs under the spotlight but there are plenty of reasons to think that the risk of currency devaluation remains small in most places. Instead, we suspect that fiscal …
12th May 2015
Egyptian inflation fell back to 11.0% y/y in April but we think the central bank will wait for inflation to ease further before it cuts interest rates again. The effects of last year’s energy price hikes are set to fall out of the annual comparison in the …
11th May 2015
Qatar was the MENA region’s best performing economy last year and, with low oil prices unlikely to derail the government’s investment programme, we expect it to grow at a decent clip of 5.0-5.5% in 2015-16. But rapid credit and property price growth means …
7th May 2015
The latest whole economy PMIs from the MENA region suggest that the boost to Saudi Arabia’s economy from the recent “accession bonus” has already started to fade. The bigger picture, however, is that the Gulf economies are still holding up well in spite …
5th May 2015
Interest rate decisions by the Central Bank of Egypt (CBE) are notoriously difficult to predict but it seems that, having been distracted by balance of payments concerns over the past few years, policymakers have now focused their attention back on to …
30th April 2015
The reshuffle at the top of Saudi Arabia’s government probably has more political than economic implications. In particular, it means that any hopes for a swift end to the Yemen conflict have probably been dashed. Meanwhile, Ali al-Naimi’s departure as …
29th April 2015
While the crisis in Yemen has dragged on, stock markets in the Gulf have rebounded in the past month as fears that it could trigger a broader regional conflict have eased. … Equities in the Gulf rebound as Yemen fears …
28th April 2015
The decision by the Central Bank of Egypt to leave interest rates unchanged today was a close call, but it looks like the recent rise in inflation tipped the balance on the MPC away from lowering rates. Further ahead, inflation should drop back in the …
23rd April 2015
The conflict in Yemen and an outline nuclear agreement between Iran and the West has thrust the region’s politics back into the spotlight. Although it looks like problems in Yemen are likely to drag on, the reaction in the Middle East’s financial markets …
With inflation at an eight-year low and public sector workers receiving a bonus following King Salman’s recent accession to the throne, household spending in Saudi Arabia appears to have gathered steam. However, we think this is likely to prove …
21st April 2015
Our GDP Tracker suggests that Saudi Arabia’s economy strengthened in February as the drag from the oil sector eased further and activity in the non-oil sector picked up. But this is likely to prove temporary and we expect growth to settle at 1.5-2.0% in …
16th April 2015
Inflation in Saudi Arabia eased further last month, to 2.0% y/y, driven in large part by a drop in housing rental price inflation. Against the backdrop of slower growth and weak commodity prices, we expect inflation to stay low for the rest of this year. …
15th April 2015
Algeria is among the most vulnerable economies in the MENA region to lower oil prices and, while large FX savings mean it should be able to muddle through for the next few years, the economy will eventually hit a crunch point whereby a sharp fiscal …
The outlook for the North African economies of Egypt, Morocco and Tunisia has brightened over the last twelve months and we expect growth to strengthen again this year. Further ahead, low income levels and rapidly growing populations mean that annual GDP …
13th April 2015
There are many details that still need to be ironed out, but earlier this month Iran and the West moved another step closer to securing an agreement over Tehran’s nuclear programme. As we explain in this Watch , if a deal can be secured the economic …
9th April 2015
The rise in Egyptian inflation to 11.5% y/y last month was driven almost entirely by a rise in food and utility prices. As a result, we think it’s unlikely to have much impact on monetary policy. Further out, we still expect inflation to remain in double …
The latest whole economy PMIs from the MENA region suggest that, in spite of lower oil prices, the Gulf economies are still holding up well. Meanwhile, activity in Egypt’s economy appears to have softened in the first quarter of this year, but we don’t …
8th April 2015
Saudi Arabia’s lack of a response to the plunge in oil prices has triggered a torrent of conspiracy theories, including plots to hurt Russia and Iran. These have been given extra prominence in light of the latter’s apparent role in the escalating conflict …
1st April 2015
The unfolding crisis in Yemen and the launch of air strikes by Saudi Arabia and its allies on the Houthi rebels has triggered a sell-off in equity markets across the MENA region over the past week or so. … Yemen crisis weighs on region’s equity …
31st March 2015
The unfolding crisis in Yemen and the commencement of air strikes by Saudi Arabia and its allies on the Houthi rebels has raised concerns of a broader regional conflict. We suspect that the worst of these fears are overdone and the wider economic impact …
26th March 2015
Even though oil prices continue to languish at around $55pb, there is still no sign that Saudi Arabia will give in to pressure from other OPEC members to cut oil output. Oil Minister, Ali al-Naimi, has been resolute in his assertion that the Kingdom will …
25th March 2015
Egypt’s recent Economic and Development Conference, which was seen as a milestone in the government’s strategy to raise much-needed investment, saw the announcement of further financial support from the Gulf as well as some ambitious public sector-led …
19th March 2015
