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Rapid credit growth in the Gulf has fuelled fears that the region is experiencing a credit binge similar to that which culminated in Dubai’s crisis in 2009. But, for now at least, we think that there are several reasons not to be overly concerned. … …
27th September 2013
Equity markets have recovered some of their earlier lost ground as concerns overWestern military intervention in Syria, as well as fears of a tapering of QE3 by theUS Federal Reserve, have eased. … Equity markets rebound on back of Syria deal & Fed …
25th September 2013
The Central Bank of Egypt’s (CBE) decision to cut interest rates by 50bp today shows that policymakers are fully focussed on supporting the economy. With the backing of aid from the Gulf, additional interest rate cuts, perhaps in the region of 50-150bp, …
19th September 2013
Growth in the Gulf States appears to have accelerated in recent months. Oil production has surged in Saudi Arabia and the UAE, at least in part as a response to supply disruptions in Libya. And in the non-hydrocarbon sector, activity remains robust. …
18th September 2013
Our Saudi GDP Tracker suggests that the economy started Q3 on a strong note. The drag from the oil sector has eased, while growth in the non-oil sector has accelerated, supported by rapid credit growth, rising government spending and an improving external …
17th September 2013
There are mounting concerns about the prospect of deficit monetisation in Egypt. Indeed, thereappears to be some evidence that the central bank is already financing the budget shortfall, albeiton a small scale. However, we think widespread deficit …
12th September 2013
Following the recent strengthening of the Egyptian pound, we have revised our year-end forecast for the currency. But in this Watch , we explain why we still think that, over a longer horizon, the pound has further to fall. … What next for the Egyptian …
10th September 2013
Signs of recovery in the euro-zone are encouraging for Morocco and Tunisia. But political problems and large twin fiscal and current account deficits will continue to cloud the economic outlook. … Growth in Morocco and Tunisia to remain …
5th September 2013
After slowing sharply over the past year or so, the Saudi economy appears to have turned the corner in Q2. The oil sector’s drag on growth is easing while government stimulus is starting to filter through. Growth should continue to accelerate over the …
3rd September 2013
August’s PMI data provide evidence that the Egyptian economy is still suffering following the country’s “second revolution”. Meanwhile, the Saudi non-oil economy has picked-up. … Egyptian economy suffers in aftermath of “second …
Egypt’s newly-announced stimulus package stands a chance of boosting the beleaguered economy in the near-term. But with the package being funded by Gulf aid, over the longer-term, it could actually take the country further away from making much-needed …
29th August 2013
Egypt’s financial markets appear to have taken the latest outbreaks of violence in their stride. The equity market is actually up since the start of the month, while bond yields remain below the level seen at the height of the “second revolution”. …
28th August 2013
The outbreak of violence in Egypt has made the economic outlook highly uncertain. But it’s pretty clear that the tourism sector will be hard hit, as it has been during previous bouts of unrest. We estimate that the losses to the sector could range between …
22nd August 2013
The outbreak of violence between security forces and protestors this month has sent Egypt spiralling deeper into crisis. It’s extremely tricky to predict how eventswill unfold from here on. In the very near-term though, the disruptions toindustry and the …
20th August 2013
Saudi inflation has eased over the course of this year, in spite of fairly robust domestic demand. And looking ahead we think price pressures are unlikely to become a major cause for concern. … Saudi inflation likely to remain …
15th August 2013
The latest Egyptian activity data suggest that the economy was suffering even before the armed forces ousted President Morsi at the start of last month. Needless to say, growth has slowed even further since then. … Egypt’s economy struggling even before …
13th August 2013
Saudi Arabia’s activity data for June provide further evidence that the slowdown in growth over the past year or so probably bottomed out in the second quarter. The non-oil sector continues to grow at a robust pace, while the drag on growth from the oil …
8th August 2013
July’s PMIs suggest that the Egyptian economy has weakened further against the backdrop of the “secondrevolution”. Meanwhile, non-oil sectors in the Gulf continue to grow at a robust pace. … Egypt’s “second revolution” takes a heavy toll on the …
5th August 2013
The surprise decision by the Central Bank of Egypt to cut interest rates today was probably triggered by two factors. The first is the influx of aid from the Gulf, which has eased strains in the country’s balance of payments. And the second is the renewed …
1st August 2013
Egypt’s financial markets initially reacted positively to the ouster of President Morsi at the start of this month. But as the dust has settled and the severity of the political and economic situation has become clearer, investors already appear to be …
31st July 2013
Egypt’s “second revolution” has made the outlook for the Arab world’s most populous nation highly uncertain. The economy is already extremely fragile – growth is sluggish, unemployment is high and the fiscal deficit is widening. The good news is that …
24th July 2013
Growth in the Gulf is set to slow over the next couple of years as the past decade’s oil boom starts to fade. At the same time, oil prices are likely to fall too. This is unlikely to pose a serious threat to budget or current account positions. But it …
22nd July 2013
The aid that Gulf states have granted to Egypt since the ousting of President Morsi should be sufficient to cover the country’s external financing requirement for almost a year. Accordingly, the immediate threat of a balance of payments crisis or default …
16th July 2013
The Saudi economy slowed sharply in Q1, recording its weakest rate of growth since 2009. The oil sector was the main drag on growth, while the public sector was the only area where the pace of expansion picked up. But there are tentative signs that the …
15th July 2013
We’ve argued for some time that the Gulf economies should outperform the rest of the MENA region over the next couple of years, in large part thanks to large increases in government spending. But while the Gulf’s fiscal positions are among the strongest …
11th July 2013
It goes without saying that there’s a vast amount of uncertainty about how events will develop in Egypt. But the economy looks more fragile now than at any time since the first Arab Spring revolution in 2011. A potential crunch point for the financial …
4th July 2013
June’s PMIs fell across the whole of the MENA region. But they do not take into account the political unrest that has flared up once again in Egypt and could weigh heavily on the economy over the second half this year. By contrast, the Gulf economies are …
2nd July 2013
The most surprising feature of the raft of Q1 GDP data released in the region over the past few days was that Egypt’s economy has continued to grow, despite the country’s political turmoil. However, the details suggest that growth is increasingly …
1st July 2013
President Morsi’s first year in office hasn’t been easy to say the least. Unemployment is up, the pound has fallen and the authorities are no closer to securing an IMF agreement. These promise to make President Morsi’s second year just as challenging as …
28th June 2013
Financial markets in Egypt have been hit by a triple whammy of rising political tensions, growing concerns over the fiscal position and the continued deadlock in negotiations with the IMF. Equities have fallen by over 20% and bond yields have reached a …
26th June 2013
Investors have lost even more confidence in Egypt over the past month. The equity market has tumbled and, while this could in part be related to signals by the US Fed that it will begin to taper QE3 later this year, we think local factors are playing a …
24th June 2013
Our Saudi Arabia GDP tracker suggests that the economy slowed to around 3.5% y/y in Q1. Encouragingly though, there are tentative signs that the slowdown bottomed out at the start of the second quarter. Economic weakness is concentrated in the oil sector, …
19th June 2013
In spite of the Central Bank of Egypt’s best efforts, it appears to be only a matter of time before the Egyptian pound breaks through 7/US$. And there is a growing risk that, without an IMF deal, the currency falls further than the 7.5/US$ that we are …
18th June 2013
Fears that the US Fed may begin to taper its third round of quantitative easing (QE) have led to a sell-off in emerging market assets over the past few weeks. The MENA region has escaped relatively unscathed so far, but in this Watch , we look at what the …
13th June 2013
Financial markets have reacted positively to the news that MSCI has upgraded Qatar and the UAE to Emerging Market status. But we fear that the eventual benefit may be lower than some seem to expect. … MSCI reclassifications likely to have limited …
12th June 2013
Subsidies are becoming increasingly unaffordable across the poorer parts of the MENA region. But the threat of higher inflation and social unrest is likely to frustrate efforts at subsidy reform. … Fears of inflation and unrest to frustrate subsidy …
11th June 2013
Two and a half years on from the Arab Spring uprisings, youth unemployment in the Middle East, which was a key trigger for the unrest, remains high. In fact, we suspect it may have risen over the past couple of years. … Youth unemployment likely to have …
6th June 2013
Ongoing political uncertainty has led to a sharp deterioration in the Egyptian government’s finances. The measures required to put them on a more sustainable footing are politically sensitive. But without them, the public finances could spiral out of …
5th June 2013
Although Egypt’s headline PMI rose sharply in May to reach its highest level in six months, we would caution against reading this as a sign that the economy has turned the corner. Meanwhile, PMIs for the Gulf suggest that activity there remains strong, …
3rd June 2013
Political unrest, a fragile banking sector and a weak fiscal position are all likely to weigh on Bahrain’s economy over the next few years. As a result, we expect it to be one of the worst performers in the Gulf. … Bahrain's political upheaval to …
30th May 2013
The Tunisian dinar has been one of the worst performing EM currencies over the past couple of months. Meanwhile, equity markets in the Gulf have continued to rally. … Tunisian dinar falls on back of IMF …
29th May 2013
Optimism has returned to Dubai’s economy, but its debt problems aren’t fully resolved. Ultimately, we think oil-rich Abu Dhabi will step in to provide emergency financing if needed. But even so, the sheer scale of the liabilities accumulated in the boom …
Growth in the Gulf economies has held up well over the first few months of this year. Admittedly, the weakness of the global economy is weighing on demand for the region’s hydrocarbon exports. But domestic demand, buoyed by fiscal stimulus and rapid …
22nd May 2013
A fresh bout of tensions between Kuwait’s parliament and the government reinforces our concerns that the country’s fractious politics is undermining the economy’s growth prospects. All told, we think Kuwait will be one of the worst performers in the Gulf …
21st May 2013
The ongoing recession in the euro-zone, domestic political instability and the deepening conflict in Syria will weigh on tourism in Egypt, Jordan, Lebanon and Tunisia. This, in turn, will be a drag on GDP and employment growth and will further weaken the …
16th May 2013
We are upbeat on the longer-term growth prospects for the resource-poor MENA economies compared with their oil-rich Gulf neighbours. But even though the region’s two largest economies, Egypt (resource-poor) and Saudi Arabia (resource-rich), appear to have …
15th May 2013
Egypt has muddled through without an IMF deal for over two years, as bilateral aid has staved off a full-blown balance of payments crisis. But this cannot go on forever. The longer Egypt goes without securing a deal with the Fund, the closer it will be to …
13th May 2013
The Egyptian central bank’s decision to hold interest rates today came as a surprise, but with the country still on the brink of a full-blown balance-of-payments crisis we would not be surprised if rates were hiked again sooner rather than later. … …
9th May 2013
The reshuffle of Egypt’s cabinet, including a complete overhaul of the government’s economic team, doesn’t change the bigger picture that achieving support from across the political spectrum for much needed economic reform will be extremely difficult. … …
7th May 2013
