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This week’s OPEC meeting will be dominated by the tricky choice of a new Secretary-General, while the decision on output should be relatively simple. We agree with the consensus that the notional ceiling will be kept at 30mn barrels per day, at least for …
10th December 2012
Egypt’s deepening political crisis has put paid to any hopes of policy easing, in the very near-term at least. Indeed, if things stay as they are, we wouldn’t be surprised if the central bank is forced into hiking rates to support the pound. … Political …
6th December 2012
The latest batch of PMI data from the Middle East and North Africa (MENA) suggest that while the oil-rich Gulf economies have lost some steam they are still comfortably outperforming their resource-poor neighbours. We expect this “twin speed” pattern of …
5th December 2012
The massive fiscal stimulus packages unveiled by Gulf economies in the wake of the Arab Spring raised fears at the time that they would lead to economic overheating and rising inflation. Fortunately, these fears have not materialised. And with the …
4th December 2012
Egyptian financial markets have been battered this month amid a deepening constitutional crisis. … Middle East Markets Monitor (Nov.) …
29th November 2012
President Morsi’s decision to grant himself sweeping powers has thrown Egypt into a constitutional crisis, the outcome of which is highly uncertain and will frame the near-term outlook for the economy and the markets. But taking a step back, it looks like …
It’s been a mixed month for Egypt’s post-revolution economy. The good news is that a $4.8bn programme with the IMF has been agreed at a staff level, paving the way for formal approval by the Fund’s board by the end of the year. However, the good news …
26th November 2012
News that Egypt’s government has reached a “staff-level” agreement with the IMF on a $4.8bn programme has greatly reduced the risk of a balance of payments crisis in the country. Radical policy reforms are unlikely in the very near-term, but the …
20th November 2012
Our Saudi Activity Proxy shows that the economic slowdown continued at the end of the last quarter. Overall, it looks like GDP growth slowed to around 2.5% y/y in Q3 from 5.5% y/y in Q2. … Saudi slowdown …
The Gulf looks comparatively well placed to weather the further deterioration in the global economy that we expect in 2013. Government spending has increased significantly in recent years, but there is room for further stimulus if needed, even if oil …
15th November 2012
The latest data from Egypt paint a disappointing picture of weakening growth and rising inflation. And with subsidy cuts and tax hikes expected as conditions to any agreement with the IMF, headline inflation is likely to be pushed higher over coming …
12th November 2012
Media reports suggesting that the Egyptian government could reach a deal with the IMF within the next few months is clearly good news. However, we have been here before and we suspect the issue of currency devaluation remains a major stumbling block to …
8th November 2012
Talks between Egypt and the IMF this month have focused attention back onto the external financing requirements of the region’s resource-poor economies. But so long as their oil-rich neighbours continue to drip-feed aid, we think they should be able to …
6th November 2012
October’s PMI data suggest that Saudi Arabia’s non-oil private sector continues to grow at a robust pace, but our own activity proxy – based on actual hard data – indicates that the economy has already slowed fairly sharply. … Saudi PMI continues to point …
5th November 2012
The arrival of an IMF delegation in Egypt and hopes that a deal will soon be concluded have supported the local equity and bond markets over the past few months. Yet, this isn’t the first time that a deal has appeared imminent and the near-term outlook …
31st October 2012
Recent activity data provide further evidence that the Gulf economies are slowing. The good news is that inflationary pressures are easing at the same time. This will boost households’ real incomes which, alongside last year’s enormous fiscal stimulus …
25th October 2012
Saudi Arabia’s headline inflation rate fell for the seventh consecutive month in September, hitting a three-year low. This will help to ease fears that the economy is overheating, which, in turn, could prompt the Saudi Arabian Monetary Agency (SAMA) to …
19th October 2012
Egypt’s central bank kept interest rates on hold today as concerns over the fragile external funding position continue to outweigh the need to stimulate an ailing economy. … Currency concerns keep Egyptian rates on …
18th October 2012
Our activity proxy for Saudi Arabia shows that the economy continues to slow, as growth in both the oil and non-oil sectors starts to ease. Overall GDP growth looks like it slowed to around 4% y/y in Q3, down from 5.5% y/y in the second quarter. … Saudi …
17th October 2012
Morocco’s current account deficit has been pushed up to a 27-year high by a combination of weaker export demand from the euro-zone and the higher cost of commodity imports. Nonetheless, an IMF funding line will help to prevent a balance of payments crisis …
16th October 2012
On the face of it, the appointment of a widely respected economist as Jordan’s new Prime Minister should help to kick-start much-needed economic and fiscal reforms in the country. But in practice we suspect the reform process will continue to be held back …
10th October 2012
September’s data show that inflationary pressures eased further in Egypt, with core inflation falling to a six-year low. But an interest rate cut is unlikely next week. … Egypt Consumer Prices (Sep. …
Today’s data from the Central Bank of Egypt (CBE) showing that foreign currency reserves fell in September highlight the importance of an IMF backstop when talks take place at the end of this month. … IMF deal needed to stop the rot in …
8th October 2012
Egypt’s talks with the IMF over a financing package are set to get underway this month. There are a number of major stumbling blocks, the most contentious of which is whether Egypt is forced to devalue its currency. Nonetheless, we don’t think that this …
5th October 2012
Today’s cut in Kuwait’s benchmark interest rate will do little to boost output growth. Instead, the economy is in desperate need of political stability and progress on the government’s development plan. … Kuwait rate cut unlikely to boost economic …
4th October 2012
September’s PMI data suggest that the UAE’s non-oil sector is growing at a healthy pace on the back of both strong domestic demand and stable external conditions. … UAE HSBC/Markit PMI (Sep. …
3rd October 2012
September’s PMI data suggest that growth in Saudi Arabia’s non-oil private sector continues to accelerate. But this contradicts other activity data, including our own proxy for the non-oil economy. … Saudi PMI continues to buck the global …
The combination of an improvement in political conditions and rising hopes of an IMF deal has boosted bond and equity markets in Egypt. But at the same time, the return of foreign investors will increase the exposure of the country’s markets to …
28th September 2012
New rules limiting the exposure of the UAE’s banks to government entities are unlikely to boost lending to the private sector in the immediate term. But in time, the change in regulations could improve credit conditions, which would help to speed up the …
27th September 2012
Political conditions in Egypt have continued to improve in recent months, but the real economy is still struggling. Industrial production has stagnated and strains in the balance of payments persist. Fortunately, the new government is making progress on …
26th September 2012
After two years of turmoil, there is light at the end of the tunnel for some of the resource-poor Arab economies. But a recovery is unlikely to start until 2014 at the earliest. Next year, most of these countries are set to be battered as political …
20th September 2012
Saudi Arabia’s recent commitment to maintain oil output at record levels means that our forecast for GDP growth this year is looking too pessimistic. We now expect the economy to expand by around 4.5% in 2012, but output will slow to 3.3% next year. … …
19th September 2012
The fact that the Egyptian government intends to increase public sector employment in the next fiscal year adds to our view that its fiscal deficit target for 2012/13 is too optimistic. We think that the deficit will come in at around 9.5% of GDP – well …
17th September 2012
We don’t agree with recent reports suggesting that some of the major hydrocarbon producers in the Gulf are likely to become net oil importers within the next two decades. Instead, we think that a combination of slower population and economic growth, …
13th September 2012
The impressive rally in dollar-denominated bond markets across the GCC over the past year has seen yields in Qatar and Abu Dhabi hit record lows in recent months, while even those in debt-ridden Dubai and crisis-hit Bahrain have fallen sharply. Looking …
12th September 2012
Saudi Arabia’s headline inflation rate fell for the fifth consecutive month in August, which will help to ease fears that the economy is overheating. … Saudi Arabia Consumer Prices (Aug. …
The slowdown in Saudi Arabia’s annual GDP growth rate from 5.9% in Q1 to 5.5% in the second quarter was due to the fact that both the oil and government sectors slowed sharply. Meanwhile, the private sector remained stable, but it is likely to weaken over …
While Egypt’s central bank kept rates on hold today, the government’s progress towards securing a deal with the IMF means that the easing cycle could start sooner rather than later. … Egypt’s rates on hold, although easing could come …
6th September 2012
PMIs for the UAE and Saudi Arabia show that their respective non-oil private sectors continued to grow at a healthy pace in August. However, we think both are set to slow over the rest of the year. … UAE and Saudi still growing at a healthy …
4th September 2012
On the back of ample liquidity, scarce supply and low interest rates, highly-rated bond markets in the oil-rich Gulf should continue to outperform other Middle Eastern assets in the coming months. Meanwhile, most equity markets are set to disappoint. … …
30th August 2012
Concerns over the balance of payments positions of some of the resource-poor Arab countries have faded as Morocco and Jordan have secured funding from the IMF. The recent surge in global agricultural and crude oil prices had left these countries facing …
29th August 2012
The visit of Christine Lagarde to Egypt today is perhaps the clearest signal yet that the country is close to signing a deal with the IMF. If this materialises before the end of the year (as the recent statement from the Egyptian Prime Minister …
22nd August 2012
Reports that Christine Lagarde will visit Egypt next week and that the country may seek more funds from the IMF than had been initially thought are positive developments. This follows the news that Egypt has reached a number of deals with external …
16th August 2012
The rapid rise in global commodity prices over the past two months has raised fresh fears over food inflation in most Arab countries. But we think that the bigger concern could be the balance of payments positions of some of the resource-poor Arab …
15th August 2012
In a surprising move, the Egyptian President decided to sack the country’s two top-ranking generals and cancelled an earlier declaration by the military council that gave it wide legislative powers. While curbing the military’s powers bodes well for …
13th August 2012
Egyptian inflation fell to a six-year low in July as price pressures in virtually all the components of the consumer price basket eased. … Egypt Consumer Prices …
9th August 2012
Today’s data from the Central Bank of Egypt (CBE) showing that foreign currency reserves fell in July serve as a reminder that devaluation of the pound remains a real and likely prospect. … Egypt: devaluation back on investors’ …
7th August 2012
The decision by the IMF to approve funding for Morocco and Jordan will reduce the risks of a balance of payments crisis in the immediate term. But both economies remain fragile. While Morocco is heavily exposed to troubles in Europe, Jordan will continue …
6th August 2012
The drop in Saudi Arabia’s PMI in July suggests that although the non-oil economy is growing at a healthy pace, it is beginning to run out of steam. … Saudi Arabia’s economy starting to show signs of …
