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On the back of a brighter outlook for the US economy and concerns over supply, we have nudged up our forecast for Brent crude prices to end the year at $95 per barrel ($85pb previously). Although this means that the oil-rich countries of the Gulf …
11th April 2012
Saudi Arabia’s headline inflation remained unchanged in March as a rise in food inflation was offset by a drop in housing (rent and utilities) inflation. … Saudi Arabia Consumer Prices …
10th April 2012
Egypt’s headline inflation dropped slightly in March as a fall in food inflation helped to offset a record rise in housing and utilities inflation. The latter contributed to a jump in core inflation to an eight-month high. … Egypt Consumer Prices …
We think that a devaluation of the Egyptian pound is more likely than not, even if the government reaches an agreement with the IMF this month. The pound appears to be overvalued by around 15% to 25%. The only issue is whether the devaluation is orderly …
5th April 2012
PMI data show that, in spite of a modest increase in the whole-economy index, activity in the UAE’s non-oil private sector remains weak. The bright spot however is the employment component, which registered a five-month high. … UAE HSBC/Markit PMI …
3rd April 2012
Although Saudi Arabia’s headline PMI index fell in March, it is still consistent with strong growth in the non-oil private sector. However, the weak employment reading suggests that the government’s attempts to boost Saudi employment in the private sector …
Another month, another fall in Egypt’s foreign currency reserves. Admittedly, the pace of decline appears to be easing. But with rising tensions between the interim government, the Muslim Brotherhood and the military council threatening to derail talks …
2nd April 2012
The price of Brent has remained close to $125 per barrel despite verbal intervention from Saudi Arabia and the threat of an early release of official stocks led by the US. We are therefore nudging up our price forecasts to reflect this resilience, as well …
30th March 2012
Given the positive outlook for the economy, relative political stability and fresh hopes that the stock market will open to foreign investors this year, Saudi equities have soared in the first quarter of 2012. However, since it is wrong to assume that …
29th March 2012
We think that GDP growth in the Gulf Cooperation Council (GCC) countries could fall to around 3.8% in 2012, down from 7.2% last year (and lower than most analysts expect). Admittedly, healthy balance sheets will help the oil-rich governments to sustain …
28th March 2012
Egypt’s Central Bank (CBE) kept interests rates on hold today. And although it looks like the CBE is taking small steps towards easing policy, much now hinges on whether an IMF deal can be agreed. If a package can be put together quickly, then rates could …
22nd March 2012
Egypt’s talks this week with the IMF over a $3.2 billion package could prove to be a defining moment in the post-Mubarak era. With FX reserves now at dangerously low levels, external financing is needed to avoid a disorderly devaluation of the pound, …
20th March 2012
An IMF team has arrived in Cairo for talks, due to start today, on a $3.2bn loan facility for Egypt. In this Update we answer five key questions that will determine how events are likely to play out from here. … Egypt & the IMF: Five key …
19th March 2012
The performance of equity markets across the Arab world has diverged since the beginning of the year. Stock markets in Egypt, Dubai and Saudi outperfromed the rest of the region and indeed the MSCI Emerging Markets benchmark. Meanwhile, equity markets in …
13th March 2012
The UAE’s economy minister has suggested that GDP grew by 3.3% last year, only marginally above growth in 2010 and well below most expectations (CE 3.5%; Consensus 4.0%). We think that tight lending conditions and growing risks of an escalation in …
12th March 2012
In contrast to other regions, February’s inflation data from Saudi Arabia and Egypt show that price pressures are mounting. In Saudi, strong domestic demand and favourable base effects are largely to blame. Meanwhile, the increase in Egypt’s inflation is …
A lack of policy direction in North Africa is jeopardising the already-sluggish economic recovery. Unemployment has reached record highs in both Egypt and Tunisia, fiscal and external positions are poor, and the global environment remains weak. So far, …
8th March 2012
At first glance, today’s data showing that the pace of decline in Egypt’s foreign currency reserves slowed last month is good news. Indeed, Egyptian markets have been buoyed by hopes that the economy will avert a fully-blown balance of payments crisis. …
5th March 2012
February’s PMI data show that Saudi Arabia’s non-oil private sector continued to grow strongly on the back of robust domestic demand and an improvement in the external environment. … Saudi Arabia HSBC/Markit PMI …
PMI data show that activity in the UAE’s non-oil private sector slowed last month. Although external demand picked up sharply, this was offset by weaker domestic demand. … UAE HSBC/Markit PMI …
Dubai’s equities soared by 26% since the beginning of the year on the back of fading concerns that government-related entities (GREs) will struggle to refinance their maturing debt this year and growing hopes that the economy is recovering. However, we …
2nd March 2012
Recent comments from Saudi Arabia that its promises of financial aid to Egypt have been held back by the latter are at odds with earlier remarks from the Egyptian Prime Minister which lambasted foreign donors for failing to honour their pledges. Coupled …
1st March 2012
After a stellar performance in 2011, Saudi Arabia’s private businesses are likely to see another year of healthy growth in 2012. We expect government spending to rise again this year, and bank lending should record robust growth. However, since GDP is …
28th February 2012
The jump in oil prices over the past month has sharpened the divide between the relatively bright outlook for the Middle East’s resource-rich countries, and the less rosy outlook for its resource-poor countries. In the GCC, the rise in oil export revenues …
23rd February 2012
King Abdullah’s plan for a full political union in the Gulf Cooperation Council (GCC) is unlikely to materialise. Although each country within the GCC is similar both in terms of economic structure and culture, current political structures vary and are …
21st February 2012
It is becoming clear that one year on from the start of the ‘Arab Spring’ several countries in the Middle East and North Africa (MENA) region are facing difficult transitions. Most of these are in resource-poor parts of the region, namely Egypt, Tunisia …
16th February 2012
With the government committed to safeguarding the pound and foreign funding yet to materialise, Egypt looks set to turn to its expatriates to raise debt finance. But while this would help capital inflows to Egypt, the overall benefit to the balance of …
15th February 2012
Saudi Arabia’s headline inflation remained unchanged in January as a rise in housing (rent and utilities) inflation was offset by a moderation in food prices. … Saudi Arabia Consumer Prices …
14th February 2012
Even though Egyptian inflation fell in January, the recent slump in foreign currency reserves to dangerously low levels may leave the central bank with no choice but to hike rates next month. … Egypt Consumer Prices …
9th February 2012
This Saturday marks a year since the end of Hosni Mubarak’s three-decade reign over Egypt. Only a few weeks before that, Tunisia’s revolution ended with the toppling of the Ben Ali regime. Since then, Libya’s and Yemen’s long-serving dictators have also …
8th February 2012
The Arab world’s markets have underperformed in January. The exception is Egyptian stocks, which are up by 25% since the beginning of the year. However, we think that Egypt’s recovery is unlikely to be sustained. … Middle East Markets Monitor …
7th February 2012
The economies of Asia and Latin America should be able to weather any financial contagion stemming from Europe’s debt crisis. But the economies of emerging Europe – notably Hungary, Turkey and the Balkan countries – look far more vulnerable to possible …
6th February 2012
January’s PMI data show that activity in the UAE’s non-oil private sector accelerated modestly. But the bigger picture is that the slowdown in the pace of growth seen in the second half of last year still persists. … UAE HSBC/Markit PMI …
January’s PMI data show that, on the back of fiscal stimulus boosting domestic demand, Saudi Arabia’s non-oil private sector made a strong start to the year. However, a surge in input prices is continuing to squeeze profit margins. … Saudi Arabia …
Today’s decision to keep the benchmark rate unchanged at 9.25% in a sign that Egypt’s central bank is increasingly confident that loans from the IMF and elsewhere will materialise soon. Indeed, the recent stock market rally (which is in part due to …
2nd February 2012
Given that public finances are vulnerable to swings in oil prices, rumours that Qatar and other Gulf countries are considering Value-Added Tax (VAT) to diversify revenue sources are welcome. Indeed, the recent fiscal stimulus packages across the Gulf have …
31st January 2012
The Arab League’s uncharacteristically unified position on Syria last year has quickly reversed. While some countries, led by the Gulf Cooperation Council (GCC), favour a tough stance, others, including Algeria, Egypt, Iraq and Lebanon, favour a less …
25th January 2012
On the back of a smooth start to the new parliament, Egyptian equities have jumped by 5.4% so far this week, and CDS premia have fallen by around 70 basis points. However, since last year’s revolution, Egyptian markets have been driven by political …
24th January 2012
The escalation of tensions with Iran has meant that financial markets in the Gulf have underperformed those in the rest of the emerging world so far this year. While the MSCI emerging market equity has gained nearly 9% since the start of this month, most …
23rd January 2012
At first glance, given their large external funding requirements, Lebanon and Jordan appear vulnerable to turmoil in international financial markets this year. However, we think that, in contrast to Egypt, there are good reasons to expect both countries …
20th January 2012
Comments earlier this week from Saudi Arabia’s Oil Minister Ali Al-Naimi indicating that the government is comfortable with a crude oil price of $100pb (up from $70-80 previously) suggests that public spending could exceeds current plans in 2012. Of …
18th January 2012
Egypt’s decision to request a $3.2 billion stand-by facility from the IMF will not be enough to cover its external funding needs in 2012. Instead, it will need at least double that amount to avoid a balance of payments crisis. We think that the country’s …
17th January 2012
Saudi Arabia’s headline inflation edged up slightly in December as a rise in core inflation (non-food prices) helped to offset a drop in food inflation. … Saudi Arabia Consumer Prices …
16th January 2012
The Egyptian government’s decision to resume negotiations with the IMF is good news. The proposed $3 billion facility would help plug a gaping hole in the budget. But it would not be sufficient to stabilise the country’s growing external payments …
12th January 2012
At first glance, the Gulf’s lack of trade links with Iran means that international sanctions will have little impact on most of the oil-rich region’s economies. Indeed, Iran’s threat to block the Strait of Hormuz seems to be the only risk to the Gulf’s …
11th January 2012
The pick-up in Egypt’s headline inflation in December has increased the likelihood of another rate hike when the central bank’s monetary policy committee (MPC) meets in February. … Egypt Consumer Prices …
10th January 2012
The increase in the costs of food and fuel subsidies, and public sector salaries, has left most oil-importers in the Middle East and North Africa (MENA) with no room to counteract the impact of a slowdown in global growth this year. And, in some cases, …
9th January 2012
December’s PMI data show that the UAE’s non-oil private sector continued to slow on the back of weaker external demand. Moreover, the data highlight the UAE’s vulnerability to conditions in the global economy. … UAE HSBC/Markit PMI …
4th January 2012
December’s PMI data show that growth eased in Saudi Arabia’s non-oil private sector on the back of softer domestic demand. Meanwhile, businesses continue to face squeezed profit margins in spite of decelerating input costs. … Saudi Arabia HSBC/Markit PMI …
3rd January 2012
Given the political turmoil in the Arab world and growing concerns of a conflict with Iran, it is unsurprising that politics took centre stage at the Gulf Cooperation Council’s (GCC) 32nd Summit this week. A number of previously announced economic …
21st December 2011
