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Egypt, Lebanon and the IMF Egypt and Lebanon took further steps towards securing IMF support this week, but finalising a deal will prove much harder for the latter than the former. Earlier this week, the IMF approved Egypt’s request for emergency …
14th May 2020
Saudi: capital spending to bear brunt of austerity Comments from Saudi officials reinforce our view that a devaluation is unlikely and fiscal policy will make the adjustment to low oil prices. Capital spending is likely to shoulder the burden of the cuts. …
7th May 2020
Saudi can weather hit from low oil prices Figures released this week provided the first signs of the hit to Saudi Arabia’s balance sheet from lower oil prices. But we remain comfortable in our view that the dollar peg will stay intact. Data published by …
30th April 2020
Saudi chooses austerity over devaluation Comments from Saudi Arabia’s finance minister late yesterday add further weight to our view that fiscal consolidation rather than a devaluation will be relied on to make the adjustment to low oil prices. The latest …
23rd April 2020
Oil price war over, but a sign of things to come? Saudi officials may be dismissing the recent price war as blip in their oil policy but, if anything, we think that it might represent a dry run of what will become the norm in the coming decades. OPEC, and …
16th April 2020
Gulf governments tap bond markets for financing Qatar and Abu Dhabi’s dollar bond sales this week, raised $10bn and $7bn respectively, and several other Gulf countries are likely to follow suit as governments seek funds in the face of low oil prices. The …
9th April 2020
Saudi to play hardball over output deal Oil prices have surged amid hopes that Saudi Arabia and Russia will thrash out a deal to cut oil output, but recent developments suggest that the Kingdom will dig in and demand that the rest of OPEC+ share the …
2nd April 2020
Coronavirus policy response ramps up Confirmed COVID-19 cases in the region have more than doubled in the past week and, at the same time, governments have ramped up containment measures. While these will help to slow the spread of the virus, they will …
26th March 2020
Saudi Arabia doubling down on oil policy, for now Oil prices have continued to plunge this week and strains on the Gulf economies are mounting. Saudi Arabia’s decision to deepen fiscal austerity is a sign that policymakers have no imminent plans to shift …
19th March 2020
The aftermath of the oil price collapse The region has been thrown into turmoil over the past week amid the collapse in oil prices and the rising fears of the economic hit from coronavirus. The announcement by Saudi Arabia last weekend that it would …
12th March 2020
Governments up policy support as virus spreads The coronavirus outbreak in the region has intensified and governments are stepping up policy support in order to deal with the economic fallout, particularly in the UAE. And OPEC+ looks set to deepen oil …
5th March 2020
Saudi halts pilgrimages amid COVID-19 fears Saudi Arabia’s decision to temporarily halt religious pilgrimages to the Kingdom adds another downside risk to our already below-consensus forecast for economic growth this year. Amid rising fears over the …
27th February 2020
Lebanon nearing default It is looking increasingly likely that Lebanon’s government will default on a Eurobond payment in March. And while the government is now turning to the IMF to work through its crisis, time is running out to secure external …
20th February 2020
Hopes for deeper output cuts wane The unexpected rise in Saudi oil production last month may be a sign that the authorities are no longer willing to bear the brunt of oil output cuts, reducing the chances of a deal to lower output further in response to …
13th February 2020
Lebanon: hopes rise for March Eurobond payment Lebanon’s Eurobond that matures in March has rallied over the past week amid rising hopes that the authorities will make the payment, but this will simply delay the inevitable debt restructuring. The price of …
6th February 2020
Oil prices drop raises of deeper OPEC+ output cuts Oil prices have dropped back in recent weeks due to fears about the coronavirus outbreak in China and, while lower prices don’t pose a significant threat to the Gulf economies, it has increased the …
30th January 2020
Lebanon: new government faces unenviable task Lebanon’s prime minister finally managed to form a new government this week and policymakers are quickly facing up to reality of the economy’s woes. An approach to the IMF for a financing package seems to be …
23rd January 2020
Lebanon: debt swap proposal fails to take off The unravelling this week of a proposed debt swap by the Lebanese authorities suggests that, even once a government is formed, debt restructuring will be a drawn-out process. On Sunday, Lebanon’s central bank …
16th January 2020
As threat of war recedes, Iran shift its focus The immediate threat of direct conflict between the US and Iran has diminished over the past day or so, supporting a rally in local and global financial markets. But the threat has not disappeared and Iran …
9th January 2020
Saudi recovery to disappoint Saudi Arabia’s economy contracted in Q3 of last year and the latest evidence suggests that Q4 was even worse. While a recovery will probably take hold this year, we think that it will be weaker than most currently anticipate. …
2nd January 2020
Higher oil prices won’t loosen the purse strings We think that the recent rise in oil prices has further to run but this is unlikely to result in a shift towards looser fiscal policy across the Gulf. Our commodities team now expects that the price of oil …
19th December 2019
Aramco’s (long-awaited) IPO Shares of Saudi Aramco jumped by 10% when they debuted on the local Tadawul stock exchange on Wednesday. And today the valuation of the company briefly touched the $2tn that Crown Prince Mohammed bin Salman (MbS) has long …
12th December 2019
Lebanon: Next stop the IMF? News that Lebanese banks will make some interest payments on FX deposits in local currency underscores that strains in the balance of payments are worsening. The risk of a debt restructuring and devaluation is rising by the …
5th December 2019
New term for CBE governor, orthodoxy to stay The appointment of Egypt’s central bank governor, Tarek Amer, for a second four-year term will welcomed by investors as a sign that the government remains committed to orthodox policymaking and supports our …
28th November 2019
Lebanon triple crisis fears escalate The Lebanese government will probably meet a FX debt repayment due next week, but this will act as a further drain on the country’s FX reserves, piling the pressure on the dollar peg. The chances of a messy …
21st November 2019
Lebanon: bailout wouldn’t be a silver bullet The situation in Lebanon is going from bad to worse and the chances of a combined debt, currency and banking crisis are rising. President Aoun seems to be seeking a bailout package but this would only pave the …
14th November 2019
More details emerge on Aramco IPO The Saudi government launched preparations for the Aramco IPO earlier this week and a few more details have trickled out in the last few days. We looked in detail at the economic implications of the Aramco IPO in an …
7th November 2019
Lebanon inching closer to the precipice The situation has remained chaotic in Lebanon this week, with protests continuing and PM Saad Hariri submitting the resignation of his government. There are some suggestions that Mr. Hariri may be asked to form a …
31st October 2019
More talk of deeper OPEC+ oil production cuts Rumours that OPEC+ oil producers are contemplating deeper production cuts underlines the desire of policymakers in Saudi Arabia to push up oil prices. But this would come at the expense of weaker GDP growth as …
24th October 2019
Egypt: IMF help won’t remove risk of fiscal splurge Reports that Egypt and the IMF are in negotiations over some kind of future cooperation suggests that the authorities are trying to soothe investor fears of fiscal loosening. To recall, in July, Egypt …
17th October 2019
Tunisian elections risk policy paralysis The second round run-off of Tunisia’s presidential election will take place on Sunday and will face the immediate challenge of trying to work with a highly fragmented parliament. A period of policy paralysis would …
10th October 2019
Gulf slowdown has further to run National accounts figures released this week showed that Saudi Arabia’s economy officially entered recession in Q2 and Qatar’s economy shrunk too, all of which supports our below-consensus 2019 GDP growth forecasts for the …
3rd October 2019
Talk of OPEC deal extension to be revived The latest reports suggest that Saudi Arabia has managed to get the bulk of its oil output back online following the Abqaiq attacks but, with oil prices drifting back towards $60pb, the debate may quickly shift to …
26th September 2019
Saudi oil output set to return quickly Saudi Arabia appears to have avoided the worst fears of prolonged disruption to its oil production following the Abqaiq attacks on Saturday. But the attacks appear to have dented the authorities’ appetite to rush …
19th September 2019
Saudi: rising chance of deeper oil output cuts With one eye on the upcoming Aramco IPO and the fiscal position under strain, the odds of the Saudi government pushing for deeper oil production cuts are shortening. This poses a downside risk to our already …
12th September 2019
Change in Aramco chief won’t affect oil policy Developments over the past week add to the signs that the Saudi government is ramping up preparations for the listing of state-owned oil company Aramco, but the latest moves are unlikely to result in a shift …
5th September 2019
Saudi equity market struggles The fall in the Saudi Tadawul equity index this week, despite the second phase of its inclusion in the MSCI EM index, reinforces our view that the stock market will struggle this year. Saudi Arabia’s stock market has been …
29th August 2019
Lebanon’s debt back in the spotlight The dire finances of the Lebanese government have come back under the spotlight and we continue to think that some form of debt restructuring is more likely than not. Argentina’s experience in the past couple of weeks …
22nd August 2019
Balance sheets resilient… The plunge in oil prices over the past week won’t result in balance sheet strains in the Gulf economies, but it does strengthen our view that governments in parts of the region, most notably Saudi Arabia, will resume fiscal …
8th August 2019
Saudi fiscal loosening unlikely to last much longer Budget figures released this week in Saudi Arabia showed that the government loosened fiscal policy in Q2 but, if oil prices remain low (as we expect), the authorities will reverse course in the coming …
1st August 2019
Rate cuts unlikely to boost Gulf credit growth Central banks in the Gulf will follow the US Federal Reserve in cutting interest rates next week, but past experience suggests that this is unlikely to provide a significant boost to the economy. Fed Chair …
25th July 2019
Threat of harsh US sanctions on Saudi still limited A bill approved by the US House of Representatives this week that seeks to impose sanctions on Saudi Arabia has created headlines, but it is unlikely to result in aggressive action against the Kingdom. …
18th July 2019
CBE to hold fire today, but rate cuts looming Fuel price hikes announced in Egypt last weekend mean that the central bank probably won’t respond to June’s sharp fall in inflation by cutting interest rates later today. But the easing cycle looks set to be …
11th July 2019
Saudi economic growth to weaken further GDP data released by Saudi Arabia this week showed that its economy slowed sharply in Q1 and, as the drag from oil output cuts intensifies and fiscal policy is tightened, growth will weaken further. The Saudi …
4th July 2019
Saudi further opens up to foreign investors The announcement that Saudi Arabia will ease foreign ownership restrictions on publicly-listed companies should go some way to boosting foreign direct investment into the country. On Wednesday, Saudi Arabia’s …
27th June 2019
Rally in Egyptian pound to be short-lived The appreciation of the Egyptian pound this week appears to have been driven by a spurt of foreign portfolio inflows, but we still think that the currency will record a modest fall in the next couple of years. …
31st January 2019