Economic Snapshot for MENA
July 31, 2019
Economic activity in MENA to be expected to be stable in 2019 compared to last
Growth in MENA is seen fairly stable this year compared to last, held back by the recently extended OPEC oil cuts. However, this masks greatly differing performances among countries; Iran will contract sharply as U.S. sanctions savage the economy, while Iraq is seen bouncing back from last year’s decline. Geopolitical tensions and volatile oil prices pose downside risks.
MENA Monetary & Financial Sector News
Regional inflation fell from 9.0% in May to 8.1% in June, likely on the recent drop in oil prices. Outside Egypt and Iran—which are grappling with successive subsidy cuts and U.S. sanctions respectively—price pressures are generally mild. Over 2019 as a whole, inflation is seen largely unchanged from 2018, as higher inflation in Iran is offset by lower prices in the GCC.
A more dovish Federal Reserve should allow central banks in the region that use interest rates to tune their monetary policies to maintain similarly accommodative stances. That said, most central banks in MENA do not have independent monetary policies as they have currency pegs, mostly against the USD.
Solid domestic momentum and the rising expectation of a Fed rate cut supported the Egyptian pound and the Israeli shekel in recent weeks. Most remaining countries in the region maintain a de jure or de facto currency peg against the U.S. dollar or a basket of currencies mostly composed of the USD and the EUR.
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Middle East & North Africa Economic News
Saudi Arabia: Non-oil PMI softens in July but remains well in positive territory
August 8, 2019
The Purchasing Managers’ Index (PMI), produced by IHS Markit, fell from June’s 57.4 to 56.6 in July and marked the lowest reading since February.
Saudi Arabia: Drop in consumer prices continues to moderate in June
July 23, 2019
Consumer prices rose 0.2% over the previous month in June, following May’s 0.1% increase.
Israel: Economic activity picks up in June after May’s lull
July 23, 2019
The Bank of Israel’s Composite State of the Economy Index rose 0.23% in June, up from May’s revised 0.14% increase (previously reported: +0.13% month-on-month).
Israel: Manufacturing PMI picks up in June
July 21, 2019
The Purchasing Managers’ Index (PMI), produced by Bank Hapoalim and the Israeli Purchasing & Logistics Managers Association (IPLMA), rose from 50.4 in May to 52.7 in June, moving further above the neutral 50-point mark separating expansion from contraction in the manufacturing sector. The change in the headline figure was driven by stronger domestic demand, while export orders continued to shrink.
Israel: Inflation plummets in June
July 15, 2019
Consumer prices fell 0.6% in June over the prior month, contrasting May’s 0.7% increase, amid lower prices for fresh fruit and vegetables, and clothing and footwear.
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