Economic Snapshot for MENA
April 8, 2020
Regional economic activity will be depressed this year. Measures to contain the Covid-19 outbreak will weigh heavily on domestic activity, while external demand will be limp. However, higher oil output following the collapse of OPEC+ talks in early March will support the energy sector. Widespread geopolitical tensions, social unrest and weak health systems pose downside risks.
MENA Monetary & Financial Sector News
Inflation in the Middle East and North Africa fell from 5.8% in January to 5.4% in February amid lower crude prices. This year, inflation is seen rising slightly as price pressures recover in GCC countries, although weak economic momentum and low oil prices will cap the increase.
Most MENA central banks manage currency pegs, against the USD or a basket of currencies including the USD or the EUR, and lack independent monetary policies. As such, central banks with currency pegs slashed their interest rates in mid-March following the Fed’s cut. The Bank of Israel and the Central Bank of Egypt also cut rates.
The Egyptian pound and Israeli shekel both lost ground against the USD over the last month as investors flocked to the safety of the greenback. 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/or the EUR.
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Middle East & North Africa Economic News
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Egypt: Central Bank leaves rates unchanged at May meeting
May 14, 2020
At its scheduled monetary policy meeting 14 May, the Central Bank of Egypt (CBE) left the overnight deposit, overnight lending, and main operation rates unchanged at 9.25%, 10.25% and 9.75%, respectively.
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Egypt: Economic growth remains robust in October–December 2019
May 11, 2020
The economy expanded 5.6% year-on-year in the second quarter of FY 2020 (October–December 2019), which was unchanged from the growth rate of the first quarter. Private consumption growth accelerated to 2.7% in October–December (July–September: +1.0% year-on-year), seemingly supported by lower inflation and cuts to the overnight deposit rate by the Central Bank, and despite an uptick in the unemployment rate to 8.0% from 7.8%.
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Egypt: Inflation picks up in April
May 10, 2020
Consumer prices increased 1.3% in April compared to the previous month, up from the 0.6% increase in March and mainly due to a sharper increase in food and vegetable prices.
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Saudi Arabia: Oil prices recover slightly in April
May 8, 2020
Oil prices recovered moderately over the past month, as OPEC+ members agreed to cut production by an unprecedented level in mid-April, amid Covid-19 lockdown measures decimating oil demand prospects.
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Israel: Economic activity contracts in March
May 6, 2020
The Bank of Israel’s Composite State of the Economy Index contracted 0.06% in March compared to the previous month in seasonally-adjusted terms, contrasting February’s revised 0.07% expansion (previously reported: +0.26% month-on-month).
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