Economic Snapshot for MENA
January 12, 2021
The MENA economy should rebound this year. Oil exporters should gain from higher crude prices and the reduction of OPEC+ cuts, while countries across the region should gain from some progress in the vaccine rollout and stronger demand abroad. That said, geopolitical tensions, fragile fiscal positions and uncertainty around the course of the pandemic pose downside risks.
MENA Countries Monetary & Financial Sector News
Regional inflation jumped to 12.6% in November from 11.6% in October, amid rising price pressures in Egypt and Iran. This year, regional inflation is set to ease somewhat, as depreciation-fueled price pressures in Iran and Lebanon lessen, and the impact of the VAT hike in Saudi Arabia fades. However, many countries will see stronger price pressures on rebounding activity.
Most central banks in the region manage currency pegs and thus lack independent monetary policies. Among those with independent policies, the central banks of Egypt, Israel and Tunisia stayed put in meetings held recently. This year, monetary policy stances will likely remain ultra-accommodative.
The Israeli shekel appreciated notably against the USD over the last month, while the Egyptian pound lost ground. 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. In December, Iraq devalued its currency to facilitate the payment of public salaries.
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Middle East & North Africa Economic News
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Israel: Consumer prices drop at quicker rate on an annual basis in December
January 15, 2021
Consumer prices fell 0.10% from the previous month in December, a softer drop than the 0.20% fall seen in November.
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Israel: Merchandise exports rebound in December
January 13, 2021
Merchandise exports soared 14.1% annually in December (November: -3.0% year-on-year).
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Saudi Arabia: Government announces smaller 2021 budget in bid to rein in deficit
January 11, 2021
In mid-December, the government announced the 2021 budget.
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Egypt: Inflation drops slightly in December
January 11, 2021
Consumer prices decreased 0.42% in December over the previous month, which contrasted November's 0.82% increase.
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Saudi Arabia: Non-oil PMI hits a 13-month high in December
January 5, 2021
The Purchasing Managers’ Index (PMI), produced by IHS Markit, increased from 54.7 in November to 57.0 in December, the highest reading in over one year.
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