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Timothy Fox - Head of Research & Chief Economist
Published Date: 24 October 2019
Some optimism is emerging regarding Brexit and trade wars, contributing to a dialing back of risk. This is just as well as the macro environment continues to deteriorate, with recent downgrades to the IMF’s global outlook, including for this region.
Global macro: Market optimism is improving on two key fronts, US-China trade and Brexit. As both issues have been the main sources of market uncertainty in 2019, signs of progress have the potential to transform sentiment in the final quarter.
GCC macro: The decline in oil production in H1 2019 has weighed on headline growth numbers. With the OPEC curb on production expected to remain in place through Q1 2020, and taking into account H1 GDP data where it is available, we have downgraded real GDP growth forecasts for 2019 in four out of the six GCC countries.
MENA macro: Lebanon’s embattled government has made concessions to the thousands of protesters that spilled onto the streets in October, but questions remain over whether these measures are compatible with the long-term structural adjustments the economy needs to take to get back on a sustainable growth path.
Fixed Income: Egyptian local currency fixed income securities are the best performing ones globally with possibly more upside heading into 2020.
Currencies: The dollar has declined amid expectations of additional rate cuts from the Federal Reserve, while sterling has outperformed on a Brexit breakthrough.
Equities: At the start of Q4 2019, equities appear to be caught in a tug-of-war between easing geopolitical risks (US-China trade and over Brexit) and firm signs of an impending global economic slowdown (European recession, US manufacturing).
Commodities: Oil markets will go through a substantial change from January 2020 when new specifications governing marine fuels come into effect. As a region that produces crude oil that is high in sulphur, MENA exporters will need to adapt to a greener, lower emission world.
November 2019 Monthly Insights
Monthly Insights September 2019