Monthly Insights - September 2020

Global macro: Developed market central banks recommitted to their ultra-loose monetary policies at their September meetings. While activity is improving, growth risks remain weighted to the downside, and the greater likelihood is for more monetary stimulus this year rather than less.

GCC macro: The normalisation of relations between the UAE and Israel opens the way for increased co-operation across a range of sectors including financial technology, food and water security, energy and transport and logistics.

MENA macro: The Moroccan central bank, the Bank al-Maghrib (BAM), opted to keep its benchmark interest rate on hold at 1.5% at its September 22 meeting, despite acknowledging that the economic outlook for the country had deteriorated. Given that the economy will only see a marked improvement once the coronavirus pandemic eases and demand is unshackled once more, we expect no further cuts from the current all-time low.

India macro: We maintain our expectation for one further rate cut in India this year, given the need to support growth. However, stubbornly high inflation has tempered our view.

Currencies: Dollar weakness remains entrenched although the pace of decline has begun to ebb. Sterling remains prone to political risks sending it lower.

Financial Markets: Benchmark bond markets have drifted sideways over the last few months as central banks have largely refrained from any new stimulus measures and investors wait for new fiscal support packages.

Commodities: Oil markets will focus on waning demand over the coming months as coronavirus cases increase.

Sector report: The UAE’s food security agenda has taken on a new priority following the start of the Covid-19 crisis, given the pandemic’s impact on global food supply chains.

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