Special Dutch version
While there will be a devaluation of the Chinese renminbi, the dollar will also become stronger more generally in 2016, due in part to the Fed’s interest rate increases. The ECB is more likely to do the opposite, which will weaken the euro/dollar currency pair further still. Slightly higher capital market rates can be expected though.
According to the World Energy Outlook of the International Energy Agency the oil sector is adjusting to the new reality after the sharp oil price shock of 2014. And that translates to low though increasing oil prices.
Economic Quarterly Report Dutch version
Economic growth in EMs disappoints again due to lower commodity prices and China’s slowdown. Higher growth in the Eurozone will result in a pick-up of growth in developed countries, but this will not be enough to prevent a slight slowdown in global growth.
Lebanon’s economy continues to show weak growth in 2014 (3%), being adversely effected by the conflict in Syria. But the banking sector remains healthy and Lebanon still has ample foreign reserves, which mitigates its otherwise high country risk.
Jordan’s economic situation is improving. GDP growth has picked up to 3.1% in 2014, driven by lower oil prices and growth in the tourism sector. The greatest risk is still that the conflicts in Syria and Iraq will lead to negative spill-overs.
Iran’s nuclear deal will be a clear plus for its economy and its trade partners. Globally, the economic impact is mainly through lower oil prices. Geopolitically, it might increase tensions within the Middle East as Iran becomes more powerful.
Economic growth is expected to maintain its momentum in the medium term underpinned by strong domestic demand and economic diversification. However, the combination of high government spending and a decreased oil price puts pressure on fiscal sustainability.
Although the UAE’s economy is more diversified and less dependent on the oil sector than the surrounding Gulf States, it is strongly affected by the decreasing oil price since the second half of 2014.
Domestic stability in Egypt has improved markedly and the economy is showing timid signs of recovery. The government has engaged in bold reforms. Generous aid from the Gulf Cooperation Council (GCC) countries gives it the financial space to gradually implement those reforms.
The Israeli economy is likely to continue to grow at a moderate pace, while the strong growth of mortgage debt and the rise of housing prices pose risks. Meanwhile, a new round of peace talks with the Palestinians is not obvious under a new government that is dominated by nationalists and ultra-Orthodox parties.