| Title | Description |
| Kenya (Africa Monitor - East and Central Africa) |
On April 23, President Uhuru Kenyatta announced his nominations for four of the most important positions in what will eventually be an 18-member cabinet. The nominee for finance minister is Henry Rotich, an economist who has been Head of Macroeconomics in the finance ministry since 2006 while Amina Mohamed, a former Assistant Secretary General at the United Nations, has been put forward for the foreign affairs portfolio. Kenyatta has named James Macharia as Minister of Health and Fred Matiang'i as Minister of Information, Communication and Technology. The nominees are set to be vetted by parliament in early May. |
| Solid Growth Despite Instability (Middle East Monitor - The Gulf) |
We project real GDP growth in Iraq of 11.2% and 14.5% in 2012 and 2013, respectively, compared to our estimate of 11.6% growth in 2012. Oil exports will remain the major growth driver over the coming years, while elevated government spending and continued investment by foreign companies will underpin healthy growth rates for private consumption and gross fixed capital formation. |
| 'Saudisation' To Have Widespread Effects (Middle East Monitor - The Gulf) |
BMI View: The recent intensification of workforce nationalisation ('Saudisation') efforts in Saudi Arabia is likely to remain the norm going forward, albeit structural weaknesses will continue to delay the effective entry of nationals into the private sector. Given the importance of Saudi Arabia's outward remittances for many Arab and Asian economies, we expect 'Saudisation' to have substantial regional implications. For Yemen, the latest developments provide a new downside risk to an already bleak political and economic outlook. |
| Back To The Drawing Board (Middle East Monitor - East Med) |
Economic activity across Egypt is likely to remain fundamentally depressed over the coming quarters, as the government grapples with implementing a potentially highly unpopular package of subsidy and tax reforms. Recently released data from the Central Bank of Egypt (CBE) shows real GDP having expanded 2.4% y-o-y in the first half of FY2012/13 (fiscal year running from July-June), which by our estimates, would have put headline FYQ2 growth at 2.2%. |
| Growth Forecast Masks Medium-Term Weakness (Africa Monitor - North Africa) |
We project real GDP growth in Algeria of 3.5% in 2013 and 4.8% in 2014, respectively, up from our estimate of 2.2% in 2012. Despite an increase in headline growth this year, expansion in private consumption and fixed investment will slow, as the government's support to the economy decreases. While growth will pick up in 2014, mainly on the back of a projected increase in natural gas exports, the economy will expand below potential over the medium term, and we forecast real GDP growth averaging 3.4% over the 2013/2017 period. Indeed, BMI's Oil & Gas team projects total petroleum export growth averaging only 0.4% y-o-y over the same period. Moreover, as we believe that the government will be unwilling to liberalise the economy over the coming years, the development of the non-oil economy will remain slow going forward. |
| Government To Miss 2013 Deficit Target (Africa Monitor - North Africa) |
BMI View: We expect Morocco's public finances to remain under considerable strain over the year, and maintain our long-held view that the government's 2013 budget target, aiming to narrow the fiscal deficit to 4.8% of GDP, is overly optimistic. We forecast a deficit of MAD50.8bn (EUR4.6bn), equivalent to 5.8% of projected 2013 GDP. Subsidy reform is likely to be delayed until 2014 at the earliest, while the government's plans to trim down investment spending this year will harm medium-term economic growth. |
| IMF Agreement: Taking Stock (Africa Monitor - North Africa) |
On April 19 Tunisian authorities and IMF staff reached a staff-level agreement on a 24-month US$1.75bn Stand-By Arrangement (SBA), a development which was widely anticipated by BMI (see our online service, January 21, 'IMF Agreement: Initial Thoughts'). The agreement will likely be approved by the IMF's Executive Board in May. A recently released statement by the IMF hints at a rather usual mix of IMF fiscal measures, such as preserving fiscal and external stability, fostering higher and more inclusive growth and addressing critical vulnerabilities of the banking sector, as well as encouraging greater exchange rate flexibility in order to help rebuild foreign reserve buffers. According to reports, the Tunisian authorities have agreed to a number of structural reforms, including streamlining public expenditures, including subsidies, reforming exchange rate policies, and promoting private investment. |
| Current Account Deficit Covered But Concerning (Africa Monitor - East and Central Africa) |
Although Kenya's large current account deficit is being covered by the capital and financial account inflows, the fact that these comprise short-term flows and 'errors and omissions' mean that they are inherently unstable and difficult to predict. The country's balance of payments position will therefore remain precarious until there is an increase in longer-term financial account inflows. |
| Fiscal Position To Deteriorate Further (Middle East Monitor - The Gulf) |
BMI View: Bahrain's fiscal position is likely to deteriorate further in 2013, given parliament's intention of pushing through higher levels of current expenditure. At the same time, growth in hydrocarbon revenue is slowing down, and the country is increasingly reliant on aid from its GCC neighbours. We forecast the fiscal deficit to reach 3.9% of GDP this year and 3.5% in 2014. |
| Chart Of Day: De-Facto Devaluation Unfolding (Middle East Monitor - The Gulf) |
In a sign of ongoing economic stress, Iran's government on April 24 has stopped allocating U.S. dollars at the official rate of IRR12,260/US$ to importers of staple goods - including meat, chicken, cooking oil, sugar rice - and medicines. With the exception of wheat, barley, corn and soya bean, all strategic imports will now be imported using the rate offered at the foreign exchange centre, which is currently around the IRR24,570/US$ level. The move was widely anticipated by BMI: in our latest research note on Iran's balance of payments, we wrote that, as a result of pressure on the country's stock of FX reserves, "The central bank will therefore be forced to further reduce its provision of dollars to importers at the official exchange rate, which will continue to trigger upside price pressures and compound the crisis in the economy" (see our online service, April 12, 'Full-Blown External Payments Crisis Unlikely'). |
| Trade Account To See Modest Narrowing (Middle East Monitor - East Med) |
BMI View: Jordan's external imbalances remain considerable, with the current account deficit having reached 18.1% of GDP in 2012. However, we expect import growth to moderate sharply this year, and project a gradual narrowing in the trade deficit. This, combined with a slight recovery in external grants, will help to stem declines in Jordan's foreign exchange reserves, and reduces the risk of a devaluation of the dinar over 2013. Yet we caution that downside risks remain elevated, and forecast a 2013 current account deficit of 11.7% of GDP. |
| Namibia (Africa Monitor - Southern Africa) |
The Finnish Embassy in Namibia has launched a network called Team Finland in Namibia, which it hopes will facilitate partnerships between the two nations and increase trade and investment. Finnish diplomat Anne Saloranta said that she believes that the two countries could 'learn a lot from each other', and that the initiative will focus on small and medium enterprises. Meanwhile, the Namibian government has signed a memorandum of understanding with China regarding various fish and fish oil exports. The two parties said the agreement was part of a new era of cooperation. |
| Macroeconomic Forecast Tunisia (Africa Monitor - North Africa) |
The Central Bank of Tunisia (BCT) increased its key interest rate by 25 basis points to 4.00% at its latest meeting on March 27. The move was motivated by the need to curb inflationary pressure, as consumer price inflation (CPI) increased to 6.6% y-o-y in March. Given elevated inflationary pressure, we believe that further cuts are on the cards this year. We forecast benchmark interest rates in Tunisia coming in at 4.25% at end-2013, a 25 basis point increase compared to the current rate. |
| Mozambique (Africa Monitor - Southern Africa) |
The next round of talks between the government of Mozambique and the main opposition party, Renamo, were postponed for three days as Renamo is not happy with the venue. The earlier rounds of discussions were held in the Indy Village hotel in the Maputo suburb of Sommerschield in December 2012. The government had suggested that the next round should also be held at the same venue on April 22, but Renamo rejected the suggestion stating that it is not fit for a state event. Talks have been scheduled on the back of rising tensions between the two parties - seven people were killed in early April following attacks by Renamo-linked militias. |
| Risk Summary - Madagascar (Africa Monitor - Southern Africa) |
Madagascar's two-time former president Didier Ratsiraka announced in April that he plans to contest the country's upcoming presidential election on July 24. The announcement follows the 76-year olds' recent return to the country after eleven years living in exile in France, before which time he was president of the country, from 1975-1993 and from 1997-2002. Ratsiraka's application was one of 49 such bids submitted for assessment to the country's Special Electoral Court (CES) and a final list of official candidates is due to be published by the CES on May 3. |
