Monthly Insights March 2020

• Global Macro: Ever more stringent measures imposed by governments across the world in a bid to impede the spread of the Covid-19 coronavirus will weigh heavily on economic growth this year. Developed economies are set to see flat-to-negative growth in 2020.  
• GCC Macro: Against the deteriorating global macro backdrop, the non-oil sectors of the GCC are unlikely to expand this year.  Add to this the impact of sharply lower oil revenues and the ability of governments in the region to increase spending to support growth is much more limited. We have revised our GDP growth and fiscal forecasts in the region accordingly.  
• Sub-Saharan Africa macro: Sub-Saharan Africa was slow to report cases of the coronavirus, but now it has reached the region the impact will likely be severe. SSA will not only be affected by the direct impact of the disease, but also through the commodities channel (lower prices and diminished exports) and capital flight as risk-off sentiment rises.
• MENA macro: Egypt has closed all international airports through the second half of March at least, the latest development which will serve to hobble the tourism sector in 2020. Rapid monetary easing by the CBE will be only a modest salve, and the economy is set to suffer as a result.
• Currencies: With the world now entering a twilight zone of lockdowns and social distancing, it may be some time before accurate economic data is seen on which to base rational investment decisions. FX markets are likely to reflect this vacuum, with reduced liquidity  likely to be the main factor moving currencies rather than fundamentals. 
• Financial Markets: Over the last month, financial markets entered unchartered territory as a classic ‘Black Swan’ event emerged. Relative to a standstill in global economic activities, gyrations in financial markets have been intense.
• Commodities: Oil markets have fallen into a vortex as the twin shocks of extensive demand destruction caused by the Covid-19 pandemic and a market-share strategy adopted by OPEC and its rivals weighs on markets. 

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