November 2019 Monthly Insights

Published Date: 28 November 2019


Recession risks continue to be priced out in the US and 2020 is likely to be a year of  stabilization albeit at relatively low levels of growth in other parts of the world. Event risk will remain prominent next year, with trade tensions not fully resolved and a pivotal US election, but strong directional market moves may be lacking. 


Global macro: ‘Mediocre growth with downside risks’, was the common characterization of US growth that we received on our recent trip to the US, in contrast to the Fed’s description of the US economy as being ‘in a good place’.  

GCC macro: We expect regional growth to accelerate in 2020 although it is likely to remain modest relative to other emerging markets.  Lower oil prices are likely to weigh on government spending, although in our view the UAE has room to provide additional fiscal stimulus.  

MENA macro: Monetary policy in North Africa will continue on divergent paths in 2020. Egypt has further rate cuts to come, Morocco will remain in its holding pattern, while Tunisia looks to have reached the peak of its hiking cycle and will likely remain on hold next year.

Pakistan macro: Pakistan’s IMF-sponsored reform programme has made headway over recent months, but efforts to implement some deeper structural reforms will likely see increasing popular pushback as they weigh on disposable incomes.

Currencies: Looking forward to 2020, trade tensions are likely to remain a theme although some alleviation is likely as a Phase 1 deal is eventually agreed, which could reduce some of the upward pressure on the dollar. As we are retaining one Fed rate cut in our forecasts this could also at the margin cause the dollar to soften slightly, as it seems much less likely that other major central banks will be able to follow suit.

Financial Markets: The performance of financial markets in 2019 was driven by manifestation of slowing economic growth on account of trade conflicts and natural attrition and a dovish shift in global monetary policy. 2020 could well be defined by how these factors play out. Further, the probable crystallization of an unfinished agenda from 2019 (Brexit & Phase 1 trade deal) and challenges of key geopolitical event (US election) could also weigh on financial markets in 2020.

Commodities: Commodity markets face several familiar themes in their outlook for 2020—trade, central banks, global growth. But new factors are growing in importance and will present a challenge for the sector to absorb.

Sector Report: Dubai’s tourism sector has seen growth in 2019 with international visitor numbers continuing to rise.

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