Monthly Insights: April 2021

Regional Economics

GCC update: The IMF upgrades growth forecasts for 2021 on a more optimistic oil sector outlook and vaccine rollouts, while Saudi Arabia announces a new investment plan.

e-commerce: Only warming up The e-commerce sector in the MENA region (and much of the world) has been one of the clear success stories of the pandemic, as Covid-19 only accelerated a shift that was already taking place.

Dubai property: Q1 turnaround? The Dubai property market performed well in Q1 2021, with residential rents largely up, and villa sales prices showing their first yearly increase since 2014 when oil prices fell. This has been driven by increased working and schooling from home, as well as greater affordability as mortgage loan-to-value caps have been increased.

Lebanon outlook: With no end in sight to Lebanon’s multiple crises, and an ongoing deterioration in many indicators, we have revised our real GDP growth outlook for 2021 from a weak expansion to another sizeable economic contraction at -4.7%

Global Economics

Headline employment gains obscure residual underlying challenges: While headline labour market data indicates an improving jobs market in developed markets, there remain residual underlying challenges.

US macro scorecard - February: A round-up of the most widely followed monthly macro data points from the US, compared to expectations and the previous month's results.

Surge in Covid-19 cases weighing on India outlook: The outlook for India’s economy this fiscal year (April-March) has become more clouded in recent weeks amidst a surge in Covid-19 cases and renewed restrictions on activity.

Markets

EM bonds get reprieve amid lower UST yieds. However, for emerging market bonds to carry on with rallying we don’t believe they can rely on the current bear market rally in USTs indefinitely. Country-level risks, largely related to a worsening Covid-19 case load in many emerging markets, will weigh on growth.

Euro gets a boost from vaccine rollouts. The Euro has managed to stage a recovery in recent weeks with EURUSD now trading within sight of the 1.20 level last reached in early March. But we believe that the disparities in the respective recoveries from the pandemic, and very different growth outlooks, mean that there remains downside risk for the single currency.

One year on from negative oil prices. It’s been one full year since WTI futures recorded a negative closing price for the first time ever, closing at USD -37.63/b. Since then oil prices have recovered dramatically. WTI prices have added more than USD 100/b by mid-April 2021 to trade between USD 60-70/b while Brent futures, which didn’t go negative in April 2020, have still managed to gain almost USD 50/b from their lows.

Metals markets rising on recovery and stimulus plans. Combined with persistent demand in markets like China and India, an American government spending heavily on infrastructure sets up a compelling medium-term outlook for industrial metals.

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