Monthly Insights - July 2020

Global macro: There has been a slight return to normality in many countries, as an easing of restrictions has prompted sharp m/m resurgences in economic activity. Output remains off pre-pandemic levels, however, and fiscal and monetary policy look set to remain loose for some time.

GCC macro: We have downgraded growth forecasts in the region again as we take into account the latest economic data. However, a higher oil price forecast for this year and 2021 improve the budget forecasts slightly.     

MENA macro: Algeria and Iraq will both face sizeable economic contractions this year. Not only are they dealing with the pandemic-related lockdowns but also the OPEC-mandated oil production curbs and lower prices, which will weigh heavily on these hydrocarbons-dependent economies.

India macro: We expect further interest rate cuts from the RBI despite persistently inflation as the bank priortitises growth.

Currencies: Dollar weakness has entrenched across most currency pairs with the Euro benefitting from a major EU coronavirus support package.

Financial Markets: Emerging market assets have displayed considerable resilience in light of the coronavirus pandemic. However, underlying conditions leave most markets at risk should unconventional monetary policies in developed market central banks start to be unwound.

Commodities: We have revised our outlook for oil prices higher for the rest of 2020. However, the heavy lifting will now be done by demand to make sure prices hold on to current levels.

Sector report: The coronavirus crisis has accelerated the growth in e-commerce in the UAE.

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