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Monthly Insights: May 2021

Khatija Haque - Head of Research & Chief Economist
Edward Bell - Senior Director, Market Economics
Daniel Richards - MENA Economist
Published Date: 25 May 2021


Regional Economics

UAE: GDP contracted by less than expected in 2020, and the speed of vaccine rollout in the UAE stands the economy in good stead to benefit from the global recovery, even as travel restrictions will continue to be a headwind for the tourism sector.

UAE BoP saw current account surplus shrink but FDI increase: The current account recorded a surplus of 5.8% of GDP despite sharply lower oil prices. Inward FDI rose to almost USD 20bn last year, despite a global decline in FDI flows due to the pandemic.

Tunisian economy remains under pressure: First quarter GDP results and persistently high new Covid-19 case numbers in Tunisia confirmed that the economy remains under significant pressure and reaffirmed our decision to downgrade our 2021 growth forecast from 4.5% down to 3.8% last month. 

ESG In Focus:Social and governance criteria are a growing area of focus for organisations in the UAE.

Global Economics

Central bankers push back against reflation narrative: Central bank officials on both sides of the Atlantic continue to push back against the reflation narrative that has gripped markets in recent months, even in the face of significant jumps in price growth in April. 

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


FOMC sticks with accommodative tone. The Federal Reserve continues to maintain accommodative policy amid mixed economic data and policymakers expect the surge in inflation to be transitory. The stand-off between the Fed and markets will persist in the near term.

Oil market begins to consider return of Iran. After several weeks of not paying attention to negotiations around the restart of the JCPOA, oil markets now seem to be pricing in a return of Iranian crude at some point in H2 2021. Given current demand expectations, the oil market should be able to absorb the additional volumes without dirsutpting prices too significantly.

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