Deutsche Bank indicated that Asian currencies are the least sensitive in emerging markets (EMs) to negative external shocks. It said that negative external shocks include nine variables that are a stronger US dollar; higher real interest rates on 10-year U.S. Treasury bonds; lower oil prices; lower gold prices; higher values for the Volatility Index; higher European stress measured by the widening average spread in 10-year bonds of Italy, Portugal and Spain against German Bunds; decline in equity indices such as the S&P and STOXX; as well as the widening of spreads between the Offshore and Onshore Chinese yuan. In contrast, it considered that any opposite movement in the previously stated factors reflects a positive external shock. It said that the Singaporean dollar is the least sensitive currency to negative external shocks, followed by the Chinese yuan, the South Korean Won and the Philippine Peso. In contrast, it noted that the Turkish Lira (TRY), the Mexican Peso (MXN), the South African Rand (ZAR), the Brazilian Real (BRL) and the Russian Ruble (RUB) are the most sensitive currencies in EMs to negative external shocks. Further, it indicated that the BRL, the ZAR, the RUB and the MXN could benefit the most from a positive external shock. It pointed out that currencies with the highest sensitivity to negative external shocks benefit the most during positive external shocks. As such, Deutsche Bank indicated that Asian currencies provide the best risk-reward, or asymmetric payoff, during periods of extreme external shocks, while the MXN, ZAR, TRY and Colombian Peso provide the lowest risk-reward. 
Source: Deutsche Bank

The Mid-2018 Cost of Living survey, produced by crowd-sourced global database Numbeo, ranked Doha as the most expensive city among 20 Arab cities and the 255th most expensive among 538 cities worldwide. Abu Dhabi followed in 269th place, then Beirut (275th), Manama (305th) and Amman (308th) as the five Arab cities with the highest cost of living. The Arab cities that have the lowest cost of living are Casablanca (441st), Algiers (470th), Tunis (508th), Cairo (513th) and Alexandria (522nd). The Cost of Living survey is a relative indicator of the prices of consumer goods and services, such as groceries, restaurants, transportation and utilities. Based on the same cities included in the mid-2017 and mid-2018 surveys, the rankings of 14 out of 20 Arab cities rose, reflecting an increase in the cost of living relative to other cities worldwide, while the rankings of six cities regressed from the mid-2017 survey. Further, the Rent Index shows that Abu Dhabi has the highest apartment rents regionally, while rents in Alexandria are the lowest. Also, the Groceries Index indicates that Doha is the most expensive city in terms of grocery prices in the region, while grocery prices in Alexandria are the lowest. In addition, the Restaurant Index shows that Beirut has the highest prices of meals and drinks at restaurants and pubs, while Tunis has the lowest such prices regionally. Numbeo relies on residents' inputs and uses data from official sources to compute the indices.
Source: Numbeo, Byblos Research

Jadwa Investment expected Saudi Arabia's economic activity to remain solid despite the implementation of major fiscal reforms since the beginning of 2018. As such, it projected real GDP to grow by 2.2% in 2018 following a contraction of 0.9% in 2017, due to improved hydrocarbon sector activity. It forecast hydrocarbon output to grow by 3.2% in 2018 relative to a contraction of 3% in 2017, driven by an increase in oil production following the OPEC and non-OPEC members' decision to raise output starting in July 2018. It anticipated Saudi Arabia's crude oil output to increase from an average of 10 million b/d in 2017 to 10.3 million b/d this year. Also, it projected non-oil growth at 1.4% in 2018 relative to 1% last year, supported by higher public spending. But it expected the implementation of the value-added tax (VAT) and energy price hikes to weigh on growth in 2018. Further, it projected the inflation rate to average 3.1% this year relative to -0.8% in 2017, due to the introduction of the VAT and higher utility prices. It considered that downside risks to the outlook include lower-than-expected oil prices and delays in capital spending.

In parallel, Jadwa considered that higher oil prices and production in 2018 would improve the Kingdom's fiscal and external balances. It forecast the fiscal deficit to narrow from 9.3% of GDP in 2017 to 3.8% of GDP in 2018 on the back of higher oil output and receipts. It said that authorities have recently announced domestic and foreign debt issuances to finance the fiscal deficit, and expected them to issue further domestic bonds during 2018. As such, it anticipated the public debt level to grow from SAR443bn or 17.2% of GDP at end-2017, to SAR560bn or 19% of GDP at end-2018. Further, it projected the current account surplus to increase from 2.2% of GDP in 2017 to 9.3% of GDP in 2018, as it anticipated oil export receipts to rise from $170bn last year to $223bn in 2018. Also, it forecast foreign currency reserves at the Saudi Arabian Monetary Agency to increase from $496bn at end-2017 to $536bn at end-2018, due to higher oil export receipts and larger portfolio investment inflows.
Source: Jadwa Investment