The Boston Consulting Group (BCG) indicated that private financial wealth in the Middle East region reached $3.8 trillion at the end of 2017, constituting an increase of 11% from $3.4 trillion at end-2016. It noted that the region's private financial wealth grew by a compounded annual growth rate (CAGR) of 4.8% between 2012 and 2017. It said that the region's private wealth accounted for 1.9% of global private financial wealth in 2017, higher than the share of Eastern Europe & Central Asia (1.6%) and Africa (0.8%), but lower than the share of North America (42.6%), Western Europe (22.4%), Asia-Pacific excluding Japan (18.1%), Japan (8.3%), Oceania (2.2%) and Latin America (2%). Further, it noted that 82% of the Middle East region's private wealth in 2017 was held in investable assets such as cash and deposits, equity, bonds and investment funds; while 18% was invested in non-investable assets such as life insurance, pensions and unlisted equities. In parallel, BCG estimated the private financial wealth per capita in the Middle East region at $18,000 in 2017, ranging from less than $6,000 per capita in Iran and Iraq to more than $400,000 per capita in Qatar. The region's private wealth per capita was higher than in Asia-Pacific excluding Japan ($13,000), Eastern Europe & Central Asia ($12,000), Latin America ($11,000) and Africa ($3,000), while it was lower than that in North America ($312,000), Japan and Oceania ($179,000) and Western Europe ($142,000). It forecast the Middle East region's private wealth per capita to increase to about $25,000 by 2022.
Source: Boston Consulting Group

Goldman Sachs indicated that the monetary tightening in the United States has an impact on emerging markets (EMs) through different channels such as capital flows, current account balances, foreign currency reserves, and currency mismatch from borrowing in US dollars. It considered that capital flows to EMs are the most affected by tighter monetary policies, while the other channels have become less vulnerable because current accounts of EMs are more balanced than in previous tightening cycles, their foreign currency reserves are larger, and their currency mismatch risk from dollar debt is lower. It said that Chile and Argentina are the most affected countries from higher U.S. interest rates, given the high share of capital inflows to their respective GDP. It added that Argentina and Turkey, whose current account deficits are the widest across EMs, are the most exposed through the current account channel to higher U.S. interest rates. In parallel, it noted that higher foreign currency reserves improved the EM central banks' ability to stabilize their exchange rates when needed or to help local banks and non-financial firms hedge their exchange rate risk. In addition, it said that corporates that borrowed the most in U.S. dollars are commodity producers or other large exporters that are originally hedged against exchange rate risk by their dollar revenues or assets, which reduces their currency mismatch risks.
Source: Goldman Sachs

Fitch Ratings affirmed at 'B-' Iraq's long-term foreign currency Issuer Default Rating (IDR), with a 'stable' outlook. It noted that the ratings are supported by Iraq's high GDP per capita, elevated level of foreign currency reserves, low debt servicing costs, and international financial support. But it said that the ratings are constrained by the country's exposure to the volatile oil sector, weak governance, elevated political risks and an underdeveloped banking sector. It noted that the fiscal and external positions remain at risk of another drop in oil prices, given that the hydrocarbon sector accounts for 90% of Iraq's public revenues and for almost all of its export receipts. It expected the fiscal balance to post a surplus of 3% of GDP in 2018 due to higher oil receipts, following five years of budget deficits. But it anticipated a budget deficit of about 2% of GDP in 2020, as it forecast oil prices to drop from about $70 p/b in 2018 to $57.5 p/b in 2020, and due to increases in investment and current spending. It added that a rise in reconstruction spending could put additional pressure on the budget. In parallel, it forecast the public debt level to decrease from 50% of GDP at the end of 2018 to 48.7% of GDP at end-2019, supported by the expected budget surplus and higher nominal GDP. But it projected the debt level to increase to 50.4% of GDP at end-2020, as oil prices decline again and a budget deficit re-emerges. Further, it projected the Central Bank of Iraq's foreign currency reserves to average $54bn during the 2018-19 period.
Source: Fitch Ratings