MOU and the path to recovery, Egyptian pound rallies

The memorandum of understanding (MOU) signed by the US and Iran to extend the ceasefire and re-open the Strait of Hormuz is a major step towards a resolution of the conflict and a recovery in Gulf energy production. Still, the damage already inflicted will result in sharp falls in GDP this year in the Gulf, and the legacy of the conflict raises question marks about the longer-term growth model. The region’s energy importers, particularly Egypt, will benefit from lower prices although a modest slowdown in growth is likely in the coming quarters.