HSBC's Williams on Oil Volatility

Let's just pick up on the price action in oil. A bit of life coming back into the oil market again after OPEC Plus. How do you see the price action in the last few weeks? Well, reasonably relaxed about that the oil price. I'm the economist, I make the long term forecast for this part of the world need a stable oil price assumption. We've been running with a base case that oil average around 80 dollars a barrel this year and into next year as well. I think we're trying to get to the is the idea that oil is range bound 70 when the world feels bad, 90 when the world feels good and 80 as a midpoint there which deals with the with the regions fiscal and external account needs very comfortably. Yeah. So your oil team have $80.00 a barrel pencilled in for the second-half of this year below where than where we are right now. They've got $76.76 and a half to be precise and 2025 ultimately they see, you know, supply over pacing demand. But because you're an economist, what is an oil price of around $75 mean for the region? Is it something to start worrying about or is it manageable? No, I think it's fine. And again, $80.00, which through our forecast is the capable number for pretty much all of the GCC economies. Public finances are reasonably strong. Character cap position is particularly strong as a Canon number, I think, which helps to support sentiment amongst policy makers and amongst of corporate sectors as well. For me to get worried, I need said oil price. It's settled below 17 or 6 handle on the oil price. At that point, I think you start to see some difficult, more difficult questions being asked about that macro outlook. But for now, now, I'm relaxed about the oil price assumption. So give us a sense of just how activity is going in the region. I know we just had a recent batch of PMI numbers. Seems like the momentum is still there with Saudi. Qatar also had positive momentum month to month. How does that square up versus other countries in the GCC? I think it's pretty good and we started to get the first quarter GDP numbers coming through Saudi and one both printed their numbers for Q1 and they were positive and reasonably strong null growth, maybe a little bit of loss momentum in the Kingdom of the underlying drivers are still there. And yes, those high frequency indicators give us every sense the momentum has continued into Q2 as well. Well, you know let's pick up on those Saudi GDP numbers because the overall number I guess masks the difference that we're seeing and and the oil output versus the non non oil outputs. Obviously with their push to diversify the economy, they will tell you that they're focused more on that non oil GDP number, but at the end of the day is still very much so a a hydrocarbon economy. So how much of A weight do you give the breakdown between oil versus non oil? The headline number can be terribly mislead. It can rise and fall depending on what's happened with OPEC production. I care about what I'm trying to understand what's happening with the underlying economy, the kind of economy the households experience of corporates experience, investors experience, that's oil all about the non oil economy there. We've got growth running around running around sort of 3 1/2 and 4 1/2 percent over the over the first quarter of this year, the kind of level we expect to persist over the rest of this year as well. Do you see the geopolitical tensions in the region impacting any of these economies materially? We're all very aware obviously what's happening in the broader region, but I look at economic performance, look at market performance as well as a sense that the markets are are looking through what what's taking place is a very rich regions able to cope with the kind of shocks that a further deterioration that geopolitics might bring. When we look at underlying economic performance, look at what's happening with the markets, look what's happening with advancement. Look at the sentiment indicates what the that we see two of the numbers as well. So far they're holding up really well. One era where it's not holding up is FDI, though you're not seeing that coveted FDI come into Saudi Arabia, which is what the conference that wanted to see. I don't think that's a reflection of the the geopolitics. I don't think it's an even story across the region either. Certainly if you look at the numbers for the UE, those FDI numbers are really, really strong. And again, a sense that for long term investment, there's an ability to look through some of those near term risks. Let me ask you about Egypt before we go because that there has been a lot going on in the Egyptian economy. They secured that investment from UAE. They've come to an agreement with the IMF. Are you seeing a turn around in terms of how the economy is reacting to the securement of those agreements? I don't think I talked about a turn around yet. I think it's too soon to be talking about recovery. But I do see in the data some very strong signs that the economy is is stabilizing. The currency has held that kind of 4550 level pretty well. I look at the external account data, I can see a big improvement in the net foreign asset position, central bank reserves and now at the highest level ever. Inflation is high, but it's starting to to trend down as a bit of fiscal room for manoeuvre there as well. So yes, I do sense that there is stabilisation taking place in Egypt, but I think we're gonna be having to to wait a while before we can start talking about return to growth.