- 8 OPEC+ members, half in the GCC, delayed tapering voluntary cuts until January.
- Most Gulf states mirrored the Fed’s interest rate cut, but Qatar went further and Kuwait held flat.
- Gulf leaders congratulated Trump, including a call from MBS.
- PMIs rose across the Gulf, except in Dubai, led by KSA at 56.9 and with Kuwait the most improved.
- The Saudi fiscal deficit rose to -2.8% of GDP in Q3, despite continued windfall Aramco dividends.
- Aramco has returned to a net-debt position, after two years of cash surpluses, and will likely borrow.
- The UAE signed yet another Cepa, this time with Australia, an important trade partner.
- The UAE announced more ambitious Paris Agreement emissions reduction goals, -47% by 2035.
- Adnoc signed a 15-year LNG deal with Germany’s SEFE and QatarEnergy’s CEO visited Japan to advance LNG talks.
- Qataris voted resoundingly to amend their constitution to end elections to the Advisory Council.
- Kuwait recorded a small surplus in the first half of its fiscal year, but a full-year deficit is expected.
- Oman’s planned personal income tax will only apply to salaries starting at $78k.
- Another major IPO is being planned in Oman, for OQ Base Industries, its methanol and LPG unit.
- Bank merger talks have begun in Bahrain between NBB and BBK.
- Iranian rhetoric hardened on tit-for-tat strikes against Israel. Netanyahu sacked his defense minister.
- Intense assaults continued in northern Gaza and southern Lebanon, with no progress on ceasefires.
These headlines are taken from a 4,100-word report from my economic research service with GlobalSource Partners, a leading source of independent emerging market intelligence. Click on any report to get guest access and contact me or GlobalSource’s sales team for more information about the service, which also includes the most extensive comparative Databank of GCC economic data available (updated weekly) and direct analytical support. Clients include banks, asset managers and governments spanning the GCC, Asia, Europe and the Americas.
Here are two brief samples from the report:
(1) Saudi deficit widens in Q3
- The Q3 fiscal outturn showed a deficit of about -2.8% of quarterly GDP (MoF).? This brought the YTD total deficit to -$15bn (about 1.9% of GDP). Although is in line with the budget, expenditure is generally higher in the final quarter, usually comprising over 30% of full-year spending. Given this, plus weaker oil prices in Q4, the full-year deficit, barring any surprises (such as a transfer from PIF), is likely to be at least -4% of GDP.
- The government is receiving a revenue windfall from Aramco’s performance-linked dividends that have been distributing its free cash, built up when prices were higher in 2022-23. That is now largely exhausted, with Aramco moving back to a position of net debt in Q3, totaling -$9bn, down from peak net cash of $44bn in mid-2023 (see Graph).
- Non-oil revenue rose by 6.1% y/y in Q3, in line with H1 growth. YTD non-oil revenue has slowed from the 11% achieved in 2023 but is running ahead of the 2.3% increase targeted in the budget.
- Expenditure was up by 15.3% y/y in Q3, ahead of the 12.9% YTD increase, whereas the budget had targeted a -3.3% decrease. There were double-digit increases in most components and sectors.
- Debt only rose slightly during Q3 to $309bn (28% of GDP).
(2) GCC leaders congratulate Trump
- MBS congratulated Trump in a call on Wednesday (SPA) and other Gulf leaders sent congratulations by cables and on social media (WAM, NB, TO, AT, X).
- Gulf states have maintained connections with Trump’s circle over the past four years, ranging from meetings (Qatar’s Emir visited Mar-a-Lago in September) to investments in Jared Kushner’s fund and Trump International projects in Saudi Arabia, UAE and Oman.
- I shared a few reflections on election implications in a post on Wednesday and in an interview with the UAE’s The National; I will have a couple of op-eds coming out in the Gulf media in the next few days. There is a lot to process and a lot of uncertainty.
- Some useful reflections include from: GIF
- Frustration by Arabs, Muslims and progressives about the Biden Administration’s role in Gaza and Lebanon was a contributing factor in the election and may have been enough to flip Michigan, where Trump won by about 85k votes (the state’s Arab population alone is about 0.5m). A bellwether result was in Dearborn, a Detroit suburb that is seen as the capital of Arab Americans and voted 3-1 for Biden in 2020, but was won by Trump. He had visited Dearborn on Friday and made pledges to end the wars - many who voted for him are skeptical, but concluded that the current policy is so bad that perhaps a change would help (DFP, Jaz, AP).
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