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Daily Economic Update
30.09.2025Kuwait: State mobilizes international banks for the first international bond sale in eight years. The government is reportedly close to returning to the international bond market after selecting a handful of international banks to oversee its first dollar-denominated issuance since 2017. Details about the value and timing of the sovereign bond sale have yet to be released but the authorities are reportedly considering issuing bonds across three tranches of 3, 5 and 10 years. Kuwait’s last foray into the international debt markets was back in 2017 when it sold $4.5 billion worth of Eurobonds, which are currently yielding around 4.3%, but since passing the long-delayed debt law earlier this year, the state has issued since June upwards of KD1.55 billion in local sovereign debt (across 1, 2, 3, 5, 7 and 10-year tranches) under the auspices of the Central Bank of Kuwait. This is equivalent to about 3.2% of GDP and covers about 74% of our estimated fiscal deficit of KD 2.1 billion in this fiscal year (FY2025/26). Total outstanding public debt currently stands at 6% of GDP, which is still very low by international standards, and offers plenty of scope for sovereign international debt sales to proceed.
Egypt: The government taps the sukuk market for the third time since 2023. Egypt has once again tapped the sukuk market, marking its second issuance this year and the third since the program was launched in 2023. The government successfully placed a $2 billion dual-tranche sukuk, split between a $1.25 billion three-year tranche at 8.625% and a $750 million seven-year tranche at 9.45% under its broader $5 billion international sukuk program. This issuance not only underscores Egypt’s continued reliance on Islamic finance as a key funding channel but also reflects the government’s strategic approach to diversifying its investor base amid ongoing fiscal pressures. It comes after June’s $1 billion sukuk deal, which was fully absorbed by a Kuwaiti bank, signaling consistent demand from regional investors. The deal is Egypt’s first international market operation in FY25/26 and will soon be listed on the London Stock Exchange. The relatively low yields compared to the previous issuances highlight the market’s perception of reduced risk of Egypt. Moreover, the successful placement demonstrates an ability to maintain access to global capital markets despite a challenging external financing environment.
Saudi Arabia: FDI inflows fall in Q2, but outflows also decline. According to official data, foreign direct investment flows to Saudi fell by 11.5% y/y (-4.1% q/q) in Q2 to SAR 25 bn ($6.6bn). Since the current data series peak of SAR 39 bn in Q4 2024, inward foreign investment has declined for two consecutive quarters to its lowest level since Q3 2023. On the other hand, outward investment flows experienced a sharp contraction, plunging 75% y/y (-10.5% q/q) to SAR 2.1 bn, amid improved capital retention and reduced foreign dividend payments or repatriations during the quarter. On a net basis, FDI improved by 14.5% y/y to SAR 23 bn in Q2. These figures, nevertheless, highlight the Kingdom’s continued appeal as a destination for foreign investment, attracted by Crown Prince Mohammed bin Salman’s ambitious Vision 2030 infrastructure development and diversification plans. The tourism, renewable energy and manufacturing sectors have been especially targeted by the authorities for FDI.
US: Government shutdown looms as Trump’s meeting with congressional leaders leads to no breakthrough. The likelihood of a government shutdown this midnight (Eastern Time) increased as Trump’s meeting with top Congressional leaders to resolve the political standoff didn’t deliver much, with Vice President Vance saying “I think we’re headed into a shutdown” and Senate Democratic leader Chuck Schumer saying “there are still large differences between us.” Republicans have been pressing for a continuing resolution to fund the government until November 21, while Democrats are currently unwilling to soften their stance mainly related to health-care subsidies and Medicaid funding. The possibility of a last-minute deal is still not ruled out. While US government shutdowns in the past have typically been non-events for financial markets and the economy, this time might be little different. This might be the case because President Trump has threatened to make many of the supposed-to-be short term layoffs more permanent. In addition, the shutdown will likely delay the publication of certain important data releases such as the monthly jobs report (due on Friday) and many others as well, such as the monthly CPI inflation report. Given the importance of these for Fed policy, especially given the current situation of the labor market, the markets will likely come under pressure if the shutdown actually causes delays. Meanwhile, Trump announced 10% import tariffs on softwood timber and lumber, and 25% duties on kitchen cabinets, vanities, and upholstered wooden products, under section 232, effective October 14, with some further increases in these levies (up to 50%) scheduled to take place starting January 1, 2026. However, the official statement clarified that tariff rates on such products from the UK and the EU/Japan would not rise above previously agreed 10% and 15% duties, respectively.
UK: Chancellor Reeves keeps all options open ahead of the Autumn budget in November. In the ongoing annual conference of the governing Labor Party, Chancellor Reeves left all options open to improve the fiscal situation. She emphasized that choices have become harder amid “long-term damage to the economy” as it faces "harsh global headwinds.” She was ambiguous about tax rises during an interview earlier in the day, saying "the world has changed" in the last year, blaming external factors but reiterated that the party’s “manifesto commitments stand.” She also announced a new “youth guarantee” scheme to provide young people with avenues for further education, an apprenticeship, or a direct support to find a new job. We note that the upcoming Autumn budget on November 26 is expected to unveil further fiscal consolidation steps given the worsening public finances.
China: September’s official PMI figures suggest a tentative stabilization in industrial activity. The official NBS manufacturing PMI rose to 49.8 in September from 49.4 in August, slightly higher than expectations of 49.7. This marks the highest level since March, indicating a slower pace of contraction as manufacturers grew cautiously optimistic about forthcoming government support to stimulate domestic demand – particularly in anticipation of the October plenum and potential more clarity on the trade situation with the US. The non-manufacturing PMI edged down to 50.0 from 50.3, pointing to stagnation in services and construction, with the latter still weighed down by persistent weakness in the property sector. It marked the lowest reading since November 2024, in part reflecting the authorities’ restrained approach to broad stimulus. The composite PMI ticked up slightly to 50.6 from 50.5, suggesting a marginal acceleration in overall economic activity.
Japan: Industrial production and retail sales in August weaker than expected. The industrial production index fell by 1.2% m/m in August, matching July’s decrease and weaker than consensus expectations of just a 0.8% drop. September’s results will be important to monitor as it will mark the first industrial production results since the Japan-US trade deal became effective, which reduced tariffs to 15%. We note that Japan’s exports to the US fell by 14% y/y in August. Meanwhile, retail sales saw a 1.1% y/y decrease in August (+0.4% in July), missing consensus estimates of a 1% rise.