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Daily Economic Update
05.08.2025Kuwait: PMI improves as key sub-components remain at solid levels. The non-oil private sector PMI rose to 53.5 in July, up from 53.1 in June, reflecting ongoing expansion in business conditions. The new orders component remained a key driver, growing at a faster pace versus June, helped primarily by firms’ advertising efforts. While output continued to rise, the growth rate eased to a four-month low. Following a record increase in June, employment was largely unchanged last month, with wage inflation pressures also easing. Meanwhile, both input and output prices also rose at a softer pace, with the former logging its slowest increase since August 2023. Looking ahead, businesses remained upbeat about future activity, though sentiment eased to a three-month low. The latest official preliminary data show that non-oil GDP growth stood at 2.0% y/y in Q1 2025. The Q2 and July PMI figures stand slightly above the Q1 average of 52.4, implying a gradually improving growth environment so far this year.
Saudi Arabia: Growth in business activity moderates but remains solid overall. The PMI eased to 56.3 in July from 57.2 the previous month, signaling slower but still solid growth in business activity. Output grew at the softest pace since January 2022, but was still strong, with growth in new orders also slowing yet remaining robust at close to 60. However, new export orders contracted for the first time in nine months. Firms cited higher competition and lower customer footfall, in addition to difficulties gaining new foreign clients as reasons behind slower growth. Meanwhile, employment continued to grow at a strong pace, especially in the services sector, amid increased work backlogs which saw the sharpest increase in four months. As for prices, input inflation eased but remained relatively high on higher purchasing and staffing costs, leading to an increase in output prices for the second consecutive month.
Saudi Arabia: Robust credit growth in first half of 2025. Total bank credit growth came in at 15.8% y/y in June, slightly lower than the 16.3% recorded in May. Credit grew by 7.8% in the year to June (6M), the highest since 2022 and outperforming the 6.5% recorded in the same period of 2024. Credit to the private sector, which comprised the bulk (93%) of total lending continued to grow strongly (14.1% y/y, 7.5% ytd), with personal loans growth of 8.2% (2.6% ytd). New mortgage financing in H1 was up a solid 15.7% y/y, accelerating from 1.9% y/y in 1H24, likely supported by lower interest rates, though it remained volatile on a monthly basis. Meanwhile, deposit growth continued to lag behind at 7.7% y/y (6.8% ytd) despite the strong growth of government and government entity deposits at commercial banks (13.7% ytd), although the loan-to-deposit ratio remained unchanged at an elevated 111%. Net foreign liabilities at commercial banks declined to SR 124 billion in June from SR 130 billion in May, thanks to a rise in foreign assets despite a continued increase in foreign liabilities which were driven by increased external funding amid tighter domestic liquidity. SAMA reserve assets reached $458 billion (36% of GDP) in June, up 4.7% ytd.
UAE: Business activity in July expands at the slowest pace since 2021. Non-oil private sector activity slowed in July, with the PMI reading slipping to 52.9 from 53.5 in June. This is the slowest rate of expansion in more than four years, driven largely by moderating growth in the output, new orders, and employment sub-components of the index. Survey respondents identified ongoing global uncertainty, partly linked to trade tariffs, and weaker-than-expected tourism activity among the factors driving the slowdown, though seasonal factors undoubtedly came into play. That said, the reading still signals fairly robust growth, especially in output, and firms were overall optimistic about their future business prospects.
Egypt: PMI edges up in July, with key subcomponents also improving. The PMI gauge of private sector activity edged up to 49.5 in July from 48.8 in June. The score still represents a small contraction in activity, though is above the average for Q2 (48.9). There were solid increases in the key output and new orders subcomponents versus June, though both remained slightly below the 50 no-change mark, while encouragingly, the employment index moved back into positive territory and hit its highest since October 2024. On the prices front, both input costs and output prices rose further into expansion territory but remained below their averages for the past year. Business year-ahead confidence improved slightly from a low June base (linked to the Israel-Iran conflict during that month), but remained historically subdued. Overall, this PMI contains no major surprises but is broadly consistent in our view with steady or gradually improving underlying growth in the domestic economy. GDP numbers for Q2 have not yet been released, though growth is expected to have been close to the 4.8% y/y recorded in Q1, and the July PMI implies a solid start to Q3. The rises in the prices indices are unlikely to be enough to prevent further interest rate cuts by the central bank over the months ahead.