India's GDP grew 7.8% in Q2

India’s GDP growth accelerated to 7.8% y/y in Q2, exceeding the 6.7% forecast and marking an improvement from the 7.4% y/y in Q1. The stronger than expected growth was driven by robust domestic consumption and a recovery in private investment, with manufacturing sector performance particularly strong following July’s industrial production surge.

US PCE inflation data released Friday came in at 2.5% y/y for July, slightly below the forecast of 2.6% and down from 2.6% in June, providing further support for a rate cut in September. The core PCE deflator, the Fed’s preferred inflation indicator, remained steady at 2.6% y/y, in line with expectations. On a monthly basis, PCE rose 0.2% while core PCE increased 0.2%, both matching consensus estimates.

UAE Foreign Trade Minister HE Dr. Thani bin Ahmed Al Zeyoudi visited Mumbai for bilateral talks with India's Commerce Minister Shri Piyush Goyal, focusing on maximizing the UAE-India Comprehensive Economic Partnership Agreement (CEPA) benefits. The visit highlighted strong trade growth, with bilateral non-oil trade reaching USD 37.6bn in H1 2025, up 33.9% y/y. HE Dr. Thani Al Zeyoudi engaged with stakeholders across logistics, agriculture, healthcare, technology, pharmaceutical, and food sectors through meetings coordinated by major Indian industry associations. He also reviewed progress on Bharat Mart, a 2.7 million square feet complex in Dubai's Jebel Ali that will showcase Indian products for Middle Eastern, African, and European markets.

Saudi Arabia's non-oil exports reached USD 7.31bn in June, rising 22.1% y/y, according to the General Authority for Statistics data. The UAE led as the top export destination with USD 2.09bn, followed by India (USD 693m), China (USD 570m), Turkey (USD 252m), and Egypt (USD 232m). Re-exports surged 60.2% while national non-oil exports grew 8.4%. Q2 2025 saw non-oil exports jump 17.8%, offsetting a 15.8% drop in oil exports. Chemical products comprised 24.5% of non-oil exports, while machinery and electrical equipment represented 23.3%, growing 168% y/y. King Abdulaziz International Airport handled USD 1.13bn in non-oil exports, up 366.3% y/y. The Kingdom's PMI rose to 57.2 in June, signaling expansion. Despite strong non-oil performance supporting Vision 2030's diversification goals, total merchandise exports fell 7.3% in Q2 due to declining oil sales. Oil's share of total exports dropped from 74.7% to 67.9%, reflecting Saudi Arabia's gradual economic rebalancing away from petroleum dependency.

Today’s Economic Data and Events

11:00 Turkey GDP, % y/y, Q2. Forecast: 4.1%

18:00 US ISM Manufacturing Aug. Forecast: 49.0

Fixed Income

• Treasury yields had a mixed day on Friday following the soft PCE data.
• The 2yr closed down 1bps to 3.6167 while the 10yr rose 3bps points to 4.2284.

FX

• The dollar index closed almost flat on Friday with little movements against major currencies.
• The Indian Rupee recorded a new all time low against the dollar declining 0.65% to 88.2.

Equities

• US equity markets closed lower on Friday with the Dow Jones, S&P 500, and the NASDAQ declining 0.2%, 0.64%, and 1.15% respectively.
• Locally, ADX and DFM closed down 0.2% and 0.3% respectively.

Commodities

• Oil prices retreated on Friday as concerns over Chinese demand and rising global supply continued to weigh down on sentiment.
• Brent futures closed down 0.7% at USD 68.1/b while WTI declined 0.9% to USD 64.0/b.
• Gold prices continued to make gains for the fourth consecutive day rising 0.9% to 3,447/troy oz.