Dubai's economy grows by 3.3% in Q2

Dubai’s economy expanded by 3.3% y/y in Q2 2024, an acceleration from the 3.2% growth recorded in Q1 this year. For the first half of the year, total real GDP increased by 3.2% y/y. Dubai’s economy has been growing at a steady pace of more than 3% y/y for the last six quarters with growth coming from multiple sectors. Transport and storage rose by 7.8% y/y in Q2, up from 5.6% in Q1, while accommodation, financial services and information and communication services also recorded strong growth rates. The real estate sector increased by 2.6% according to a government publication while construction rose by 1.8% and manufacturing expanded by 2.5%. Overall we expect Dubai’s GDP to be on target to grow by 3.5% in 2024 before picking up to 4% growth in 2025.

Inflation in Egypt accelerated in October to 26.5% y/y, slightly faster than the 26.4% recorded a month earlier. On a monthly basis, however, the pace of inflation eased to 1.1% in October from 2.1% in September. Food and beverage prices were higher by 27.3% y/y in October. Inflation has been trending modestly higher in the last several months as Egypt carries out further subsidy reform, in particular raising fuel prices. Egypt’s central bank meets later in November and is expected to leave rates unchanged at 27.25%.

The Turkish central bank has released its quarterly inflation outlook, with its revised projections for price growth. Year-end CPI inflation is now forecast at 44%, falling to 21% in December 2025. This is revised from respectively 38% and 14% in its previous report published in August. Inflation is newly forecast to have fallen to 12% in December 2026, still above the target 5% level. Price growth has come down markedly from recent peaks but at 48.6% y/y still in October not at the pace the TCMB had previously envisaged. The past several prints have also shown stubborn m/m inflation (2.9% in October) and the TCMB has pledged to maintain its tight monetary stance ‘until a significant and sustained decline in the underlying trend of monthly inflation is observed.’

Consumer sentiment in the US improved in November according to the University of Michigan’s preliminary estimate. The consumer sentiment index increased to 73 in November, up from 70.5 a month earlier and ahead of market expectations. The assessment of current conditions dipped slightly to 64.4 in November but the expectations component rose to 78.5. Year-ahead inflation expectations dropped to 2.6% from 2.7% a month earlier while long-run inflation was marginally higher at 3.1%.

China has announced a new support plan to swap “hidden” debt of local governments worth USD 1.4bn. The new measures are meant to alleviate pressure on local governments who have endured weaker land sales which form a large part of revenue. But the latest plan falls short of adding new stimulus spending to turn around China’s economy. Markets will focus increasingly on China’s exposure to a new, hardened trading relationship with the US when President-elect Donald Trump takes office as his administration is expected to enact high tariffs on imports of Chinese goods. Elsewhere in China, CPI inflation rose by 0.3% y/y in October, slower than the 0.4% recorded a month earlier, while producer price inflation declined by 2.9% y/y, faster than markets had been expecting.

Today’s Economic Data and Events

• 11:00 TU industrial production m/m Sept

Fixed Income

• US Treasuries closed mixed on Friday with the 2yr yield up by a bit more than 5bps at 4.2539% while the 10yr yield dropped by 2bps to 4.3043%. The 2s10s curve flattened by almost 8bps to just under 5bps, its flattest level since early October.
• Markets are continuing to take out expectations for a December move from the Federal Reserve with a 65% chance of an additional 25bps cut. Slightly more than 3 cuts are now priced in between now and the end of next year.
• High-yield and emerging market bonds had a positive close at the end of the week, managing to recoup some losses from earlier in the week.

FX

• The US dollar closed higher against peers on Friday as markets adjust their expectations to the new economic priorities of the upcoming Trump administration. EURUSD fell by 0.8% to settle at 1.0718 while GBPUSD fell by 0.5% to 1.2921. Commodity currencies were also pulled lower with AUDUSD down by 1.4% at 0.6583 while USDCAD rose by 0.4% at the expense of the Loonie to close at 1.3912.
• USDJPY, however, managed to buck the trend with a drop of 0.2% in favour of the yen with the pair closing at 152.64.

Equities

• US equity markets remained on an upswing at the end of last week with the Dow Jones up 0.6% and the S&P 500 rising by 0.4%. For the week as a whole the S&P 500 gained 4.7%. European markets closed lower on Friday.
• Local markets were softer at the end of last week with modest declines in both the DFM and ADX on Friday. The Tadawul opened the week lower with a drop of 0.2%.

Commodities

• Oil markets were underwhelmed by China’s latest support measures with spot Brent down 2.3% at USD 73.87/b and WTI at USD 70.38/b, down 2.7%. A lack of new spending from China’s government will fail to spark enthusiasm about demand in 2025, leaving markets to expect another year of relatively soft consumption.
• The disappointment to China’s plan spread to industrial metals as well with a 2% drop in iron ore futures to USD 103.32/tonne, aluminium down by 2.8% to USD 2,620.50/tonne and copper off by 2.3% to USD 9,443.50/tonne.
• Precious metals closed the week lower with gold recording its first weekly decline in the past four weeks. Gold dropped by 0.8% on Friday to USD 2,684.77/troy oz, with bigger declines across the rest of the precious metals complex.