16 January 2024
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Saudi inflation slowed in December

Daily Outlook - 16 January 2024

By Daniel Richards

Annual CPI inflation in Saudi Arabia slowed to 1.5% in December, from 1.7% y/y the previous month. Food and beverage inflation slowed to 1.2%, from 1.4% in November, and there was deflation in the transport component, at -1.3% y/y. Housing and utilities prices continued to rise rapidly though, at 7.5% y/y, albeit slower than the 7.8% registered the previous two months. CPI inflation averaged 2.3% y/y in 2023, with housing the primary driver of headline price growth. We expect a similar trend this year, forecasting an annual average of 2.5% in 2024.

Egypt’s real GDP by expenditure growth slowed to 2.5% y/y in the first quarter of fiscal 2023/24 (July-September), down from 3.0% the previous quarter and 3.7% growth over 2022/23 as a whole. This marked the slowest quarter for annual growth since 2020 in the midst of the Covid-19 pandemic crisis. Growth was 2.1% q/q. Our forecast for this fiscal year is for GDP growth of 3.5%, with risks weighted to the downside as regional unrest poses a risk to the tourism and transport sectors. The World Bank revised down its 2023/24 forecast last week, from 4.0% previously to in line with our own.

Germany’s economy contracted 0.3% in 2023 according to the early estimate, in line with projections and compared with growth of 1.8% in 2022. Data out of Germany has continued to disappoint in recent months, and the consensus forecast this year is for growth to remain weak at 0.3% as export markets remain weak and high interest rates weigh on domestic demand. However, Germany dodged a technical recession as while Q4 growth was negative at -0.3% q/q, the previous quarter was revised up from the initial reading of a 0.1% contraction to flat growth.

Today’s Economic Data and Events

11:00 UK average weekly earnings, 3m y/y. Forecast: 6.8%

14:00 Germany ZEW survey, expectations, January. Forecast: 11.7

14:00 Germany ZEW survey, current situation. Forecast: -77.0

17:30 Canada CPI inflation, % y/y, December. Forecast: 3.4%

Fixed Income

  • US treasury markets were closed yesterday.
  • Push back on the topic of rate cuts from ECB officials weighed on European bonds at the start of the week, and the 10yr bund saw yields rise by 5bps to 2.23%. In the UK, the 10yr was virtually unchanged at 3.80%.
  • Qatar International Islamic Bank has mandated banks for a USD 5yr sustainable sukuk, according to press reports.


  • The USD strengthened against its peers yesterday with US markets closed and it is seeing further gains in early trading today.
  • The yen was a notable loser as it lost 0.6% to the greenback, weakening to 145.73. Commodity currencies were also under pressure as the AUD and NZD lost 0.4% and 0.6% respectively.
  • The euro held up as ECB officials pushed back against rate cuts, staying almost flat against the USD at 1.0950. GBP closed down 0.2% at 1.2727.


  • Asian equity markets were mixed to start the week. The Hang Seng closed down 0.2% while on the mainland the Shanghai Composite added 0.2%, as the PBOC’s decision not to cut the benchmark rate as had been expected weighed on gains. In Japan the Nikkei closed up 0.9%, following strong gains on Wall Street on Friday and as the yen weakened.
  • In Europe, the trend was downwards with the FTSE 100, the DAX, and the CAC dropping 0.4%, 0.5%, and 0.7% respectively.
  • Locally, the DFM and the ADX both ended the day 0.1% lower. Saudi Arabia’s Tadawul added 0.5%.
  • US equity markets were closed yesterday.


  • Oil prices came under renewed downwards pressure yesterday, starting the week on the back foot after the gains they saw at the end of last week when they closed up on both Thursday and Friday.
  • Brent futures fell 0.2% on the first trading day of the week yesterday to close at USD 78.2/b and is holding fairly steady so far this morning, and while WTI trading was closed along with US markets yesterday, it has started Tuesday in the red, trading down 0.4% in early trading at USD 72.3/b.
  • Despite ongoing tensions in the Red Sea, it is the gloomy global economic outlook that has been the primary price driver so far this week, with Germany confirming its 2023 contraction yesterday and recent data out of China week. The rise in the USD at the start of the week will also have weighed prices.

Written By

Daniel Richards Senior Economist

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