IMF slashes global growth outlook

 The IMF has slashed its outlook for global growth in 2025 to 2.8%, down from 3.3% previously, with the Fund blaming tariff levels “not seen in a century and a highly unpredictable environment.” Inflation is also now set to slow less than previously anticipated and the IMF said that “downside risks dominate the outlook.”

The bulk of the downgrade comes from advanced economies which are now set to expand by 1.4% thanks to a near full percentage point cut to the outlook for the US economy, set to grow by 1.8% in 2025 and 1.7% in 2026. The Eurozone is forecast to grow by just 0.8% with Germany recording no growth. Emerging economies will grow by 3.7% with almost all economies expected at a slower pace. China is now forecast at 4% growth (4.6% previously) while India is set to decelerate.

Growth in the Middle East and Central Asia will improve to 3% from 2.4% estimated for 2024 although the new outlook is still a cut from 3.6% expected as recently as January. Saudi Arabia is forecast at 3% growth while the UAE is projected to see growth of 4.0% this year and 5.0% in 2026.

US President Donald Trump backtracked on his threat to fire Fed chair Jerome Powell, saying he had “no intention of firing him” but that he would like Powell to be “a little more active in terms of his idea to lower interest rates.” The comments follow a sharp sell off in the US dollar and equity markets on Monday on the financial uncertainty a direct executive intervention into US monetary policy would cause. The White House also confirmed that President Trump will visit the UAE, Qatar and Saudi Arabia next month.

Du plans to build a AED 2bn data centre in collaboration with Microsoft according to reports citing Crown Prince of Dubai Sheikh Hamdan bin Mohammed.

Today’s Economic Data and Events

• 09:00 IN HSBC PMI mfg
• 11:15 FR HCOB composite PMI Apr: forecast 47.8
• 11:30 GE HCOB composite PMI Apr: forecast 50.5
• 12:00 EC HCOB composite PMI Apr: forecast 50.2
• 12:30 UK S&P Global composite PMI Apr: forecast 50.4
• 17:45 US S&P Global composite PMI Apr: forecast 52.2

Fixed Income

• The front end of the UST curve sold off overnight with yields up by almost 6bps on the 2yr UST to settle at 3.819%. The 10yr by contrast rallied with yields lower by nearly 1bps at 4.4008% as officials tone on Fed independence and tariffs moderated.
• Fitch cautioned that market volatility in Turkiye could “disrupt positive rating trajectory” of banks in the country. According to the rating agency exposure to currency markets and external borrowing would leave banks vulnerable.
• OCP mandated banks for a USD 5yr and 10yr issuance.
• Ajman Bank has also mandated banks for a USD 5yr sukuk.
• The UAE sold an AED 550m 2027 sukuk at a yield of 3.83% and AED 550m 2029 sukuk at 3.93%.

FX

• The US Dollar recovered some ground after heavy selling pressure on Monday erupted following President Trump’s comments about Fed chair Jerome Powell. EURUSD fell by 0.8% overnight to close at 1.1421, holding those levels in early trade today, while GBPUSD dropped by 0.4% to 1.3332. USDJPY pushed higher, up by 0.5% at 141.57 while USDCHF added 1.2% to close at 0.8129.
• Commodity currencies were split with deep sell offs in AUD and NZD, down 0.8% at 0.6367 and 0.5% at 0.5969 respectively. USDCAD, however, managed to move in favour of the Loonie and fell by 0.2% to 1.3815.

Equities

• Equity markets bounced back after US officials appeared to pull back from some of their more aggressive posturing. The Dow Jones added 2.7% overnight while the S&P was higher by 2.5% and the NASDAQ rallied 2.7%. European markets were also higher with the Euro Stoxx index up by 0.5% and the FTSE gaining 0.6%.
• In local markets the DFM gained 0.6% overnight while the ADX was softer. The Tadawul was higher by 0.3%.

Commodities

• Gold prices pulled back from a pop above record level of USD 3,500/troy oz, spurred by market anxiety over US policies. Gold prices eased back over the rest of the day, ultimately closing the day lower by 1.3%. Precious metals dropped over the day with silver lower by 0.6% at USD 32.51/troy oz.
• Oil prices had a modest pick up overnight with gains of 1.8% in the Brent market at USD 67.44/b and WTI adding almost 2% at USD 64.31/b. The API reported a draw in US crude stocks of 4.6m bbl along with draws in gasoline and diesel inventories.