Saudi Arabia reports strong non-oil export growth in Q1

Saudi Arabia has reported strong growth in non-oil exports in the first quarter of 2025, with y/y growth of 13.4% when including re-exports. National non-oil exports were up 9.0% to SAR 54bn, while re-exports rose 23.7% y/y to SAR 27bn. Nevertheless, total goods exports were down by 3.2% y/y as lower oil prices and ongoing production curbs through the start of the year saw oil exports decline 8.5% y/y in the first quarter. The fall in oil exports saw the share of non-oil exports rise to 28.2%, from 24.1% in Q1 2024. Imports rose by 7.3% y/y to SAR 223bn. Looking at non-oil exports, chemical products accounted for 23.8% of the total, followed by plastics, rubber and their products. Machinery and electrical equipment and parts was the biggest imported good. China remained the primary destination for Saudi exports, followed by India.

Crown Prince and UAE deputy prime minister Sheikh Hamdan was on an official visit to Oman yesterday, the UAE’s GCC neighbour and increasingly important trade partner, where he met with Sultan Haitham of Oman and other dignitaries. There were discussions around a range of political, security, and economic partnerships, with one of the key developments the agreement to launch a special economic zone at Al-Rawdah, on the border of the two countries. This huge SEZ will be developed by Mahada Development Company, a joint venture between Oman and the UAE spearheaded by DP World and will include manufacturing, warehousing, food processing, mining, pharmaceuticals, and plastics. The initiative will help both countries further realise their diversification strategies, tying in with the UAE’s D33 agenda in particular. Combined with the under-development railway, there is likely to be a boost to mutually beneficial cross-border trade and partnerships between the two countries through the coming years.

After the stay of execution granted to the EU by Donald Trump, whereby he has extended the deadline around the imposition of 50% tariffs to July 9, the single currency bloc has agreed to accelerate its trade negotiations with the US. The EU has signalled that it is eager to talk but it has also made clear that it is ready to retaliate with its own targeted tariffs on US goods, raising the risk of another round of global tariff tit-for-tat between the US and major economies.

Today’s Economic Data and Events

10:45 France CPI inflation, May, % y/y. Forecast: 0.9%

16:30 US durable goods orders, April, % m/m. Forecast: -7.8%

18:00 US Conference Board consumer confidence index, May. Forecast: 87.0

Fixed Income

• US treasury markets were closed for the Memorial Day holiday yesterday.
• The Central Bank of the UAE held its bi-monthly auctions of M-Bills. The CBUAE sold AED 4.5bn of 28-day bills at a yield of 4.65% with a 1.33 coverage ratio; AED 2.5bn of 56-day bills at a yield of 4.58% with a coverage ratio of 2.15; AED 2bn of 84-day bills at 4.62% with a coverage ratio of 1.64; and AED 5bn of 252-day bills at a yield of 4.65% with a coverage ratio of 1.1. The total amount issued was AED 14bn with total bids of more than AED 20bn.
• Kuwait’s finance minister has approved international borrowing to be undertaken by the Kuwait Investment Authority and domestic borrowing to be undertaken by the central bank. Kuwait passed a debt law in March this year that will allow the country to borrow on international markets for the first time since 2017.

FX

• The dollar index dropped 0.2% on Monday, following the sharp 0.9% fall on Friday. The performance of the majors was mixed, with CAD, CHF, and AUD closing flat amidst relatively muted trading.
• JPY was the significant loser as it weakened by 0.2% to 142.9, but it is strengthening today following comments by BoJ Governor Ueda around raising interest rates.
• EUR added 0.2% to 1.1387, while GBP was also up 0.2%, to 1.3564. INR strengthened 0.2% to 85.0912.

Equities

• US equity markets were closed Friday but futures suggest that there should be gains at the open following the improvement in the outlook for US/EU trading negotiations.
• This was reflected in European equities yesterday where the CAC added 1.2% and the DAX 1.7%.
• Locally, the ADX dropped 0.1% while the DFM gained 0.4%. Saudi Arabia’s Tadawul closed up 0.7%.

Commodities

• Brent futures closed all but flat, down by less than 0.1% at USD 64.7/b on Monday but is down 0.2% in early trading this morning. WTI did not trade on Monday due to the US holiday.
• OPEC+ has brought forward its scheduled conference call to agree production levels for July by one day to May 31.