Saudi economy expands in 2024

Saudi Arabia recorded real GDP growth of 1.3% in 2024 according to the flash estimate from the General Authority for Statistics. With oil production curbs still firmly in place through 2024, growth was driven by a 4.3% expansion in non-oil activity while oil GDP shrank by 4.5%. Government activities recorded 2.6% growth. In 2025 we forecast headline GDP growth of 3.3% with both the oil and non-oil sectors driving the expansion.

The ECB cut policy rates by 25bps at its first decision of 2025, taking the deposit facility rate to 2.75%. The ECB noted that the regional economy was “still facing headwinds” while it was “well on track” to getting inflation close to target levels. Christine Lagarde, president of the ECB, said in her commentary after the decision that risks were “tilted to the downside” though like other central banks, she refrained from giving explicit forward guidance on the ECB’s next steps. Markets are pricing in an additional three 25bps cuts from the ECB by the end of the year.

The Eurozone economy stagnated in Q4 last year, recording no growth from Q3. On an annual basis the Eurozone economy expanded by 0.9%, in line with Q3 but missing market expectations. France’s economy contracted marginally q/q in Q4 2024 while Germany’s economy shrank by 0.2% q/q.

The US economy expanded by 2.3% annualized in Q4 2024, easing from 3.1% in the prior three months. Consumer spending led the way with growth of 4.2%, accelerating over the course of the year, while fixed investment declined by 2.2% as manufacturing in key sectors was impacted by strikes in the final months of 2024. Both exports and imports declined by 0.8% in Q4 2024. The US economy is projected to record another year of relatively robust growth with consensus projections for real GDP growth of 2.2% in 2025.

US President Donald Trump has said he intends to follow through with 25% tariffs on goods imported from Mexico and China in response to what he describes as weak border security. The tariffs would reportedly take effect from February 1 although President Trump has yet to decided if they will apply to oil imports from both Mexico and Canada.

ADQ has formed a joint venture with Orion Resource Partners, a US-based investor in metal and mining companies, to invest up to USD 1.2bn in critical minerals. The JV will reportedly target investments in Africa, Asia and Latin America according to press reports.

Turkey’s central bank noted that inflation pressures had likely picked up in January, according to minutes of the January 23rd MPC meeting. Food prices and rents were estimated to have increased in January while producer prices are estimated to have eased.

Today’s Economic Data and Events

• 11:00 TU Trade balance Dec: forecast -8.8bn
• 11:45 FR CPI y/y Jan: forecast 1.5%
• 17:00 GE CPI y/y Jan: forecast 2.6%
• 17:30 US personal spending Dec: forecast 0.5%
• 17:30 US PCE price index y/y Dec: forecast 2.6%

Fixed Income

• Treasury markets closed nearly unchanged overnight with the 2yr UST yield at 4.2073% and the 10yr UST yield lower by 1bps at 4.5163%.
• Kuwait is reportedly close to signing a new public debt law that would allow the government to borrow up to KWD 20bn over a period of 50 years.

FX

• The US dollar was stronger against most peers overnight but a 0.6% drop in USDJPY to 154.29 meant that the overall dollar index settled lower on the day. EURUSD fell 0.3% to 1.0391, showing little apparent reaction to the widely expected decision from the ECB to cut rates by 25bps. GBPUSD was lower by 0.3% at 1.2419.
• Commodity currencies were weaker across the board with USDCAD rising by 0.5% to 1.4486 as the market reacted to President Trump’s plan to impose tariffs on imports from Canada. AUDUSD fell 0.4% to 0.6209 while NZDUSD declined by 0.4%.

Equities

• US equity markets closed stronger overnight with a 0.4% gain in the Dow Jones, the S&P 500 climbing by 0.5% and the NASDAQ settling higher by 0.3%. European markets were also pushed higher with the Euro Stoxx index up by 1%, helped by positive results in the AI space, while the FTSE 100 rallied by slightly more than 1%.
• Local markets closed higher overnight. The DFMGI added 0.5% while the ADX settled higher by 0.2%. In Saudi Arabia, however, the TASI fell by 0.2%.

Commodities

• Oil prices ticked higher overnight with Brent futures up 0.4% at USD 76.87/b and WTI marginally higher at USD 72.73/b. Both markets will face volatility in the coming days as President Trump dithers on whether to impose tariffs on imports of oil from both Mexico and Canada, two large sources of oil imports into the US and accounting for roughly two-thirds of total oil imports.
• Metals prices were generally higher overnight with gold prices up 1.3% at USD 2,794.59/troy oz. The rest of the precious metals complex closed higher. Industrial metals were broadly stronger with gains in aluminium, copper and iron ore.