- The German ZEW’s Assessment of the Current Situation improved to 86.7 in August from 86.4 the previous month, against the market consensus for a drop back to 85.2. However, in the same period, the ZEW Expectations component fell to 10.0 from 17.5, worse than the expected. German investor confidence has now declined for three consecutive months amid concerns that the strengthening euro will dampen export prospects and weigh down on the Eurozone’s largest economy. The same measure for expectations in the Eurozone declined to 29.3 from 35.6 which may also be attributed to the 12% appreciation of EURUSD in 2017 and recent geopolitical uncertainty.
- According to a report from the UK’s Office for National Statistics, the UK posted a budget surplus of GBP 184m in July compared with expectations for a deficit of GBP 1bn. The surplus is a result of the Treasury benefitting from higher than expected income tax receipts thanks to an 11% y/y increase in self-assessed receipts as well as a 5% y/y rise in VAT revenue. It is noteworthy that this is the first July in 15 years that there has been a budget surplus. The same report showed that downside risks to the economy remain, as a result of reduced spending and debt costs rising 23% year to date for the fiscal year, the largest increase since 2010.
- Saudi Arabia plans to transfer ownership of all its airports to the Public Investment Fund, the kingdom’s principal sovereign wealth fund. A Saudi official with the General Authority of Civil Aviation (GACA) was quoted saying companies will be set up for each airport under Saudi Civil Aviation Holding, a spin-off from the General Authority of Civil Aviation (GACA), which will continue to regulate the industry. The official added that a company had already been established for Dammam's main airport, while Singapore's Changi Airport Group would start managing the expanded King Abdulaziz International Airport in Jeddah which would start operating in the second half of 2018. The airport privatization drive comes under the umbrella of a wider economic reform program needed to support the kingdom’s long term economic diversification vision. The privatization push will culminate with the IPO of Saudi Aramco sometime next year, expected to be the biggest IPO in history.
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Emirates NBD Research