The easing cycle has started for some of the world’s major central banks this past month, with the ECB, Canada, and Switzerland all cutting their benchmark rates. The Federal Reserve kept the Fed funds rate on hold, and the dot plot projection was adjusted to one cut this year from three previously, but the next move will still more than likely be downwards. We have maintained our forecast at two cuts this year of 25bps each.
Within the region, the PMI surveys for the UAE, Dubai, and Saudi Arabia all slipped modestly in May compared with April, and the second quarter is looking weaker than Q1. Nevertheless, they remain well within expansionary territory, and other indicators and developments have continued to show robust activity. Dubai real estate continues to outperform, with an all-time high of 15,800 residential units transacted in May, an increase of 42% m/m and 45% y/y. In Saudi Arabia, there has been a substantial issuance in sovereign debt as the kingdom remains committed to funding its ambitious infrastructure development programme.