Monthly Insights - November 2023

Saudi Arabia’s voluntary oil production cuts are starting to show up in GDP and fiscal data, with the Q3 releases showing a 4.5% y/y contraction in GDP and a sharp widening of the budget deficit. Nevertheless, the GCC’s non-oil economies continue to look strong, with particularly robust PMI survey readings in October. In Dubai, this growth has been fuelled by the tourism sector in particular which has seen visitor numbers hit a new record over the first three quarters of the year, while the real estate market also continues to hit new records.

On the global front, we believe that the major central banks have come to the end of their hiking cycles as the cumulatively tighter monetary policy of the past two years has started to weigh on the growth outlook for the major economies. Nevertheless, the expectation is that any slowdown will be relatively mild, and hopes of a soft landing for the US remain in play. Looking at a longer term horizon, growing skepticism towards globalisation could impose a drag on growth if the global economy is increasingly broken up into regional blocs.