04 July 2023
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UAE approves more ambitious National Energy Strategy

By Khatija Haque

The UAE cabinet yesterday approved a new and updated National Energy Strategy which aims to triple the contribution of renewable energy in the UAE by 2030, and invest AED 150-200bn in the energy sector over the period to boost capacity. This is more ambitious than the previous (2017) target of doubling the contribution of clean energy to the energy mix by 2050. A new National Hydrogen Strategy was approved to “promote the UAE’s position as a producer and exporter of low-emission hydrogen over the next eight years.” This will require investment into research and supply chains for green hydrogen. Policies to boost the use of electric vehicles and develop the network of EV chargers in the UAE were also announced, as was preliminary approval for the testing and development of autonomous vehicles by the firm WeRide.  

The cabinet also announced the creation of a new Ministry of Investment, led by Mohamed Al Suwaidi, to support and boost investment in the country, as well as the creation of a Financial Stability Council tasked with monitoring risks, tackling and preventing financial crises, and promoting financial stability in the UAE.

The Eurozone’s manufacturing PMI for June came in slightly lower than the preliminary estimate at 43.4, lower than the 44.8 recorded in May and the weakest reading since May 2020. The data confirms that Europe’s manufacturing sector remains firmly in recession territory, more than three years on from the initial pandemic lockdown, even as services have rebounded. While the UK and US manufacturing PMIs were also in contraction territory last month, the degree of contraction was less severe. The UK manufacturing PMI improved slightly from May to 46.5 in June, while the US manufacturing PMI was unchanged m/m at 46.3.

The ISM manufacturing survey also pointed to sustained weakness in the US manufacturing sector, coming in below forecasts at 46.0 in June, down from 46.9 in May. This was the lowest reading since April 2020. However, the prices paid component also fell sharply to 41.8, suggesting that goods inflation should continue to slow. The employment component of the ISM survey showed a decline in manufacturing jobs in June after two months of modest gains in employment.   

Morocco recorded real GDP growth of 3.5% in the first quarter, compared to 0.5% in Q4 2022. We forecast growth of 3.0% this year, up from 1.0% last year, with the expectation that harvests should normalize, although stubbornly high levels of inflation pose a challenge to consumption.

Today’s Economic Data and Events

  • 08:30 Reserve Bank of Australia rate decision
  • US markets closed for Independence Day

Fixed Income

  • US Treasuries dropped marginally in a short trading day thanks to a US public holiday. Yields on the 2yr UST rose 4bps to 4.9358% while the 10yr yield added a bit less than 2bps to close at 3.8545%.
  • European bond markets started the week on a generally softer footing as well. Yields on 10yr bunds rose 4bps to 2.432% while gilt yields picked up 5bps to 4.431%.
  • Turkey’s 10yr bond pulled higher overnight with yields down 20bps to 15.97% while South African bonds had a positive bias with little ultimate movement.


  • Currency markets had a relatively quiet close after some modest intraday moves. EURUSD closed near flat at 1.0912 while GBPUSD had a slight downward bias at 1.2693. USDJPY pulled upward by 0.3% to 144.68.
  • Commodity currencies showed broadly wide moves with AUDUSD up by a bit more than 0.1% at 0.6673 while NZDUSD was the biggest gainer on the day, up 0.5% at 0.6153. USDCAD closed near unchanged at 1.325.


  • Asian equity markets kicked off the trading week positively, with strong gains through the region. The Hang Seng added 1.7% on the day and the Shanghai Composite 1.3%, while in Japan the Nikkei closed up 1.7%.
  • The recent rally in equities started to fizzle out later in the day in Europe, however, as initial gains in the primary European indices later turned negative. The FTSE 100 ended the day 0.1% lower, the CAC dropped 0.2%, and the DAX 0.4%.
  • There were some marginal gains in the US as factory data came in weak. The Dow Jones closed up by less than a basis point, the S&P 500 0.1%, and the NASDAQ 0.2%.
  • Locally, equity markets returned from the extended break on the front foot, with the DFM closing up 2.3%. The ADX added 0.1% while the Tadawul closed 0.5% higher.  


  • Oil prices failed to hold on to gains sparked by further production cut announcements from Saudi Arabia and Russia. Brent futures initially popped higher to almost USD 77/b but then faded over the session, ending the day down 0.3% at USD 74.65/b. WTI had a similar move but closed lower by 1.2% at USD 69.79/b.
  • Saudi Arabia has announced it will extend its voluntary production cut of 1m b/d for an additional month after the cuts took effect from the start of July. Production from Saudi Arabia will be at 9m b/d for two months, near its lowest levels since the peak of the pandemic. Russia has said it will also cut output by a further 500k b/d for August. The Saudi cuts for July were announced at the last OPEC+ meeting when the producers’ alliance agreed to extend their output rationalization until the end of 2024. We expect Saudi Arabia will keep output constrained for the remainder of 2023, only incrementally adding supplies to the market.  




Written By

Khatija Haque Head of Research & Chief Economist

Edward Bell Head of Market Economics

Daniel Richards Senior Economist

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