Pakistan central bank set to deliver fourth consecutive rate cut to revive economy
All 15 investors and analysts surveyed by Reuters expect the central bank to cut rates next week
Policymakers continue efforts to revive a fragile economy as inflation eases off recent record highs
Updated 01 November 2024
Reuters
KARACHI: Pakistan’s central bank is expected to cut its key interest rate further at its policy meeting on Monday, with policymakers continuing their efforts to revive a fragile economy as inflation eases off recent record highs.
The central bank, the State Bank of Pakistan, has slashed the benchmark policy rate to 17.5% from an all time-high of 22% in three consecutive policy meetings since June, having last reduced it by 200 basis points in September.
All 15 investors and analysts surveyed by Reuters expect the central bank to cut rates next week. Two expect a 150 bps cut, twelve predict a 200 bps reduction, and one forecasts a 250 bps cut.
Economic activity has stabilized since last summer when the country came close to a default before an eleventh hour bailout by the International Monetary Fund (IMF).
The IMF, which in September gave a boost to Pakistan’s struggling economy by approving a long-awaited $7 billion facility, said that the South Asian nation had taken key steps to restore economic stability with consistent policy implementation under the 2023-24 standby arrangement.
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While the economy has started to gradually recover, and inflation has moved sharply down from a multi-decade high of nearly 40% in May 2023, analysts say further rate cuts are needed to bolster growth.
Mustafa Pasha, Chief Investment Officer at Lakson Investments, said rates must drop under 15% and hold below that for six months to have a material impact.
The IMF in its latest October report forecast Pakistan’s gross domestic product growth at 3.2% for the fiscal year ending June 2025, up from 2.4% in fiscal 2024.
The government expects annual inflation to have come in at 6-7% last month and slow further to 5.5-6.5% in November.
However, inflation could pick up again in 2025, driven by electricity and gas tariff hikes under the new $7 billion IMF bailout, and the potential impact of taxes on the retail and wholesale sector proposed in the June budget.
Ahmad Mobeen, senior economist at S&P Global Market Intelligence, said that while lower rates will offer some relief to the manufacturing sector, the benefits may be limited due to “elevated input costs, driven by high electricity and gas tariffs, combined with global supply and shipping constraints.”
The survey responses on Monday’s policy rate decision are listed below:
Investors on edge over Israel-Iran conflict, anti-Trump protests
Updated 5 sec ago
Reuters
NEW YORK: Dual risks kept investors on edge ahead of markets reopening late on Sunday, from heightened prospects of a broad Middle East war to US-wide protests against US President Donald Trump that threatened more domestic chaos.
Israel launched a barrage of strikes across Iran on Friday and Saturday, saying it had attacked nuclear facilities and missile factories and killed a swathe of military commanders in what could be a prolonged operation to prevent Tehran building an atomic weapon.
Iran launched retaliatory airstrikes at Israel on Friday night, with explosions heard in Jerusalem and Tel Aviv, the country’s two biggest cities.
On Saturday Prime Minister Benjamin Netanyahu said Israeli strikes would intensify, while Tehran called off nuclear talks that Washington had held out as the only way to halt the bombing.
Israel on Saturday also appeared to have hit Iran’s oil and gas industry for the first time, with Iranian state media reporting a blaze at a gas field.
The strikes knocked risky assets on Friday, including stocks, lifted oil prices and prompted a rush into safe havens such as gold and the dollar.
Meanwhile, protests, organized by the “No Kings” coalition to oppose Trump’s policies, were another potential damper on risk sentiment. Hours before those protests began on Saturday, a gunman posing as a police officer opened fire on two Minnesota politicians and their spouses, killing Democratic state assemblywoman Melissa Hortman and her husband.
All three major US stock indexes finished in the red on Friday, with the S&P 500 dropping 1.14 percent. Oil and gold prices soaring. The dollar rose.
Israel and Iran are “not shadowboxing any more,” said Matt Gertken, chief geopolitical analyst at BCA Research. “It’s an extensive and ongoing attack.”
“At some point actions by one or the other side will take oil supply off the market” and that could trigger a surge in risk aversion by investors, he added.
Any damage to sentiment and the willingness to take risks could curb near-term gains in the S&P 500, which appears to have stalled after rallying from its early April trade war-induced market swoon. The S&P 500 is about 20 percent above its April low, but has barely moved over the last four weeks.
“The overall risk profile from the geopolitical situation is still too high for us to be willing to rush back into the market," said Alex Morris, chief investment officer of F/m Investments in Washington.
US stock futures are set to resume trading at 6 p.m. (2200 GMT) on Sunday.
With risky assets sinking, investors’ expectations for near-term stock market gyrations jumped.
The Cboe Volatility Index rose 2.8 points to finish at 20.82 on Friday, its highest close in three weeks.
The rise in the VIX, often dubbed the Wall Street ‘fear gauge,’ and volatility futures were “classic signs of increased risk aversion from equity market participants,” said Michael Thompson, co-portfolio manager at boutique investment firm Little Harbor Advisors.
Thompson said he would be watching near-term volatility futures prices for any rise toward or above the level for futures set to expire months from now.
“This would indicate to us that near-term hedging is warranted,” he said.
The mix of domestic and global tensions is a recipe for more uncertainty and unease across most markets, BCA’s Gertken said.
“Major social unrest does typically push up volatility somewhat, and adding the Middle Eastern crisis to the mix means it’s time to be wary.”
UAE posts 4% GDP growth in 2024 as economic diversification accelerates
Updated 28 min 2 sec ago
MOHAMMED AL-KINANI
JEDDAH: The UAE’s gross domestic product reached 1.77 billion dirhams ($481.4 billion) in 2024, recording 4 percent growth, with non-oil sectors contributing 75.5 percent of the total, highlighting diversification progress.
The Central Bank of the UAE has maintained its real GDP growth forecast at 4 percent for 2024, with an expected acceleration to 4.5 percent in 2025 and 5.5 percent in 2026.
According to the Central Bank’s Quarterly Economic Review for December 2024, this growth outlook was supported by strong performances in tourism, transportation, financial and insurance services, construction and real estate, and communication sectors.
In comparison, Saudi Arabia, the largest economy in the region, recorded a modest growth rate of 1.3 percent in 2024, with its non-oil sector contributing 54.8 percent of GDP as the Kingdom steadily advances its Vision 2030 reforms.
Qatar’s economy expanded by 2.4 percent, supported by non-hydrocarbon activities comprising nearly 64 percent of GDP, reflecting ongoing efforts to broaden its economic base.
Oman’s GDP grew by 1.7 percent, driven by a 3.9 percent increase in non-oil activities, particularly in industry and services, while Kuwait’s economy contracted by 2.7 percent in 2024 due to lower oil revenues under extended OPEC+ cuts, though its non-oil sector showed relative resilience with stronger private sector credit growth.
According to the Federal Competitiveness and Statistics Centre, the non-oil GDP grew by 5 percent, totaling 1,342 billion dirhams, while oil-related activities contributed 434 billion dirhams to the overall economy.
Minister of Economy Abdulla bin Touq Al-Marri emphasized that the latest GDP figures released by the FCSC reflect a renewed and positive momentum in the national economy, according to the UAE’s official news agency.
He added that they further underscore the new milestones achieved by the UAE in economic diversification and competitiveness, guided by the vision and directives of its leadership.
The minister emphasized that “these indicators reflect the sustained success of the nation’s economic strategies, which are driving the transition toward an innovative, knowledge-based, and sustainable economic model aligned with global trends and emerging technologies,” WAM reported.
“With each milestone, we are moving closer to achieving the UAE’s target of raising GDP to 3 trillion dirhams by the next decade, while reinforcing its position as a global hub for the new economy, driven by sustainable development, international competitiveness, and forward-looking leadership,” Al-Marri said, as per WAM.
FCSC Managing Director Hanan Mansour Ahli emphasized that the UAE’s 4 percent GDP growth in 2024 reflects the country’s strong economic performance, driven by a forward-looking vision centered on sustainable, non-oil-led development.
As per the WAM report, the transport and storage sector was the fastest-growing contributor to the country’s GDP last year, expanding by 9.6 percent year-on-year. This surge was largely attributed to the outstanding performance of the country’s airports, which handled 147.8 million passengers—marking a rise of nearly 10 percent.
It added that the building and construction sector registered an 8.4 percent growth in 2024, driven by robust investments in urban infrastructure. Financial and insurance activities grew by 7 percent, while the hospitality sector, including hotels and restaurants, saw a 5.7 percent increase.
The real estate sector also posted a 4.8 percent rise during the same period.
Based on the FCSC findings, the news agency stated that with regard to non-oil economic activities that contributed most to the GDP, the trade sector contributed 16.8 percent, the manufacturing sector accounted for 13.5 percent, and financial and insurance activities contributed 13.2 percent.
“Construction and building contributed 11.7 percent, while real estate activities accounted for 7.8 percent of the non-oil GDP,” it concluded.
According to WAM, passenger traffic through the UAE’s airports also saw a notable rise of 10 percent, reaching a total of 147.8 million travelers.
Meanwhile, financial and insurance activities grew by 7 percent, while the hospitality sector, including restaurants and hotels, expanded by 5.7 percent. The real estate sector posted a 4.8 percent growth, underscoring its continued importance in the nation’s economic landscape.
CPI remained stable in May 2025, recording 0.1% increase
Broader inflation picture reinforced by wholesale price data, which showed 2% year-on-year increase
Updated 5 min 20 sec ago
Nour El-Shaeri
RIYADH: Saudi Arabia’s annual consumer inflation edged up to 2.2 percent in May, with rental prices emerging as the principal driver behind the increase.
The uptick was fueled by an 8.1 percent rise in housing rents, including a 7.1 percent increase in villa rental prices, according to the latest data released by the General Authority for Statistics.
While inflation across the Middle East and Central Asia shows signs of easing, country-level dynamics remain mixed, with Egypt reporting 16.8 percent in May, Jordan at 1.98 percent, Saudi Arabia holding steady at 2.2 percent, and Dubai’s rate moderating to 2.3 percent in April.
In a release, GASTAT stated: “On a monthly basis, the consumer price index remained stable in May 2025, recording a 0.1 percent increase compared to April 2025.”
Major initiatives such as NEOM and Jeddah Central are attracting investments among the Vision 2030 development projects. Vision 2030
It added: “This was mainly due to a 0.3 percent rise in housing, water, electricity, gas, and other fuels section, driven by a 0.4 percent increase in actual housing rent prices.”
On a month-to-month basis, the consumer price index recorded only a modest increase, signaling relative price stability. However, key segments such as housing, food and beverages, and personal goods and services contributed to the mild inflationary pressure, partially offset by declines in transportation and household furnishings.
The Kingdom’s inflation dynamics in May highlight the ongoing strain in the housing sector, where rising rental costs have been the most significant inflationary force.
The housing, water, electricity, gas, and other fuels category saw a year-on-year increase of 6.8 percent, driven primarily by the sharp climb in actual rents.
This sector carries the greatest weight in the consumer basket, representing 25.5 percent of the overall index, which significantly increases its impact on the national inflation rate.
GASTAT stated that “rents paid for housing in May 2025 increased by 8.1 percent, attributed to a 7.1 percent increase in rental prices for villas,” underscoring the persistent demand pressures in the residential rental market.
As urban development and population growth continue, rental affordability may remain a critical issue for policymakers.
The upward trend in rents is being driven by a complex mix of structural and economic factors.
Education and health costs recorded limited inflation, with education rising by 1.3 percent. File/SPA
Residential demand in Saudi Arabia’s largest cities, particularly Riyadh and Jeddah, has increased as urban populations grow and Vision 2030 development projects attract investment.
Major initiatives such as NEOM and Jeddah Central are fueling this trend. At the same time, housing supply has not kept pace, especially in the rental market, despite a pipeline of 3.5 million residential units.
Construction activity remains below the level needed to stabilize prices. Rising costs for building materials and labor have also pushed up developers’ expenses, contributing to higher rents.
These dynamics reflect the Kingdom’s rapid urban development under Vision 2030, which aims for a 70 percent homeownership rate and a diversified economy.
However, as mortgage-backed homeownership increases, rental demand remains strong, continuing to perpetuate upward pressure on rents.
In addition to housing, food and beverage prices rose by 1.6 percent compared to May 2024, largely driven by a 2.8 percent increase in the prices of meat and poultry.
These gains coincide with trends observed in the wholesale sector, where the prices of agricultural and fishery products jumped by 4.4 percent over the same period.
Agricultural products alone posted a 6.2 percent rise, and fishing products increased by 6.1 percent, indicating upstream cost pressures that are gradually being passed on to consumers.
Construction activity remains below the level needed to stabilize prices. File/SPA
The personal goods and services category also saw a notable annual rise of 4 percent, led by a 24.4 percent increase in prices of jewelry, watches, and precious antiques.
This increase, while potentially reflecting stronger discretionary spending, also suggests elevated pricing in the luxury goods segment. Meanwhile, catering services drove a 1.8 percent increase in restaurant and hotel prices, adding modestly to overall inflation.
Education and health costs recorded limited inflation, with education rising by 1.3 percent, primarily due to a 5.6 percent increase in non-university post-secondary costs.
Health-related prices remained broadly stable, providing some relief in an otherwise inflationary environment.
However, certain sectors experienced deflationary pressures. Furnishings and household equipment prices dropped by 2.5 percent year on year, largely because of a 4 percent decline in furniture, carpets, and flooring prices.
Clothing and footwear prices fell by 0.9 percent, driven by a 2.7 percent reduction in footwear prices.
Transport costs also decreased by 0.8 percent, as the price of vehicle purchases dropped by 1.9 percent.
These categories helped counterbalance some of the broader upward pressures on the index.
The prices of agricultural and fishery products jumped by 4.4 percent over the same period. File/SPA
On a monthly basis, the CPI’s 0.1 percent increase was relatively muted. Food and beverage costs rose by 0.1 percent, while personal goods and services increased by 0.5 percent, and tobacco prices ticked up 0.2 percent.
However, several categories saw declines: transportation fell 0.2 percent, recreation and culture decreased 0.1 percent, furnishings dropped 0.7 percent, clothing and footwear slipped 0.4 percent, and communication declined 0.1 percent.
The prices of education, health, and restaurants and hotels showed no significant month-over-month changes.
Wholesale Price Index
The broader inflation picture is reinforced by wholesale price data, which showed a 2 percent year-on-year increase in the wholesale price index in May.
The WPI tracks the prices of goods before they reach the retail level, offering insights into future consumer price trends.
The rise was mainly driven by the same categories that affected the CPI: agriculture and fishery products, which increased by 4.4 percent, and other transportable goods, excluding metals and machinery, which rose by 4.3 percent.
“This increase was primarily driven by an 8.2 percent rise in the prices of refined petroleum products,” the WPI report stated.
Furniture and other transportable goods not elsewhere classified recorded a sharp 9 percent increase, further signaling inflationary pressures in non-essential consumer goods.
Conversely, wholesale prices of metal products, machinery, and equipment fell by 0.3 percent, affected by a 5.1 percent decline in the prices of radio, television, and communication equipment, as well as a 3.3 percent decrease in general-purpose machinery prices.
The prices of ores and minerals dropped by 1.5 percent, reflecting a general cooling in commodity prices, mainly due to a reduction in the prices of stone and sand.
Monthly changes in the WPI were largely flat, recording no overall change from April.
A slight 0.1 percent rise in the prices of transportable goods and ores was balanced out by a 0.3 percent decline in agricultural products and a 0.2 percent fall in metal and digital machinery prices.
Saudi Arabia’s Almarai to acquire Pure Beverages Industry Co. in $277m deal
Transaction will be funded through Almarai’s internal cash flows
Pure Beverages Industry Co. is a bottled drinking water producer in the Kingdom
Updated 15 June 2025
MIGUEL HADCHITY
RIYADH: Saudi dairy giant Almarai has signed an agreement to fully acquire Pure Beverages Industry Co. for SR1.04 billion ($277 million), aiming to diversify its offerings and enhance its market position.
Pure Beverages Industry Co. is a bottled drinking water producer in the Kingdom, known for its “Ival” and “Oska” brands. The company operates modern facilities and follows established production standards with a focus on quality and sustainability.
Mergers and acquisitions are on the rise in Saudi Arabia as the nation pursues economic diversification and privatization efforts under Vision 2030, a strategy that promotes foreign investment and supports local entrepreneurship.
In a statement, Almarai stated: “This strategic acquisition is in line with Almarai’s plan to diversify its beverage offerings and enhance its market position. We believe this deal will create added value for our shareholders.”
The transaction will be funded through Almarai’s internal cash flows and is subject to fulfilling all contractual conditions and obtaining necessary regulatory approvals in the Kingdom.
Almarai also confirmed that there are no related parties involved in the transaction and pledged to disclose any material updates regarding the deal in the future.
Founded in 1977, Almarai is one of the largest food production and distribution companies in the Middle East, offering fresh dairy, yogurt and cheese, as well as juices, baked goods, poultry, and infant nutrition products. Listed on Tadawul since 2005, it remains one of the market’s highest-valued companies.
According to the General Authority for Statistics, bottled water was the primary source of drinking water used by households in Saudi Arabia in 2023, with a reliance rate of 57.24 percent. This was followed by public network water at 23.56 percent and tanker water at 18.60 percent.
Given the heavy reliance on bottled water, the Saudi Water Authority plays a pivotal role in regulating and improving water sources — ensuring sustainability, safety, and accessibility across all supply methods.
The authority is the competent body in the Kingdom for all water system affairs at the supervisory and regulatory levels, providing strategic support to the sector through regulatory control and supervision.
Gulf markets fall as Israel-Iran conflict escalates
Israel and Iran launched fresh attacks on each other overnight into Sunday
Updated 15 June 2025
Reuters
DUBAI/BANGALORE: Stock markets across the Gulf fell on Sunday morning after Israel and Iran launched fresh attacks on each other overnight, sparking fears of a widening conflict in the Middle East.
Israel said it had targeted Iran’s nuclear facilities, ballistic missile factories and military commanders in strikes that started on Friday and continued over the following days, in what it warned would be a prolonged operation to prevent Tehran from building an atomic weapon.
Iran responded by launching attacks on Israel and calling off Sunday’s nuclear talks that the US said were the only way to halt Israel’s bombing.
The Qatari stock market index slid 2.9 percent by around 10:15 Saudi time, with almost all constituents in negative territory. Among them, Qatar Gas Transport Nakilat extended losses and was down 3.1 percent, while Qatar Electricity and Water Company was down 1.7 percent.
Qatar National Bank, the Gulf’s biggest lender, retreated 3.3 percent.
Israel late on Saturday attacked Iranian energy infrastructure, including an offshore installation on the South Pars gas field, which Iran shares with Qatar, and is the source of most of the gas produced in Iran, stoking fears of potential disruption to the region’s energy exports.
Saudi Arabia’s benchmark index recovered some ground to trade 1.6 percent lower, after plunging 3.6 percent at the open as stocks fell across sectors.
In Kuwait, where the main index was down 4.3 percent, shares in Jazeera Airways fell as much as 10 percent, as airlines avoided the airspace over most of the region.
Elsewhere in the Gulf and wider Middle East, the Muscat Stock Exchange registered a 1.5 percent fall, the Bahrain index eased by 0.8 percent, while Tel Aviv stocks opened lower by 1.5 percent.
Oman was a mediator between Iran and the US in the nuclear talks.
The Dubai and Abu Dhabi bourses in the UAE, which will reopen on Monday, closed down 1.9 percent and 1.3 percent, respectively, on Friday.
