GCC-EU trade agreement finally seeing the light?

PMIs are out — and up: Saudi Arabia, the UAE, Kuwait, Egypt, and even Lebanon all saw their purchasing managers’ index readings rise in May, while Qatar bucked the trend to inch down slightly — albeit at a softer pace — as the ongoing conflict continued to bite at demand and business sentiment. Meanwhile, although the headline figures were up, Kuwait, Egypt, and Lebanon all remained in contraction territory last month, with Lebanon just 0.3 points away from the 50.0 mark that separates contraction from expansion.

Even as the headline numbers looked better, the underlying details are more complicated: In the UAE, supplier delivery times lengthened at the worst rate since April 2020, input costs rose at the second-fastest pace in nearly two years, and export orders fell across both the UAE and Saudi Arabia for a third straight month.

The IMF now sees Saudi Arabia’s growth slowing to about 2% this year, revised down from its April forecast of 3.1% and down from the 4.5% clip recorded in 2025. The fund wrapped its 2026 Article IV mission to Riyadh on Wednesday, saying the country’s economy is resilient so far, but prolonged conflict will spike risk. The IMF also sees inflation creeping up to roughly 2.3% as higher shipping and insurance costs feed through.

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The long-stalled GCC-EU trade agreement could be settled at a leaders’ summit in Riyadh this October, Aleqtisadiah reports, citing unnamed European and Gulf sources. The shape of the agreement is also reportedly shifting — officials are now discussing a move away from a single, all-encompassing framework towards sector-specific agreements covering renewables, digital trade, and industrial supply chains.

The hold-up has been the EU’s insistence on bundling in non-trade matters, the lead negotiator for the GCC said.

Brussels’ renewed urgency follows the conclusion of a trade agreement with the UK last month to remove duties on roughly GBP 580 mn worth of UK exports to the GCC annually.

Kuwait could restore 70% of its pre-war oil production within six to eight weeks of the Strait of Hormuz reopening and return to full output within three months, AGBI quotes Kuwait Petroleum Company’s Managing Director Shaikh Khaled Ahmad Al Sabah as saying.

The emirate was previously producing around 2.7 mn bbl / d, with that figure falling to 1.2 mn bbl / d after the war broke out. Al Sabah also said Kuwait could restore full refining capacity within two to three weeks, far sooner than some analysts had projected.