Saudi GDP fell 1.8% y-o-y in the first quarter of the year, marking the third consecutive quarter that the Kingdom’s economy has been in contraction, according to preliminary figures from state statistics agency Gastat (pdf). The downturn was again due to a 10.6% decline in oil activity, which accounts for c. 40% of GDP (and about 75% of government revenues).

Non-oil activity was up 2.8% y-o-y, with government activity also growing at a 2% clip.

REMEMBER- The Kingdom cut oil production by 500k barrels per day in April 2023 in a bid to arrest falling oil prices. That figure became a 1 mn bpd voluntary cut by June. Though originally seen ending in December 2023, the government extended the 1 mn bpd cut through 1Q 2024 and now seems poised to continue it through June 2024, maintaining production at 9 mn bpd.

On a quarterly basis: GDP climbed 1.3% compared to the previous quarter, driven primarily by a 2.4% increase in oil activity, as well as 0.5% growth in non-oil activities. Government activity slowed by 1% q-o-q.

The Kingdom’s Finance Ministry is targeting GDP growth of 4.4% for the current fiscal year, Finance Minister Mohamed Al Jadaan said in December. The IMF revised its 2024 growth forecast for the Kingdom to 2.6% last month, pointing to the combined effects of lower oil prices and production cuts.

Activity could pick up later this year: London-based research outfit Capital Economics sees the economy recovering throughout the year, saying in a research note seen by Mubasher that the preliminary estimate of the country’s GDP this quarter is a sign that it is emerging from a recession.

MARKETS THIS MORNING-

Asian shares are mixed this morning, with the Nikkei and Kospi in the red while Hong Kong’s Hang Seng is flat and the ASX 200 is up 0.3%. The Shanghai Stock Exchange remains closed as China observes an extended labor day holiday.

Traders seem to be happy with Jay Powell’s comments that interest rates would stay put for a while longer: Dow, Nasdaq, and S&P futures are all up 0.4% or more in overnight trading.

European stocks look set for a softer open, with futures for most of the continent’s major benchmarks trending lower at dispatch time this morning.

ADX

9,032

-0.4% (YTD: -5.7%)

DFM

4,133

-0.5% (YTD: +1.8%)

Nasdaq Dubai UAE20

3,524

-1.6% (YTD: -8.3%)

USD : AED CBUAE

Buy 3.67

Sell 3.67

EIBOR

5.0% o/n

5.5% 1 yr

TASI

12,345

-0.4% (YTD: +3.16%)

EGX30

25,270

+3.4% (YTD: +1.5%)

S&P 500

5,023

-0.3% (YTD: +5.3%)

FTSE 100

8,121

-0.3% (YTD: 6.5%)

Euro Stoxx 50

4,921

-1.2% (YTD: +8.8%)

Brent crude

83.63

-3.1%

Natural gas (Nymex)

1.93

-3.0%

Gold

2,311.00

+0.4%

BTC

USD 57,436.50

-4.2% (YTD: 36.0%)

THE CLOSING BELL-

The DFM fell 0.5% yesterday on turnover of AED 307.6 mn. The index is up 1.8% YTD.

In the green: Mashreq bank (+4.5%), Islamic Arab Ins. Company (+4.5%) and Watania International Holding (+2.9%).

In the red: Emaar Properties (-6.1%), Orascom Construction (-5.3%) and National General Ins. Company (-5.2%).

Over on the ADX, the index fell 0.4% on turnover of AED 996.5 mn. Meanwhile, Nasdaq Dubai dropped 1.6%.

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