GULF WEEKLY: Saudi deficit narrows and GDP accelerates, Oman records strong FDI, UK will recognize Palestine

GULF COUNTRIES - Report 01 Aug 2025 by Justin Alexander

A skimmable summary overlaid with our analysis and links. Headlines:

* US tariffs on GCC states are remaining at 10%, providing a competitive edge on some other states.
* The Saudi deficit narrowed to -3% of GDP in Q2, mainly due to a seasonal rise in tax revenue.
* There was a record $36bn in Saudi debt issuance in Q2, half of which was not previously reported.
* Saudi GDP accelerated to 3.9% growth in Q2, as oil output rose but the non-oil sector slowed.
* Fitch hiked its forecast for the UAE fiscal surplus this year to 6% of GDP.
* DIFC saw a 32% y/y increase in new registrations by financial firms in H1.
* Adnoc’s takeover of German chemicals firm Covestro is being hit with an EU subsidies review.
* Israel withdrew embassy staff from the UAE on heightened concerns about terrorism.
* Moody’s upgraded Warba Bank and lowered the outlook on Gulf Bank in the context of their merger.
* Oman’s current surplus improved to 3% of GDP in 2024, and FDI remained very high at 12% of GDP.
* India said that its CEPA with Oman is close to finalization.
* Bahrain issued a BD250m five-year local sukuk, its first such local issuance.
* Qatar has increased aid funding to boost gas piped from Azerbaijan to supply Syria.
* The Houthis threatened to widen targeting of Red Sea shipping to any companies trading with Israel.
* Killings in Gaza exceeded 60,000, and Israeli human rights groups concluded it is a genocide.
* The UK and Canada joined France in saying that they will recognize Palestinian statehood.
* Databank updates: Saudi GDP and fiscal; UAE forecasts; Oman BoP; Bahrain inflation.

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