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Daily Economic Update
15.09.2025Kuwait: Cabinet receives draft housing finance law for approval as PAHW announces major public-private tenders. The cabinet has received the finalized draft of the long-awaited housing finance (‘mortgage’) law, prepared by the Fatwa & Legislation Department. The new law is expected to offer citizens an additional, speedier path to home ownership than the traditional route of waiting – often many years – for housing units via the Public Authority for Housing Welfare’s (PAHW) program. The PAHW is currently grappling with an estimated backlog of more than 100,000 applications. The new law, once approved, will enable the private sector to assume a greater role in the provision of housing and should ease the pressure on the government (and the public finances) by changing its role from sole financier into regulatory partner, with banks brought in to lead the financing aspects. Furthermore, the law should stimulate investments in the real estate sector, especially if it establishes a clear mechanism for mortgage registration, enforcement, and protection. At the same time, the PAHW has launched a major prequalification tender to develop three strategic residential zones in Al-Mutlaa City, East Saad Al-Abdullah, and West Saad Al-Abdullah, alongside the service corridor in Jaber Al-Ahmad City. According to the housing cities law, each project will be governed by a 30-year contract, comprising a 4-year construction phase and a 26-year investment period. Notably, companies may apply to develop one or more of these projects. PAHW also emphasized that the development would be underpinned by a comprehensive design, finance, build, operate, maintain, and sell model, with ownership transfer provisions included (excluding non-residential assets).
Oil: Prices finish the week higher on geopolitical risk, but bearishness intensifying on supply glut concerns. Brent futures gained 2.3% w/w last week, closing Friday at $67/bbl after a Ukrainian drone attack on Russia’s largest oil terminal helped raise the geopolitical risk premium once again after Israel’s strike on Hamas negotiators in Qatar earlier in the week. Nevertheless, market sentiment is strongly bearish, with traders continuing to unwind bullish positions (to their lowest on record for US oil futures). This comes in anticipation of a supply glut stoked by the OPEC-8 group unwinding their supply cuts from 2023-2024 at an accelerated pace. The International Energy Agency (IEA), in its September oil market report, raised its world supply growth projection to 2.7 mb/d this year and 2.1 mb/d in 2026 to reflect this additional OPEC+ supply and ongoing non-OPEC supply growth, so much so that it now sees next year’s surplus at a wider 3.3 mb/d. The IEA does not believe that the market can absorb this level of supply even if China accelerates its stockpiling. Either supply or oil demand will need to adjust, and in the latter, the agency did recognize that demand surpassed expectations in H1 2025 on the back of resilient consumption in OECD economies, raising its annual growth forecast this year by 50 kb/d to 0.74 mb/d. OPEC, which published its oil market report on the same day as the IEA, left its relatively bullish oil demand growth figures unchanged at 1.3 mb/d in 2025 and 2026. On the supply side, according to OPEC secondary sources, OPEC+ (including quota-exempt members) raised production by a cumulative 509 kb/d m/m to 42.4 mb/d in August, with the largest increases coming from the OPEC-8 group including Saudi (+259 kb/d to 9.71 mb/d), Iraq (+122 kb/d to 4.02 mb/d), the UAE (+87 kb/d to 3.26 mb/d), Russia (+50 kb/d to 9.17 mb/d) and Kuwait (+40 kb/d to 2.49 mb/d). Despite the sharp increases in Iraqi and Russian oil production, both countries complied with their respective compensatory cut quotas. Kazakhstan, though, despite a 23 kb/d decline in output in August, was still producing nearly 300 kb/d above its quota.
China: Key indicators disappoint indicating softening economic growth. Economic activity appears to have slowed more than expected recently with both retail sales and industrial production undershooting consensus forecasts for the second straight month in August, growing by the weakest pace so far this year. Retail sales increased by 3.4% y/y, below expectations of 3.9% and eased from 3.7% in July, suggesting consumer demand remains fragile. While industrial production rose 5.2%, it was a slowdown from July’s 5.7% and its worst performance since August last year, indicating weaker momentum in manufacturing. On the property front, new home prices continued to decline, falling by 2.5% y/y (-0.3% m/m) and reflecting ongoing stress in the real estate sector. However, the pace of decline has gradually eased over the past ten months, suggesting tentative signs of stabilization. Overall, the latest data suggests that China’s economic growth is softening after a stronger than expected performance in the first half, reinforcing expectations for increased targeted policy support.
Global: Fed, BoE, and BoJ policy meetings key matters this week, but only the Fed seen cutting rates. In the US, the FOMC will meet on September 16-17, and the market widely expects a 25-bps interest rate cut. While the cut is a near certainty, a key matter is whether or not there will be hints of further cuts in the coming meetings. Committee members will also provide their latest dot-plot projections, in addition to updated macroeconomic forecasts. On Thursday, initial weekly jobless claims (expected at 240K) will take on extra importance given the surge to a near four-year high (263K) in the previous week. August’s retail sales are due on Tuesday, and growth is seen slowing to 0.3% m/m from 0.5% in July. In the UK, the Bank of England’s MPC will announce its policy decision on Thursday, and market expectations point to no change in the bank rate (4%). On Tuesday, the unemployment rate is seen steady at 4.7% for May-July, with expectations of easing growth in regular pay (excluding bonus) to 4.8% y/y from 5% in April-June. Meanwhile, August’s CPI inflation is due on Wednesday with the headline rate projected to accelerate further to 3.9% y/y from 3.8% in July, but with a moderating core rate of 3.7% from 3.8%. In China, the central bank’s decision on the loan prime rates (for one year and five years) is due on Saturday, which comes at a time when recent macroeconomic metrics have come in weaker than expected. Finally in Japan, the BoJ is widely expected to keep rates unchanged at 0.5% in their meeting on Friday. August’s inflation is also due on Friday, with consensus estimates pointing to a decrease in core inflation (excluding fresh food) to 2.7% y/y from 3.1% in July.