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Daily Economic Update
07.10.2025Eurozone: French PM resigns, thrusting the country, once again, into political turmoil. France entered renewed political turmoil after Prime Minister Sébastien Lecornu resigned on Monday, less than a month after taking office, amid growing political pressure and criticism over his largely unchanged cabinet lineup. The resignation underscores France’s deep political fragmentation, adding to uncertainty over the government’s stability. In response, President Emmanuel Macron has given Lecornu 48 hours to negotiate with political parties in a last-ditch effort to avert a deeper political crisis. Macron’s next move remains unclear, with options including appointing a new prime minister (potentially Lecornu again), calling early parliamentary elections, or, though highly unlikely, resigning himself. Financial markets reacted negatively to the news, with French bond yields widening against their German counterparts and the CAC 40 index falling 1.4%. Meanwhile, Eurozone retail sales edged up 0.1% m/m in August after a 0.4% decline in July, in line with expectations. The slight rebound was supported by higher sales of food products (+0.3%) and auto fuels (+0.4%), partly offset by a 0.1% drop in non-food goods. On an annual basis, retail sales growth slowed to 1%, down from 2.1% in July and 3.5% in June, marking the weakest pace since July 2024.
Egypt: Gold boosts reserves to a new record high in September. Egypt’s net international reserves rose to a new all-time high of $49.5 billion in September, supported by a notable increase in gold holdings and continued foreign portfolio inflows. Gold reserves climbed by $1.8 billion as the Central Bank of Egypt took advantage of higher global gold prices, adding around 7.2 thousand ounces to support the overall reserve position amid declines in other foreign reserve components. In terms of FX buffers, the higher reserves helped offset August’s decline in net foreign assets (NFAs), which fell by $600 million to $17.9 billion, mainly due to a drop in banks’ NFAs. Meanwhile, the foreign currency position in the banking sector likely improved in September by around $1.8 billion, driven by sustained portfolio investments in Egyptian sovereign debt, which strengthened the Egyptian pound, pushing the exchange rate to below EGP 48 per USD for the first time since May 2024.
