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Daily Economic Update
29.10.2025
Kuwait: GDP growth accelerates in Q2, boosted by robust non-oil growth of 3.1%. Preliminary official estimates just released by the Central Statistical Bureau (CSB) show that Kuwait’s headline GDP grew by 1.7% y/y in Q2 2025, accelerating from 1% in Q1, helped by solid growth in the non-oil economy and a return to expansion for the oil sector. Non-oil GDP rose 3.1% y/y (from 2% in Q1 2025), supported by a notable acceleration in construction (12.6% y/y), telecommunications (8%), real estate (7.2%), and health & social work (5.9%). Somewhat offsetting this increase was reduced output in the wholesale & retail trade and electricity & gas sectors as well as softening activity in the manufacturing sector, which grew only marginally during the quarter. Meanwhile, oil sector GDP, having contracted every quarter since Q2 2023, finally returned to growth in Q2 2025 with a gain of 0.2% y/y, after OPEC+ commenced the unwinding of voluntary production cuts from 2024. Oil GDP will expand further in the second half of the year, with OPEC+ accelerating its resupply plans and commencing the unwinding of voluntary production cuts from 2023. The CSB statistical release did not include revisions to the historical data. The positive headline and non-oil GDP readings align with our outlook for the economy this year, which, in the latter sees non-oil activity (ex- refining) expanding by around 2.5% y/y on improving prospects for the domestic business environment, projects activity and investment.
Oman: Public spending insulated from oil price volatility, according to MoF Secretary General. Although Oman’s 2025 budget was based on an oil price of $60/bbl, public spending and project implementation should remain unaffected even if prices fall below that level, according to the Secretary General of the Ministry of Finance. The government has built sufficient fiscal buffers to sustain spending momentum and support ongoing development projects without disruptions. Oman’s fiscal resilience reflects years of reform, including prudent debt management and expenditure rationalization. The Sultanate’s public debt level has declined sharply from around 70% of GDP five years ago to a projected 35% by the end of this year, which underscores its strengthened fiscal position and improved capacity to weather oil market fluctuations.
US: Trump may lower China fentanyl-linked tariffs, ease chips exports; consumer confidence down slightly in October. In a further de-escalation of trade tensions with China, President Trump suggested that he might lower the fentanyl-linked 20% tariffs on Chinese goods and ease curbs on US semiconductor exports to China ahead of his meeting with President Xi tomorrow in South Korea. Meanwhile, the Conference Board consumer confidence index dropped slightly to a six-month low of 94.6 in October (95.6 in September) as consumers’ outlook on future job market and business conditions somewhat weakened even though their views about the present situation improved. An increasing number of participants saw jobs were “plentiful” (27.8% versus 26.9%), though slightly more believed jobs were “hard to get” (18.4% versus 18.2%) along with a higher share of people (27.8% versus 25.7%) expecting fewer jobs in the next six months. Consumers were generally concerned about prices and inflation and their reference to tariffs eased but remained elevated as inflation expectations for the year ahead ticked up to 5.9% y/y from 5.8% in September. They were also worried about the political situation given the ongoing government shutdown. Overall, consumer confidence exhibited only a slight deterioration from September, though the trend has remained weak this year, with the Conference Board index averaging 96.5 so far in 2025 versus 104.5 in 2024. Meanwhile, the S&P Case Shiller 20-City index showed a further moderation in annual house price increases, to 1.6% in August from 1.8% in July, a two-year low, though on a monthly basis prices were up 0.2% after they dropped for five consecutive months. Still-elevated mortgage rates and a steep increase in house prices since the pandemic have made affordability a key concern for many first-time buyers, impacting price gains.
Japan/US: Authorities set to finalize Japan’s pledged investments as part of the trade deal. Sanae Takaichi, Japan’s newly elected Prime Minister, met with President Trump and the two countries agreed to finalize the trade deal that had been signed earlier by Japan’s former PM Shingeru Ishiba. Both leaders ‘overly’ showered praises on each other, as they vowed to “take further steps for a new golden age”. Talks focused on improving the mutual alliance and boosting cooperation on energy, defense and shipbuilding among other things. After the meeting, Japanese authorities produced a fact sheet detailing almost $400 billion of possible investments in the US, most of which were in the energy sector, including nuclear power, and part of the $550 billion worth of investments pledged by Japan to secure concessional tariff duties of 15% from the US, including autos. Japanese corporations will be heavily involved in executing these investment plans, with funding support from the Takaichi administration. The two sides also agreed to coordinate on securing rare earth minerals supplies, boosting AI investments, and expanding US shipbuilding capacity, however, details were sparse at this stage. Prior to the meeting, Takaichi had announced plans to raise defense spending to 2% of GDP by the end of FY2025 (March 2026), expediting plans that were initially targeted for FY2027.
China: Beijing and ASEAN strengthen ties with an upgraded trade pact. China and the Association of Southeast Asian Nations (ASEAN) have upgraded their free trade agreement to a “3.0 version,” signed on the sidelines of the ASEAN Summit on Tuesday. This will see cooperation expanded further in infrastructure, digital and green transitions, and, most importantly, trade facilitation. China and ASEAN trading ties have been boosted in recent years, partly driven by the rise of the “China Plus One” supply chain strategy that gained momentum following the 2018 US-China trade frictions. This most recent move reflects deepening economic ties and growing integration of supply chains, as China seeks stronger regional alliances in response to escalating trade tensions with the US and the EU.