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Daily Economic Update
08.12.2025
Kuwait: Headline inflation unchanged at 2.4% in August, but core rate softens to a multi-year low. Consumer price inflation was 2.4% y/y in August, unchanged from July, as an acceleration in food & beverage price inflation offset broader, softer increases elsewhere. Indeed, food & beverage prices, the main driver of headline inflation since 2021, increased by 6% y/y, matching an uptick in global food prices as per the UN’s FAO index. Meanwhile, housing services inflation, the largest component in the consumption basket by weight and which reflects mostly rents, remained unchanged at 1%. Excluding food and housing, core inflation slowed from 2.1% in July to 1.8% in August, its lowest since May 2019, reflecting broad-based softness across most subcomponents. The most significant slowdown was recorded in the clothing & footwear and services & miscellaneous categories, with the former continuing its two-year moderating trend and the latter dropping to a 17-month low. Inflation in household furnishings, healthcare, and recreation & culture also moderated, albeit at a slower pace, while remaining steady in communication, education, and restaurants & hotels. We see headline inflation holding at around the current rate in 2026 (year average) on anticipation of moderating rises in food & beverage prices but counterbalanced by a forecast uptick in non-oil economic growth.
Egypt: Foreign reserves hit a new record high in November. Egypt’s foreign reserves inched up to a fresh high of $50.2 billion in November (+$145m m/m), according to data from the Central Bank of Egypt (CBE). The monthly increase was mainly driven by a sharp $707 million rise in gold reserves, following the handover of a confiscated gold collection to the CBE by the Public Prosecution. The collection, which dates to the 1980s and 90s, is valued at around EGP 1.65 billion. The rise in gold holdings helped offset declines elsewhere in the reserves basket, including a $118 million decrease in SDRs and a $445 million drop in foreign currency holdings. Overall, the increase underscores the continued resilience of Egypt’s external reserve position, supported by diversified components and sustained foreign currency inflows, despite some monthly volatility in hard currency assets. Egypt’s current reserve levels are ample, covering about six months’ worth of imports.
Oil: Brent notches second straight weekly gain on higher geopolitical risk, weaker dollar. Brent futures rose 0.9% w/w on Friday to settle at $63.8/bbl (-14.6% ytd) amid concerns about a possible US incursion on Venezuela territory and a retreating US dollar. President Trump reiterated last week that the US will start taking action against Venezuelan drug traffickers on land “very soon,” putting at risk Venezuela’s 1.1 mb/d of crude oil production. Also on the geopolitical front, the market assessed the prospect of higher Russian crude flows in the near term as less likely after US-mediated ceasefire talks between Russia and Ukraine failed to result in a breakthrough. The G7 countries and the European Union, meanwhile, are looking to intensify pressure on Russia by limiting its oil revenues even more through a replacement of the price cap with a full maritime services ban that could come into effect within the next few months. This will effectively end the use of Western oil tankers by Russia, which are currently being used to export a third of its oil (price cap-compliant). It is unlikely to result in a large loss of Russian supply, though, as the country will just resort to exporting via more of its shadow tanker fleet. Oil prices also benefited from a recent bout of dollar weakness, driven by Fed rate cut expectations this week amid a subdued labor market. On the schedule this week for Thursday are the monthly oil market reports from OPEC and the IEA.
China: November exports rebound sharply, far exceeding forecasts. China’s exports surged 5.9% y/y in November, reversing October’s 1.1% decline and far exceeding consensus expectations of 3.8%, as manufacturers accelerated shipments following the trade deal with the US. Chinese factories got some relief after Presidents Xi Jinping and Trump agreed in late October to suspend restrictive trade measures for a year, including rolling back tariffs and export controls. Nevertheless, exports to the US continued to fall in November (-29% y/y). Meanwhile, imports rose 1.9% y/y in November, accelerating from 1.0% in the previous month, marking the sixth consecutive month of expansion, but the rise was below the anticipated 2.8% y/y, reflecting the ongoing weakness in consumer confidence. For the January–November period, exports grew 5.4% y/y while imports fell 0.6% y/y, driving the trade surplus to $1.08 trillion, up 22% y/y. That said, though, and with GDP growth steady at around 5% annually, China faces mounting pressure to reduce export dependence and strengthen domestic consumption for sustainable future growth.
Japan: Growth in cash earnings improves; Q3 GDP revised downward. Growth in cash earnings improved for the second consecutive month to reach 2.6% y/y in October, beating consensus estimates of 2.2% and September’s upwardly-revised 2.1% figure. The increase was driven by stronger ‘special cash earnings’ (mostly bonuses) as well as ‘contractual cash earnings’. However, real wages continued to decrease for the 10th straight month, falling 0.7% y/y in October. Meanwhile, Q3 GDP was downwardly revised to a 0.6% q/q fall, compared to a 0.4% q/q drop initially.
Global: Highly-anticipated FOMC meeting in the US and inflation in China key matters this week. In the US, the FOMC will meet on Tuesday and Wednesday, with the market strongly expecting a 25-bps interest rate cut. A key matter will be the 2026 interest rate outlook, hints of which will be seen in the widely-followed dot-plot and likely in Chair Powell’s press conference. New projections for economic growth, inflation, and unemployment will also be released. Prior to this, on Tuesday, delayed job openings (JOLTS report) for both September and October will be released. Finally, initial weekly jobless claims (on Thursday) for the w/e December 6 are seen rising to 221K from an over three-year low of 191K the previous week. In the UK, GDP for October is due on Friday and consensus forecasts indicate an increase of 0.1% m/m following a drop of 0.1% in September. In China, CPI inflation for November (Wednesday) is seen jumping to 0.9% y/y from 0.2% in October, but mainly driven by base-effects. Finally in Japan, PPI inflation for November (Wednesday) is seen remaining steady at 2.7% y/y.