Daily Economic Update

UAE: Abu Dhabi’s property sales strong in Q2 2025. Real estate sales in Abu Dhabi rose by 48% y/y to AED28 billion ($7.6 billion) in Q2, even stronger than the 40% y/y increase in the previous quarter, according to Abu Dhabi Real Estate Centre. The upswing in sales was largely driven by the residential sector, which accounted for 62% of total sales, rising by 73% y/y, underscoring the emirate’s growing appeal as a residential destination. Residential sales were mostly cash sales at 85% during the quarter, reflecting a market characterized by high liquidity, investor confidence, and resilience against interest rate fluctuations. Almost half of residential sales were in the apartment segment, rising by about 40% y/y to AED6.2 billion in Q2 while villa sales nearly doubled to AED4.5 billion. The robust performance in sales was underpinned by multiple factors including robust non-oil growth (6.1% y/y in Q1) and strong growth in the emirate’s population (7.5% in 2024 to 4.14 million). Sales are expected to remain strong over the medium term, supported by the variety of real estate products, the growing population, FDI flows to the sector and the availability of liquidity within the market.

Kuwait: Stronger revenue growth in Q2 for local banks, but net profit growth was mixed. With Q3 drawing to an end, it is useful to look at a high-level summary of the results of the nine listed Kuwaiti banks in Q2. Despite much stronger y/y operating income growth in Q2 for nearly all banks (median growth increased to 10% from 1% in Q1), net profit growth was mixed with four banks recording a drop in earnings. The rebound in operating income growth was particularly driven by non-interest income, with seven banks recording double digit y/y increases. Meanwhile, y/y growth in net interest income picked up in Q2 (median increased to +3% from -1% in Q1) driven by a q/q improvement in NIMs and ongoing asset growth. The y/y increase in net interest income was on the back of asset growth as NIMs are materially lower than last year for seven of the nine banks. Risk costs remained favorable in Q2 and much lower than historical averages indicating generally robust asset quality with three banks recording net recoveries in Q2 while NPL ratios were generally steady YTD. Cost-to-income ratios were mixed in H1, but with cost growth in H1 mostly softening from the 2024 pace, standing at mid-single digits for the three largest banks.

Egypt: Remittances reached a new record high in July. Worker remittances during July 2025 increased by 26% y/y to $3.8 billion, the highest monthly record, up from $15.5 billion in the same month of 2024. Moreover, aggregate remittances in the first 7 months of 2025 increased by 50% y/y to $23.2 billion, up from $15.5 billion during the same period of the last year. This increase provides a boost for the Egyptian economy where remittances represent around 10% of GDP. Egypt is the fifth highest receiver of remittances globally.

US: New home sales climb to the highest level in more than three years. New home sales in August jumped to their highest since the beginning of 2022, rising by 20% m/m after recording a drop of 1.8% in July, helped by some softening in mortgage rates and aggressive promotions by property developers. Although mortgage rates (30Y at 6.34%) have recently moderated to their lowest in almost a year, they remain significantly elevated versus the 2010s levels, which along with high residential property prices, have worsened affordability conditions for many first-time buyers. Sales of existing homes also resumed a weakening trend recently after seeing some recovery in prior months. Moreover, the immigration crackdown and tariff-driven higher input costs could continue to impact construction of new units, as building permits have remained on a downward path lately, with housing starts volatile. Separately, the US authorities ratified the earlier trade framework signed with the EU in late July, reducing tariffs on EU autos to 15% (retroactive to August 1) along with trimming duties on several other goods such generic drugs and aircraft. Meanwhile, congressional lawmakers are yet to reach a funding deal (continuing resolution) to keep the government open, with the deadline being Tuesday midnight (September 30). We note that Congress is currently out of town, returning Monday September 29, hence lawmakers will need to act immediately upon their return to avoid a government shutdown. President Trump was supposed to meet with Democratic congressional leaders later today but has now cancelled that meeting, exacerbating the situation.  

Japan: BoJ minutes show members pausing rate hikes until trade uncertainty decreases. Minutes from the Bank of Japan’s (BoJ) July meeting, where the bank unanimously agreed to keep interest rates on hold for the fourth consecutive time, reveal that members saw macroeconomic risks moderating but that the BoJ still needed to maintain “accommodative financial conditions” to support the economy. Members consistently mentioned the US’s tariff agenda as a source of uncertainty, stating that economic growth was likely to moderate as a slowdown in trade led to a slump in both the overseas and domestic economies. Members also highlighted that private consumption and employment have been resilient in Japan to date but emphasized that the situation might change due to the impact of “price rises and other factors” resulting from tariffs. The BoJ stated that domestic financial conditions have been accommodative so far, with the central bank waiting until global uncertainty decreases before raising rates. As Japan finalized a trade deal with the US last month, that global uncertainty decreased but has been replaced with domestic uncertainty after Prime Minister Ishiba’s resignation in early September. Looking forward, the BoJ’s interest rate path looks more uncertain after members voted 7-2 to keep rates constant in September, marking the first time that BoJ Governor Ueda received two dissenting votes and highlighting increasing pressure within the bank. The BoJ’s late October meeting will be highly anticipated as markets look to see how that pressure evolves.
 

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