Daily Economic Update

Egypt: Big new land development investment agreed with Qatar. According to media reports, sovereign wealth fund-owned firm Qatari Diar has agreed to invest a huge $29.7bn in developing the Alam Al Roum area, a 7-km stretch of coastline northwest of Cairo. The investment includes a $3.5bn payment for the land, alongside a $26.2bn in-kind investment to build out high-end residential, commercial, tourism and entertainment facilities, which will ultimately generate annual revenues of $1.8bn. No timeline for the project has yet been announced, though more details may follow today’s official signing. The deal is comparable in size to the $35bn Ras al Hekma deal secured with the UAE last year, which proved transformative in improving Egypt’s external financing position and stabilizing the pound – although the in-kind nature of the investment suggests a smaller immediate boost to Egypt’s reserves this time around. The absence of follow-through on big pledged FDI deals until now has been a sticking point in talks with the IMF, and this agreement will provide strong support for discussions on the merged 5th and 6th program reviews currently in process, which if approved could trigger another $2.5bn in funding. The Egyptian pound was little changed overnight. 

US: Supreme Court justices express skepticism about tariffs’ legality; private sector job growth rebounds more than expected. The Supreme Court started hearing arguments yesterday about the legality of Trump’s reciprocal tariffs imposed under an emergency act, and during which, many justices expressed doubts about the legal validity of these tariffs. Though a ruling may take several weeks, yesterday’s court proceedings are an initial blow to the US administration. The betting markets are now signalling around 25-30% chance of a decision in favor of the administration compared to around 40% prior to the hearing. In case of a legal setback, the administration has vowed to reintroduce tariffs availing other legal mechanisms but that would re-ignite high uncertainty on many fronts including trade, the fiscal position, and the business and price outlooks in 2026. Meanwhile, the ISM services PMI rose to an eight-month high of 52.4 in October from September’s 50, helped by accelerating new orders (56.2, a 12-month high) and rising output (54.3). However, other details were more mixed as employment shrank for the fifth consecutive month to 48.2, albeit better than September’s 47.2, and the price gauge ticked up to a nearly three-year high of 70. The survey noted firms’ worries about tariffs and the ongoing government shutdown that could impact business over the near term but on a positive note, it didn’t indicate any widespread pick up in layoffs. Moreover, in an upbeat labor market read amid the lack of official data, figures from ADP showed that private sector employment growth rebounded in October to 42K following a drop of 29K in September. Still, ADP data continued to point at a broader weakness in overall hiring as job gains in the private sector averaged just 18K per month since June. Finally, the ongoing US government shutdown, now in its 36th day, became the longest in history, surpassing the previous record of 35 days during Trump’s first presidency in 2018-19. The bipartisan Congressional Budget Office recently estimated that, depending upon the length of the shutdown, it could shave 1-2 percentage points from the current quarter’s GDP.

Chart 1: US ISM services PMI  (index, >50=growth) Source: LSEG Workspace

China: Premier expects around 4% nominal GDP growth through 2030, reiterates focus on boosting consumption. Chinese Premier Li Qiang, at the China International Import Expo, expected that the Chinese economy will exceed Yuan 170 trillion (approximately $23.8 trillion) by 2030, underscoring its role as a key driver of global growth. This implies a nominal GDP CAGR of nearly 4% in the six years through 2030. While this pace is modest compared to the double-digit expansion seen during China’s high-growth era, it aligns with the country’s recent growth trajectory—nominal GDP growth was around 4% to 5% over 2022-2024. His remarks emphasized a strategic focus on expanding domestic demand, especially through boosting consumption, which accounts for a smaller share of the economy compared with the other major economic blocs such as the US, the EU, and Japan. In a pointed critique of the recent global trade tensions, Li mentioned that “unilateral and protectionist measures have had a severe impact on the international economic and trade order.” He reaffirmed the country’s commitment to maintaining stable and unimpeded global supply chains.

Japan: Stronger increase in cash earnings in September but real wage growth remains negative. Total cash earnings increased 1.9% y/y in September, matching consensus estimates, and exceeding August’s downwardly-revised 1.3% increase. The higher growth was driven by stronger ‘special cash earnings’ (mostly bonuses) while ‘contractual cash earnings’ increased by a steady 1.8% y/y. Real (inflation-adjusted) wages extended their slump (-1.4% y/y), falling for a ninth consecutive month. Real wage growth is a matter closely monitored by BoJ officials, who would like to see sustained positive increases, which would increase the chances for a rate hike and a further normalization of monetary policy. The Bank of Japan expects an ongoing increase in nominal wages going forward, citing the tight labor market and decisions by the labor unions to hike wages.

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