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Daily Economic Update
08.09.2025Oil: OPEC-8 decides to commence return of second tranche of cuts from 2023. The OPEC Group of Eight (OPEC-8) agreed yesterday to start unwinding from October the second tranche of voluntary production cuts, announced in April 2023 and totaling 1.65 mb/d. The aggregate OPEC-8 production increase for October will be 137 kb/d, with Saudi Arabia (+42 kb/d to 10.02 mb/d), Iraq (+17 kb/d to 4.237 mb/d), the UAE (+12 kb/d to 3.387 mb/d) and Kuwait (+11 kb/d to 2.559 mb/d) leading gains among regional producers. OPEC-8 this time, however, opted not establish forward guidance as it has done in the past and most recently with the just-returned first tranche of supply cuts worth 2.2 mb/d one year ahead of schedule, preferring to give itself flexibility to pause or even reverse the output hikes should demand growth underperform the group’s own, admittedly robust, forecasts. Most analysts including the International Energy Agency expect the market to move into oversupply in Q4 2025 and Q1 2026 with global inventories building as a result. Should OPEC-8 maintain a steady pace of resupply going forward then on paper all 1.65 mb/d of this second tranche of supply cuts would have been unwound within 12 months, though the actual output increase could fall short of target, with several members still subject to partly offsetting compensatory cuts and others already close to their working production capacity. Surprisingly, Brent futures opened higher this morning in Asian trading, rising 1.2% d/d to $66.3/bbl at the time of writing, which likely reflects relief that OPEC-8 did not opt for an accelerated pace of output hikes as it did this summer. Last week saw Brent close down 3.8% w/w to $65.5/bbl amid speculation about the OPEC-8 meeting and on the weaker US jobs report.
UAE: Dubai real estate sales growth slows in August but remains solid. Growth in real estate sales (transaction value) in Dubai cooled in August, at 7.9% y/y to AED51.5 billion ($3.9 billion) from 30% in July, according to DXB Interact. Sales of apartments continued to dominate activity (accounting for 85% of volume and 59% of value), increasing by 29% y/y to AED30.2 billion. 79% of these transactions fall under the first-sale category, primarily off-plan sales. Conversely, villa sales declined sharply in August (-38% y/y to AED10.9 billion), spurred by a fall in first sales (-56% y/y), which suggests a cooling in demand for newly launched villa projects. Sales of plots declined month-on-month but increased on an annual basis (7.4% y/y to AED8.9 billion). Among the top-performing areas in August were Business Bay, Jebal Ali First, and Dubai Investment Park II, underscoring the continued appeal of mixed-use and strategically located developments. After cooling in August, overall real estate sales growth is likely to normalize further over coming months due to high base effects from the previous year. Meanwhile, solid supply increases are expected to moderate the double-digit growth in prices seen over the past three years.
Japan: Prime minister to submit resignation, increasing fiscal uncertainty. Prime Minister Ishiba intends to submit his resignation in the next few weeks, following July’s upper house elections results. The resignation is already casting a shadow over the country’s fiscal stability and the mounting task for the Liberal Democratic Party’s to select a new leader capable of restoring confidence amid political fragmentation. Several contenders have emerged with differing views on fiscal stimulus and taxes. Meanwhile, the government has unveiled that budget requests by ministries for FY2026 are up over 4% y/y to JPY122.4 trillion (about $822 billion) mainly on higher debt servicing costs (JPY32.4 trillion) as bond yields climb, and for higher defense spending (JPY8.8 trillion) as the government looks to raise military expenditure to 2% of GDP by 2027. The rise in government expenditures has once again raised concerns about the long-term sustainability of Japan’s public finances, especially amid intensifying debt and demographic challenges. The next PM will need to resolve public discontent over rising inflation and the need for fiscal discipline to ensure long-term stability.
Global: US CPI inflation and annual payroll revisions as well as the ECB meeting key matters this week. In the US, the CPI inflation print for August (due on Thursday) is the most important economic data point ahead of the FOMC meeting on September 16-17. The consensus forecast points to higher headline inflation of 0.3% m/m (2.9% y/y) versus 0.2% (2.7% y/y) in July but a steady core rate of 0.3% m/m. PPI inflation for August, due on Wednesday, is seen softening to 0.3% m/m from 0.9% in July for both overall and core prices. On Tuesday, the Bureau of Labor Statistics will release its annual preliminary estimate of job growth revisions for the 12 months through March 2025, with expectations of downward revisions to the numbers. In the Eurozone, the European Central Bank is widely expected to keep rates on hold on Thursday and will provide updated projections for economic growth and inflation. Meanwhile in France, Prime Minister François Bayrou is expected to lose a no confidence vote in parliament this evening, with political instability intensifying bond market concerns about the government’s weak fiscal position. In the UK, July’s GDP data will be released on Friday, with the street expecting no change in GDP after a solid 0.4% m/m increase in June. In China, the CPI for August, due on Wednesday, is forecast to slip back into deflation at -0.2% y/y from 0.0% in July. Finally in Japan, the PPI for August will be released on Thursday with the street projecting a slight tick up to 2.7% y/y from July’s 2.6%.