Saudi Deficit Hits Record, PMI Grows

Market Snapshot

Asset	Level	Change
Saudi Aramco	27.78	+1.02%
MSCI Saudi	38.46	-0.70%
MSCI UAE	19.16	+0.95%
DFM General	5,898.42	+2.96%
MSCI Qatar	18.86	-0.16%
MSCI Kuwait	38.54	+0.44%
Brent Crude	101.82	-7.33%
WTI Crude	95.67	-6.45%
Gold	4,714.60	+3.49%
USD/SAR	3.75	+1.70%
USD/AED	3.67	+0.03%
USD/KWD	0.31	-0.02%
Bitcoin	81,100.19	+0.21%

Prior Economic Events

Data	Prior	Cons	Actual
No events available

Today's Economic Events

Data	Prior	Cons	Time
No events available

Saudi Arabia posted a $33.5bn Q1 budget deficit due to lower oil revenues, spending surges, and war costs, underscoring fiscal strains from volatile crude prices.
Saudi non-oil PMI returned to growth in April, reflecting diversification progress despite client spending deferrals tied to regional conflicts.
GCC foreign inflows rebounded in April, led by Saudi Arabia's $953m, while UAE markets surged on defense deals and positive sentiment.

Yesterday's Recap

Saudi Arabia led regional news with its Q1 2026 budget revealing a SR125.7bn ($33.5bn) deficit, driven by reduced oil sales, spending increases, and war-related costs amid geopolitical tensions. The kingdom's non-oil private sector showed growth in April per PMI data, boosted by new orders though tempered by conflict-linked deferrals. Saudi Aramco shares rose 1.02% to 27.78 following reports of June oil price cuts from May highs, but the MSCI Saudi index fell 0.70% to 38.46.

UAE markets advanced, with the MSCI UAE up 0.95% to 19.16 and DFM General climbing 2.96% to 5,898.42, supported by defense manufacturing agreements and PMI easing while staying expansive. Qatar's MSCI index dipped 0.16% to 18.86, with non-energy PMI rising to 46.4, slowing the contraction rate. Kuwait's MSCI index gained 0.44% to 38.54.

Broader GCC sentiment was mixed amid Brent crude dropping 7.33% to 101.82 and WTI falling 6.45% to 95.67. Foreign flows into GCC rebounded, with Saudi attracting $953m, indicating early stabilization. Geopolitical updates included Saudi support for UAE after Iranian attacks, with condemnations from the Crown Prince and Arab League.

UAE signed deals for a global defense hub in Abu Dhabi and advanced stem cell therapies via partnerships. No major data emerged from Oman or Bahrain.

The Day Ahead

No key economic releases are slated for May 6, 2026, shifting focus to OPEC+ talks on extending voluntary production cuts, which could sway crude prices and GCC budgets. UAE highlights include the Make it in the Emirates forum's fifth edition, emphasizing industrial diversification, AI initiatives, and non-oil growth drivers. Saudi Arabia may build on reports of consolidating its top regional tourism position.

Qatar's LNG exports stay in view amid global energy pressures and potential US-Iran MOU talks involving GCC states to reduce tensions and enhance trade connectivity. Markets will watch Strait of Hormuz stability, as escalations could affect oil transit and sovereign CDS. Kuwait and Bahrain might update on interbank rates, tied to USD peg movements.

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Other Economic Notes

GCC economies prioritize non-oil diversification through frameworks like Saudi Vision 2030 and UAE 2050, channeling investments into tourism, defense, and renewables to counter oil price swings. Fiscal challenges arise from geopolitical risks, such as Iranian attacks on UAE and Houthi threats, raising sovereign credit premia and disrupting energy flows. Advances in LNG projects, including Qatar's North Field expansion and UAE's defense hub, aim to strengthen export resilience and draw foreign capital.

Regional PMI trends show mixed non-oil activity, with Saudi growth offsetting contractions elsewhere, while foreign inflows signal investor confidence recovery.

Global Macro News

Crude prices plunged, with Brent down 7.33% to 101.82 and WTI off 6.45% to 95.67, straining GCC oil-reliant budgets but possibly curbing global inflation. Geopolitical strains intensified from Iranian attacks on UAE, prompting GCC condemnations and pushes for a US-Iran MOU to halt strikes and foster energy trade, including LNG and LPG links. Gold rose 3.49% to 4,714.60 as a haven asset.

USD strength bolstered GCC pegs, with USD/SAR up 1.70% to 3.75, USD/AED up 0.03% to 3.67, and USD/KWD down 0.02% to 0.31. Bitcoin edged 0.21% higher to 81,100.19 amid crypto steadiness. OPEC+ eyes post-cut decisions to steady markets, while US LNG demand aids Qatar and UAE shipments, as seen in Adnoc's Hormuz exports and Pakistan's spot bids.

Broader shifts include US-Qatar jet deals and Japanese-UAE health partnerships, influencing regional alliances and trade.

GCC Central Banks Watch

GCC central banks align closely with Fed policy via USD pegs, keeping rates unchanged amid stable interbank rates like SAIBOR and EIBOR. SAMA, CBUAE, QCB, CBK, CBO, and CBB prioritize inflation management and capital stability, with robust FX reserves supported by inflow rebounds. Saudi's deficit prompts SAMA vigilance on fiscal impacts without imminent changes.

Qatar's QCB leverages LNG liquidity, while Oman's CBO and Bahrain's CBB focus on diversification against oil volatility. Kuwait's basket peg allows minor flexibility, as USD/KWD dipped slightly. Overall, synchronized stances limit divergences, with all monitoring Fed cues for potential adjustments.

GCC Macro Daily(Beta Mode)