The dollar has stabilised after its historic tumble last week, with the DXY index set to end broadly flat on the week. At the margin, the greenback was lifted by relatively hot CPI and PPI data this week, which we think point to a 0.35% rise in the core …
14th March 2025
SA 2025 Budget: will a compromise be reached? South Africa’s budget was finally delivered this week, but without the DA’s support. There are enough reasons to think that a compromise within the GNU will eventually be brokered, but it will still need to …
Prime Minister Starmer’s announcements this week to abolish both NHS England and the Payment Systems Regulator are the government’s latest initiatives aimed at boosting productivity and, in turn, improving the UK’s medium-term economic prospects. It’s …
Will high inflation or weak growth win out? Brazil’s central bank is all but certain to follow through with a clearly-signalled 100bp hike in the Selic rate to 14.25% next week, so all attention will be on the statement: whether it includes forward …
Trump torments Tiff The Bank of Canada’s decision to lower its policy rate by a further 25bp, to 2.75%, at its meeting on Wednesday was largely expected given the growing downside risks to the economy from US tariffs. While the temporary carveout …
Tariffs drive divergence in metals price outlook The price premium for industrial metals in the US surged in anticipation of the 25% tariffs on steel and aluminum, which were implemented this week. For example, the Midwest premium for aluminum has jumped …
What Trump put? Investors had until recently been relatively sanguine about the economic and financial market risks posed by President Donald Trump’s more extreme policy inclinations. His cabinet lacks the establishment types that served as a check on …
Bond market investors don’t seem to believe that monetary policy will be eased any further in China. Two-year yields have risen from 1.0% to 1.5% since the start of the year, putting them into line with overnight rates. They are higher now than they were …
Ceasefire proposal met with resistance by Putin The US proposal for a 30-day ceasefire in Ukraine has been met with a mixed response in Russia, with President Putin saying that he “supports the idea” but that it needs “serious reworking”. The ceasefire …
Europe’s plans to increase its defence expenditure are still evolving but based on what we know so far, we estimate that it will rise by around 0.5% of GDP between 2024 and 2026 for the euro-zone as a whole, lifting GDP by 0.2-0.3% over two years. The …
Duterte arrest puts political instability in spotlight The arrest this week of former Philippine president Rodrigo Duterte by the International Criminal Court for his role in extra-judicial killings of over 6,000 suspected drug dealers has no direct …
Key risks: food prices, banks, tariffs This week we published our Q2 India Economic Outlook , which contains all of our latest analysis of India’s economy and financial markets (the forecasts and underlying data can also be viewed in our interactive India …
Shunto results in largest pay hikes since 1991 Japan’s Trade Union Confederation (RENGO) today released the first round of results of this year’s spring wage negotiations (Shunto). Including seniority pay hikes, RENGO’s preliminary tally showed a 5.46% …
Budget deficit not widening as much as feared Treasurer Jim Chalmers will hand down the 2025/26 Budget on 25 th March and he will be eager to share the good news that the budget deficit in 2024/25 will be smaller than the Treasury had predicted in the …
Egypt is now twelve months into its orthodox policy shift and, so far, the authorities have moved in the right direction towards restoring macro stability. But there is still work to do in the next phase of reforms that is needed to unlock stronger GDP …
13th March 2025
The dollar has suffered one of its largest weekly falls on record in the wake of President Trump’s latest tariff flip-flip , continued jitters around the health of the US economy and, most importantly, Germany’s historic fiscal policy shift . We have …
7th March 2025
The US tariff exemption for USMCA-compliant goods still leaves considerable uncertainty for the economy because less than 40% of exports to the US last year were formally USMCA compliant. The share that could be quickly declared USMCA-compliant is likely …
Rand makes gains, but for how long? The rand rallied this week on the news that South Africa’s current account deficit narrowed in 2024, but it remains vulnerable to depreciation given that the terms of trade are set to worsen, and the stability of the …
Mexico may have received a (belated) reprieve from US tariffs this week, but some goods will still be subject to US duties now and there’s still the lingering uncertainty about whether Mexico will face tariffs on 2 nd April. Assuming Mexico faces a tariff …
Trump tariff push descends into farce Tariff flip-flop amplifies confusion Markets reacted badly this week when President Donald Trump first imposed 25% tariffs on all imports from Canada and Mexico, with the only partial exemption for Canadian energy. …
The agreement reached this week by the German government’s likely next coalition parties to reform the national fiscal rule suggest they will implement a significant fiscal stimulus over the next two years, which we think could lift German GDP growth by …
What a week! Germany’s fiscal announcement on Monday evening amounts to a potentially huge increase in public sector demand and bond issuance (see here ) and could result in the widest sustained deficit since reunification. The market reacted accordingly, …
NPC points to a renewed pick-up in fiscal spending The announcements out of the National People’s Congress (NPC) confirmed that China’s budget deficit will widen this year. But given the complexity of the Ministry of Finance’s fiscal projections, the …
The UK government’s decision to raise defence spending from 2.3% of GDP to 2.5% of GDP by 2027 was upstaged this week. It may have been enough to impress President Trump, but incoming German Chancellor Merz has raised the bar. The German response differs …
Discipline difficulties meet demand delusion While we learned this week that OPEC+ is sticking to its plan to gradually raise oil output from April (see here ), question marks over production discipline within the group and the strength of global oil …
US may be seeking more market access It’s been another eventful week on the tariff front, with the Trump administration going ahead with 25% tariffs on Canada and Mexico (as well as an additional 10% on China) on Tuesday before then announcing carve outs …
Taiwan vulnerable to semiconductor tariffs China, Mexico and Canada have so far been the focus of Trump’s tariff measures. But it seems likely other countries will soon enter the firing line. Given its large trade surplus with the US, Taiwan is an …
Biggest pay hikes since 1991 forthcoming Japan’s Trade Union Confederation (RENGO) revealed yesterday that its members are requesting a 6.09% rise in pay (including seniority pay hikes) in this year’s spring wage negotiations (Shunto). That marks an even …
RBA won't provide much interest rate relief The minutes of the RBA’s February meeting confirmed that the Bank’s decision to cut rates last month had come down to the wire. Moreover, with concerns still persisting about lingering inflation risks, the Board …
OPEC+ has now confirmed that it will finally begin to unwind its oil production cuts from the start of next month, providing a gradual boost to Gulf oil sectors and GDP growth. But with oil prices sliding and Aramco reducing its dividend, questions are …
6th March 2025
Following the 0.5% m/m slump in real consumption in January and the massive 10% m/m surge in real goods imports, we now expect first-quarter GDP to contract by 1.0% annualised. Assuming that surge in imports reflects the front-running of tariffs, however, …
28th February 2025
The greenback has rebounded this week as market participants have started to take President Trump’s continued tariff threats a bit more seriously and risk sentiment has soured. Even so, we think that the probability of significantly higher tariffs is …
Economy doing well ahead of tariff threats Fourth-quarter GDP growth of 2.6% annualised was much stronger than the 1.8% rate we and the Bank expected, while third-quarter growth was revised up to 2.2%, from the initially reported 1.0%. As a result, growth …
President Putin this week described Moscow’s initial contact with the Trump administration as “inspiring a certain degree of hope”, and we think that the recent thawing in US-Russia relations has increased the probability of the war in Ukraine coming to …
No sign yet of SA budget dispute being resolved There’s now less than two weeks until South Africa’s Finance Minister Enoch Godongwana (finally) delivers the 2025 Budget. But the past few days have only further underlined the widening divide between the …
Fiscal deficit and consumption support will be key China’s National People’s Congress kicks off its annual gathering on Wednesday. While the meeting tends to last around a week, the most important events, including the delivery of the Work Report and …
CBAM caught in the EU’s regulatory slimdown The European Commission (EC) announced its ‘Simplification Omnibus’ this week, which scaled back firms’ reporting requirements with the aim of lowering costs and improving competitiveness. From a climate …
It has not even been a week since the German election and the presumptive next Chancellor, Friedrich Merz, is already dealing with a fiscal dilemma. Specifically, how to finance the increase in defence and public infrastructure spending that Germany …
Metals, minerals, and oil are in Trump’s sights There were three key commodity-related developments from the White House this week. First, the US and Ukraine have agreed to jointly develop Ukraine’s energy and mineral reserves. We wrote about the key …
Things change quickly with Trump as President. Only two weeks ago, the title of our UK Economics Weekly was “Trump’s tariffs tirade becomes more troubling for the UK” as it looked as though the UK’s goods exports to the US would be hit with a 25% …
More concessions may be coming One of the major talking points from our recent meetings with clients, policymakers and contacts in India was (unsurprisingly) the threat of Trump tariffs. As we noted here, India is one of the most exposed countries …
Mexico: tariffs loom (again) The coming days looks set to be dominated by tariffs, with President Trump (after some confusion around the timing) confirmed that the 25% tariff on Mexico (as well as Canada) will “indeed go into effect as scheduled” on …
Korea: jump in fertility unlikely to last Figures published earlier this week showed the fertility rate in Korea increased last year for the first time in nine years, rising from 0.72 in 2023 to 0.75 in 2024. (See Chart 1.) This uptick, though still below …
Soft data belie lingering capacity pressures At first glance, data released this week should give the Reserve Bank of Australia greater confidence that it has brought inflation under control. To start with, the ABS’ Monthly CPI indicator showed that both …
Ratio of deaths to births reaches record high According to preliminary data released this week, the number of births in 2024 fell by 5% to a record low of 721,000, while the number of deaths edged up by 1.8% to a record high of 1,62mn. Even though net …
Saied’s unorthodoxy keeps Tunisia on risky path Tunisia’s President Kais Saied has resumed his attacks on the central bank, Banque Centrale de Tunisie (BCT), and seems set on having the state take over the Bank’s responsibilities. We’ve long warned that …
27th February 2025
Despite a continued steady stream of headlines out of the Trump administration, currency markets have remained remarkably calm this week. The dollar has stabilised today but remains around its lowest level in two months. That probably reflects a judgement …
21st February 2025
Underlying inflation picks up Headline inflation rose to 1.9% in January, from 1.8%, despite the partial GST/HST holiday that began in mid-December. (See here .) Excluding taxes, headline inflation climbed to 2.5%, providing a taste of what is to come now …
Pills, chips and automobiles After last week’s focus on reciprocal tariffs, President Trump shifted his attention this week to product-specific tariffs targeting motor vehicles, semiconductors, and pharmaceuticals. Speaking to reporters on Tuesday, he …
Europe scrambles amid warming US-Russia ties The plans announced by the US and Russia to improve relations and seek an end to the war in Ukraine have sent shockwaves across Europe and caught many off guard. The possibility that a peace deal is negotiated …
