Skirting technical recession, but power cuts threaten stagflation March’s activity data out of South Africa suggest that the economy is likely to have skirted a technical recession, but the outlook is bleak as the intensification of power cuts weighs on …
17th May 2023
Mexico’s economy has put in a decent performance over the past year or so, but we think that most of the factors that have supported robust growth have now run their course. Tight policy and a looming recession in the US mean that the economy is likely to …
Core goods inflation declining, services inflation sticky Data published today confirmed that both headline and core inflation were little changed in April and that while core goods inflation has begun to fall, services inflation reached an all-time high. …
Following a surge in property yields over the second half of last year, property moved closer to fair value again in Q1. Admittedly, on our measure the all-property score is still sitting in overvalued territory. (See Chart 1.) But that is largely due …
The RBNZ will lift its OCR by 25bp next week. With upside risks to inflation persisting, we’ve pencilled in another 25bp hike in July. However, we still think the Bank will pivot to rate cuts by year-end. The latest data don’t tell a compelling story as …
Sluggish wage growth suggests RBA is done tightening The Q1 wage price index showed that quarterly wage gains were a bit softer than the RBA had anticipated which supports our view that the Bank won’t raise interest rates any further. The 0.8% q/q rise in …
Exports downturn to drag economy into recession in H2 GDP surprised to the upside last quarter, mainly because of stronger performances in private consumption and business investment than preliminary data had indicated. That suggests that there is …
We think Japan’s economy expanded by 0.2% q/q in the first quarter (00.50 BST) Euro-zone data will probably confirm HICP inflation ticked up to 7.0% in April (10.00 BST) Sign up here for a Drop-In to discuss our long-term energy forecasts (15.00 BST) …
16th May 2023
Resilience of activity likely to fade Solid gains in retail sales and manufacturing output in April indicate that the economy remains resilient to the impact of higher interest rates and tightening lending standards. That said, real consumption growth is …
Many academic studies underplay the extent to which higher temperatures could affect economic activity over the long run. Nonetheless, even in a scenario in which the global average temperature rose by more than 3 ° C from its pre-industrial average, …
The renewed acceleration in the monthly changes in CPI-trim and CPI-median in April leaves us doubting our view that the Bank of Canada will be ready to cut interest rates as soon as October. While the rise in headline CPI inflation to 4.4%, from 4.3%, …
Overview – Most commodity prices have moved lower over the past month as concerns about demand have intensified and risk appetite has soured. We think prices will continue to struggle over the next few months as tight monetary policy feeds into slowdowns …
Surveys suggest April strength will soon be reversed The 1.0% m/m surge in manufacturing output in April adds to the evidence that the economy enjoyed a strong start to the second quarter, helped by renewed strength in the motor vehicle sector. But the …
A step backward The renewed acceleration in the monthly changes in CPI-trim and CPI-median in April, combined with the recent rapid turnaround in the housing market, leaves us doubting our view that the Bank of Canada will be ready to cut interest rates …
Having picked up sharply in April, inflows into EM bond and equity markets have weakened in the past few weeks. Inflows into India and Turkey remained strong over the first half of the month, but in the latter this is likely to reverse after the …
Real consumption growth still slowing The 0.4% m/m rebound in retail sales in April indicates that higher interest rates and tightening lending standards are yet to deal a major blow to consumers. That said, with the April gain coming after two months of …
South Africa has traditionally sought to be non-aligned and, in our ‘ mapping decoupling ’ work, we placed it in neither the US nor the China camp. But recent developments suggest that it could be leaning towards the latter. If that’s the case, it might …
Economy slowing, but growth remains solid GDP growth remained fairly solid in Israel in Q1 (2.5% q/q annualised) as it came in slightly above expectations thanks to an unexpected surge in business investment. We think growth will come in below potential …
Labour market defying economic weakness The labour market has been remarkably strong so far this year and we think it will continue to hold up much better than the GDP data might suggest in the coming quarters. The second estimate of Q1 GDP confirmed that …
Decent rebound in GDP as investment surprised to the upside GDP surprised to the upside last quarter, mainly because of stronger performances in private consumption and business investment than preliminary data had indicated. That suggests that there is …
Downturns ease, but growth to remain weak Q1 GDP data for Central and Eastern Europe were fairly weak, but Poland’s economy beat expectations and the worst of the regional downturn appears to have passed. Even so, headwinds remain strong and a sustained …
The stronger-than-expected Q1 GDP data from Colombia suggest that the risks to our forecast for the economy to expand by 0.8% over 2023 as a whole are skewed to the upside. That said, there were signs of underlying weakness in the data and we expect the …
The sharp rise in unsecured bank lending has probably helped to support consumption and boosted bank profitability over recent quarters. But it also leaves the banking sector at risk of rising defaults, a concern that is exacerbated by the relatively low …
Cooling labour market eases some pressure on BoE to raise rates further The labour market loosened by a bit more than the Bank of England expected in March. That may alleviate some pressure on the Bank to raise rates above 4.50% at the next policy meeting …
Cooling labour market eases some pressure on BoE to raise rates further The labour market loosened by a bit more than the Bank of England expected in March. That may alleviate some pressure on the Bank to raise rates further at the next policy meeting in …
The RBA’s balance sheet has barely shrunk since it decided to stop reinvesting the proceeds from maturing bonds. While pressing ahead with quantitative tightening would make it easier for the Bank to engage in quantitative easing during future downturns, …
This page has been updated with additional analysis and charts since the initial publication. A mixed start to Q2 Growth on most indicators accelerated in y/y terms in April. But this was due to a weak base for comparison from a year ago when Shanghai and …
RBA retains its tightening bias The minutes of the RBA’s May meeting were on the hawkish side, but we still think that the Bank’s tightening cycle is already over. Although the Board discussed the option of leaving the cash rate unchanged, it ultimately …
Housing continues to shrug off high interest rates House prices rose by even more than we anticipated in April and the sales-to-new listing ratio points to further gains ahead. Housing starts also jumped last month, but the rising inventory of newly …
15th May 2023
The recent strength of services exports has helped to offset much of the impact of the drop in goods exports and – along with a pull-back in import values – is another reason to think that the current account deficit will narrow this year. Data for April …
Five years ago, we forecast that China’s trend economic growth would be as little as 2% by the end of this decade. At the time, it was a decidedly minority view. But, as featured on the cover of The Economist last week, our work in 2018 identified many …
We expect April activity and spending data in China to be flattered by base effects (03.00 BST) The UK labour market probably remained tight by historical standards in March (07.00 BST) US retail sales likely rebounded in April, though real consumption is …
The downturn in the housing market appears to have paused in many countries in recent weeks. However, we doubt that this marks the bottom of the market. With higher interest rates yet to take their full effect, and affordability generally still stretched, …
The resilience of PCE core services ex-housing inflation is only partly due to the strength of labour market conditions, and other factors are likely to play an important role in driving it lower over the rest of this year. That should reinforce the …
Lending against commercial turned increasingly negative in April Net commercial real estate (CRE) lending slowed sharply once again in April. Lending against all commercial sectors turned negative for the first time in nearly six years, and with little in …
Turkey’s presidential election on Sunday was close, but Erdogan performed better than recent polls had suggested and he now has the edge ahead of a second round run-off on 28 th May. Hopes of an opposition victory and a return to orthodox policymaking …
Thailand’s general election has delivered a massive victory for the main opposition parties, but this may not be enough to allow them to form the next government. This Update answers five key questions on the election and what it means for the economy. 1) …
Slump in March to be followed by further weakness The 4.1% slump in euro-zone industrial production in March was much worse than expected and means that industry was a drag on GDP growth in Q1. While the fall seems to be partly driven by one-off factors …
Borrowing over a longer period significantly reduces monthly mortgage payments. So the accelerated shift towards loans with a term of 35 or 40 years rather than 25 has probably helped to mitigate the drag on buyer demand from higher interest rates. Higher …
This webpage has been updated with a table and chart of key data. Inflation steady, but should resume its slowdown over the rest of the year Saudi Arabia’s inflation rate was unchanged at 2.7% y/y in April, as an increase in non-food inflation offset …
A flurry of data and policy announcements in recent weeks has provided more clarity about where the global economy is heading, even as it has highlighted some key risks to that outlook. Three things have become clear. The first is that the global economy …
Better showing for Erdogan, now in the driving seat for victory Turkey’s presidential election this weekend was incredibly tight and looks to have produced no clear winner, but President Erdogan performed better than recent polls had suggested and this …
Positive surprise brings end of tightening cycle nearer Inflation fell a bit more than we, the consensus and the Riksbank had anticipated in April, strengthening the case for the Riksbank to end its tightening cycle sooner rather than later. We still …
Drop in wholesale inflation reinforces our view of no more rate hikes The drop in Indian wholesale price inflation in April, to a 33-month low, further reinforces our view that the central bank’s tightening cycle has come to an end. Headline wholesale …
GDP figures released earlier today show the economy bounced back strongly in the first quarter of the year. Provided political stability is maintained, the economy is well placed to grow strongly in 2023. GDP rose by 1.9% q/q in Q1 following the 1.1% fall …
Australia’s house prices have rebounded over the last couple of months and most leading indicators suggest that the recovery has legs. However, we doubt that a sustained recovery is on the cards. While false dawns in the housing market are rare, they did …
Economic recovery underway Thailand’s election has dominated the headlines over the past 24 hours and we will have more to say on the economic implications later in the day, but GDP figures released just now show the economy bounced back strongly in the …
The Bank of Canada’s first-quarter Senior Loan Officer Survey (SLOS) showed a sharp tightening of mortgage lending standards, but we already know that has not been enough to prevent a resurgence in the housing market. While bank lending standards for …
12th May 2023
The PBOC is likely to leave the MLF rate unchanged at 2.75% (Mon) US retail sales probably rose in April, but industrial production may have declined (Tue) We think UK wage growth eased but labour market conditions probably remained tight (Tue) Key …
