Weak economy and elevated inflation in Singapore Having been one of the star performers during the pandemic, Singapore’s economy has weakened considerably in recent months. GDP grew by just 0.1% q/q in the final quarter of last year, and recent data …
6th April 2023
Expansion in Q1 likely… After stagnating in Q4, euro-zone GDP probably rose in the first quarter. The final Composite PMI , released this week, confirmed that economic conditions improved further in March (though a bit less than implied by the flash …
Real estate exposures have not been central to financial developments in Europe over recent weeks, but, as property prices correct after a decade of steady expansion, some strains are likely to emerge. While not appearing systemic, these fragilities …
CEE remains in recession in Q1 The batch of hard activity data and surveys released across Central Europe this week were relatively weak and suggest that GDP contracted in most economies again in Q1. We think the regional downturn will stabilise in Q2, …
Infrastructure boosting construction activity The shape of China’s post-zero-COVID rebound has become clearer over the past week: primarily services-driven, as expected, but with stronger construction activity too, which appears to be mostly about …
Nigeria’s uphill battle to reverse declining FDI Nigeria’s incoming administration is facing an ever-increasing list of economic challenges, and for many there are no quick solutions are at hand. This is certainly the case for the steady decline in …
The Land Registry report that London house price growth slowed to 3.2% y/y in January and more timely data based on mortgage approvals show a 2.2% y/y fall in prices in Q1. The detail suggests that affordability is becoming the primary driver of pricing. …
The RBA’s decision to keep rates on hold at its April meeting has reignited debate over whether the Bank’s tightening cycle is at an end. Financial markets certainly seem to think this is the case. However, our view, and the analyst consensus, is that the …
We anticipate that the S&P 500 will fall back later in 2023, largely because analysts are far from pricing in a recession in the US that we think is even more likely after the recent banking turmoil. Our forecast is that the index will reach a trough of …
Note: Join our 6 th April online briefing all about the risks to EMs from banking turmoil. Register now . Gulf economies to slow on back of OPEC+ cuts One of the main angles to the surprise voluntary oil output cuts by OPEC+ is geopolitical – it’s another …
Construction activity holds up as housing enters the doldrums The March headline CIPS Construction PMI reversed some of its surprise jump in February, but it remained in expansionary territory. That was driven by the commercial sector, where strong …
JODI data on global oil and natural gas consumption reveal that global energy demand remained in the doldrums around the turn of the year. We suspect a recovery in natural gas demand is more likely to occur than in oil demand, as prices of the former have …
The RBI’s decision to keep the repo rate on hold at 6.50% today belied the central bank’s recent hawkish communications. The door remains ajar for hikes in the future but with headline inflation set to fall back to within the RBI’s 2-6% target range …
House price indices diverge The third consecutive monthly increase in house prices recorded by Halifax suggests that pricing is proving remarkably resilient to higher mortgage rates. But it is at odds with the consistent fall in the Nationwide house …
Industrial resilience won’t prevent recession The second consecutive big increase in German industrial production in February all but confirms that GDP returned to growth in Q1. The industrial resilience may continue in the coming months but we still …
RBI unlikely to tighten any further The RBI’s decision to keep the repo rate on hold (at 6.50%) today comes as a surprise and belies the central bank’s recent hawkish communications. The door remains ajar for hikes in the future but with headline …
Falling international trade points to weaker growth The widening of the trade surplus in February largely reflects the fact that imports of goods and services fell at a much faster rate than exports. Therefore, even though net trade will make a positive …
Falling international trade points to weaker growth The widening of the trade surplus in February highlights ongoing weakness in domestic demand. The rise in the trade surplus to $13.9bn in February, from a downwards-revised $11.3bn in January, was in …
Inflation has fallen faster than Bank expected Probably too soon for Bank to drop its bias toward further rate hikes New neutral policy rate estimate could move long-run rate expectations The recent banking turmoil in the US means the Bank of Canada may …
5th April 2023
SPR releases should support commercial stocks in the coming weeks The rebound in crude oil prices is already feeding into wholesale gasoline prices, but we don’t think the increase will be enough to derail demand, which is running at a healthy clip. …
Central banks focused on inflation for now, but will monitor credit in the months ahead Conditions were already tightening before recent turmoil… …and by Q3, lending surveys and spending data will show clear signs of strain Central banks are now in a …
Note: Office-based employment data for several metros were missing for February. February employment growth slowed after January’s high February saw a slowdown in jobs growth after a strong month prior, suggesting January’s jump in employment was an …
The Monetary Policy Report released by Chile’s central bank today revealed that policymakers are more concerned about inflation risks than we’d thought. We still think that Chile’s central bank will be among the first to start loosening monetary policy, …
Will underlying inflation prove to be stickier than we thought? Paul Ashworth and Andrew Hunter from our US Economics team held an online briefing shortly after the release of the March CPI report. During this 20-minute briefing, Paul and Andrew answered …
Models suggest recession coming soon Our composite models suggest the economy was on track to fall into recession soon even before the impact of the banking turmoil feeds through. There also appears to be a lower, but rising, chance that a recession has …
OPEC+ decision sends oil futures curves into steeper backwardation The surprise OPEC+ decision to cut oil production sent oil futures curves into steeper backwardation. This doesn’t necessarily mean that market participants see prices falling from here, …
The RBI will probably end its tightening cycle with a 25bp hike on Thursday (04.30 BST) Industrial production was probably flat in Germany in February (07.00 BST) Catch up on yesterday’s Drop-in on the outlook for global financial markets here Key Market …
Underlying inflation pressures are still well above the 2% mid-point of the Bank of Canada’s target range, but there are several reasons to expect disinflationary forces to build. We forecast that CPI inflation excluding food and energy will fall to 2% at …
Recent data suggest the economy’s resilient end to 2022 was sustained at the start of this year. But while the worst of the falls in real household incomes are in the past, we still think around two-thirds of the drag on real activity from the rise in …
Strong start to the year already going into reverse The ISM services PMI fell to 51.2 in March, from 55.1, adding to the evidence that, following a weather-related sugar high to start the year, the economy and labour market are rapidly losing upward …
Mortgage applications boosted by banking turmoil A sharp decline in 10-year Treasury yields in the middle of March led to a drop in mortgage rates, restoking demand for mortgage applications as a result. We expect this will help offset a tightening in …
Falling trade volumes add to signs of economic slowdown The sharp declines in both exports and imports in February add to the signs that economic growth is faltering. Although strong gains in January mean that both are still likely to have risen over the …
The surprise decision by OPEC+ to cut production has meant we have revised up our oil price forecasts for end-2023 and end-2024. This does not materially change our outlook for inflation in advanced economies. And we still think weak economic growth there …
Net trade on track to boost quarterly GDP growth Exports are still on track to rise this quarter, despite declining in February specifically, but the renewed deterioration in the survey-based export indicators points to weakness in the second quarter. The …
Net trade on track to boost quarterly GDP growth Exports are still on track to rise this quarter, despite declining in February specifically, but the renewed deterioration in the survey-based export indicators points to further weakness in the second …
Pick-up in services inflation paves the way for final rate hike The further fall in Mexico’s headline inflation rate, to 6.9% in March, confirms that inflation is now on a clear downward trajectory. But services inflation is showing no signs of easing, …
Rates on hold, but cutting by year end Poland’s central bank (NBP) left its main policy rate on hold as expected again today, at 6.75%, and policymakers look set to keep interest rates at this level at the upcoming meetings. But with inflation likely to …
Falling trade volumes adds to signs of economic slowdown The sharp declines in both exports and imports in February add to the signs that economic growth is faltering. Although strong gains in January mean that both are still likely to have risen over the …
The historic drought afflicting Argentina will cause a steeper contraction in GDP than most expect this year and intensify balance of payments strains by reducing export earnings to the tune of 2-3% of GDP. That will make it hard to meet the IMF’s …
London office capital values fell by a relatively modest amount in the second half of last year and monthly data show values stabilised in the first two months of 2023. But that has left London office spreads very narrow at a time when the recent banking …
Surveys point to expansion in Q1 March’s PMIs suggest that the economy expanded in Q1. They also point to further gains in employment and strong price pressures. With the turmoil in the banking sector having stabilised, this makes us more confident in our …
Tankan paints gloomy picture This week’s Q1 Tankan headline indices supported our assessment that Japan’s economy will slip into a mild recession in the first half of this year. The Bank subsequently released the comprehensive data from the survey on …
The decision by the Reserve Bank of New Zealand to lift its official cash rate by 50bp, to 5.25%, came as an upside surprise, but we still think the end of the hiking cycle is approaching. In any case, the Bank’s aggressive tightening confirms our view …
Hawkish RBNZ will push New Zealand into recession The RBNZ’s decision to lift its official cash rate by 50bp, to 5.25%, came as an upside surprise to all. 22 out of 24 analysts polled by Reuters, including ourselves, had predicted a 25bp rate hike. The …
We expect the RBNZ to slow the pace of tightening and hike by 25bp (02.00 BST) The ISM Services Index is likely to show further signs of slower growth (15.00 BST) We think policymakers in Chile and Poland will keep interest rates on hold Key Market …
4th April 2023
Table of Key Forecasts Overview – Aggregate EM GDP growth will be much stronger this year than last, but that’s almost entirely a result of China’s reopening rebound. Growth in most other EMs will be weaker and will generally disappoint consensus …
The sharp fall in job openings in February shows that labour demand was cooling even before the recent banking turmoil and provides another reason to think that the Fed’s tightening cycle is nearly over. The fall in vacancies and downward revision to …
While we expect a more-than 20% peak-to-trough price correction for US commercial real estate, offices face a much tougher outlook, with large falls in net operating incomes compounding the broader re-pricing facing the sector and driving a …
Sri Lanka’s central bank (CBSL) left interest rates unchanged today and we expect rates to stay on hold for the rest of the year as policymakers look to strike a balance between clamping down on inflation, maintaining good relations with the IMF and …
