The roots of the crisis in China’s property sector lie in the worsening long-term outlook for demand. This has not improved. But sales started the year so beaten down that a short-run cyclical recovery is likely. Sales of new residential property fell …
15th February 2023
Economy struggling at the end of last year The fall in euro-zone industrial production and imports in December further highlights the weakening in the economy at the end of last year. We expect the economy to enter a recession this year as the squeeze on …
If it isn't already, India will soon be the world’s most populous nation. But this doesn’t mean that policymakers can simply wait for the economic benefits to arrive. The key to unlocking India’s demographic potential is to develop the manufacturing …
This report has been updated with additional analysis and a Table and Chart of key data. Inflation edges higher to its peak Saudi Arabia’s headline inflation rate nudged up from 3.3% y/y in December to 3.4% y/y in January, which came on the back of a …
Moderating services inflation makes Bank of England’s life easier The fall in CPI inflation from 10.5% in December to 10.1% in January (consensus and CE forecast: 10.2%, BoE forecast: 10.1%), the drop in the core rate from 6.3% to 5.8% and the easing in …
The 6.9% annual rise in Australia’s trimmed mean CPI in Q4 was stronger than the RBA’s November forecast and has prompted some hawkish rhetoric from the Bank at its February meeting. Indeed, we now expect the cash rate to peak at 4.10% in May instead of …
Easing price pressures to make way to final rate hike Inflation in South Africa continued to decline, to 6.9% y/y in January, but we think that the Reserve Bank will err on the side of delivering a final 25bp rate hike to (7.50%) at the next policy …
Resilient economy boosts case for further rate hikes after March Norway’s mainland economy put in a much better performance in Q4 than the central bank expected and ended the year with a healthy expansion in December. Together with the continued …
Moderating services inflation makes Bank of England’s life easier The sharp fall in CPI inflation from 10.5% in December to 10.1% in January (consensus and CE forecast: 10.2%) was the most eye-catching part of today’s CPI release. But it is the easing in …
The government formally nominated Kazuo Ueda as the next Bank of Japan Governor at yesterday’s Diet session. Since the initial announcement of his candidature last Friday , analysts and investors have been looking for clarity on Mr Ueda’s views. So far …
Data a touch softer than expected, but not soft enough for RBNZ to back away We still expect rates to peak at 5.5% by the middle of this year Looming recession will prompt looser policy by year-end The incoming data have been a touch softer than the RBNZ …
Output still below quota, demand will be key OPEC’s monthly report for February did not make any major revisions to its forecasts. That said, the group is clearly worried about both the outlook for global demand and supply from Russia. We think OPEC is …
14th February 2023
A further decline in US inflation seems largely priced in to financial markets. But we still think investors are too optimistic about how quickly the economy will grow, and as such are sticking with our view that equities will come under renewed pressure, …
The surge in employment in January highlights that some sectors are still recovering strongly and raises the prospect that the economy could avoid recession, although we still judge that a modest one is more likely than not. As the employment gains have …
We think the PBOC will cut the interest rate on its Medium-Term Lending Facility UK CPI inflation probably fell further in January (07.00 GMT) We expect US activity data to show some recovery, due partly to easing supply shortages Key Market Themes …
Pace of disinflation slowing The 0.5% m/m increase in consumer prices in January suggests that the downward trend in inflation is slowing. But we still expect the disinflationary process to re-accelerate soon, as easing shortages push core goods prices …
Core inflation eases only gradually The 0.5% m/m increase in consumer prices in January illustrates that inflation is still declining only gradually, but we still expect that downward trend to accelerate soon, as easing goods shortages feed through and …
While Singapore’s government has framed today’s budget as being designed to help poorer households cope with a rise in the cost of living, the main macro impact is a tightening of fiscal policy at a time when the economy is already facing several …
Recession looming Confirmation that euro-zone GDP growth slowed to a crawl in Q4 does not alter our view that the region is now falling into recession. That said, we think the labour market will continue to hold up well. The second estimate of Q4 GDP …
Recessions hit in Hungary and Czechia, further weakness ahead The falls in GDP in Central and Eastern Europe shown in the Q4 figures probably mark the worst of the regional downturn, but we still think that activity will (at best) only stagnate over …
Wage growth continues to accelerate despite cooling labour demand December’s labour market data showed that, despite an easing in labour demand, labour market conditions stayed tight and the market continued to support strong wage growth. The Bank of …
Still on track for a recession in the first half Japan’s economy returned to growth in Q4, avoiding a technical recession after the contraction in Q3. With business investment slowing even quicker than we anticipated and a lower savings rate leaving less …
UK labour market probably remained historically tight in December (07.00 GMT) Economies in Central and Eastern Europe likely to have contracted in Q4 We think US headline and core inflation eased further in January (13.30 GMT) Key Market Themes Despite …
13th February 2023
Wage growth continues to accelerate despite cooling labour demand December’s labour market data showed that, despite an easing in labour demand, labour market conditions stayed tight and the market continues to support strong wage growth. The Bank of …
Click here to read full report. The Ukraine war has added to the forces reshaping the global economic system into two US-led and China-led economic spheres. While the economic diversity of the US-bloc should help it to adapt relatively easily, the …
Slowdown in lending activity beginning to show in January The expected slowdown in net lending to real estate began to show in January. This was seen across all sectors and the latest Senior Loan Officer (SLO) survey suggested this will continue, as banks …
Prague retail saw an unexpected rental uplift at the end of 2022, ending three years of decline. But we think that will be a false dawn and expect that a subdued consumer outlook will combine with existing structural weaknesses to push rents down again …
Chances of another rate hike have just risen The unexpectedly large jump in headline consumer price inflation in January to 6.5% y/y is a clear challenge to our view that the hiking cycle is at an end. Further signs of the economy coming off the boil and …
Central banks need wage growth to slow significantly before they can judge that inflation is firmly under control. The least painful way for this to happen is for the recent rise in “mismatch” between workers and vacancies to reverse. However, we think …
In August 2021, while Jerome Powell was arguing in his COVID-compliant Jackson Hole address that inflation’s resurgence was “transitory”, emerging market central banks across Emerging Europe and Latin America were taking no chances and raising rates. EM …
Inflation still likely to fall this year The rise in Swiss headline inflation will be of less concern to SNB policymakers than the increase in the core rate to its highest level on record. However, we do not think these increases are the start of a new …
Weak investment momentum makes recession even likelier Japan’s economy returned to growth in Q4, avoiding a technical recession after the contraction in Q3. However, the rebound was subdued, let down mostly by contractions in business investment and …
The economy slowed sharply in Q4 and we expect growth to remain tepid and well below-trend over the coming months as multi-decade high interest rates and weak global demand weigh on prospects. The revised estimate for Q4 GDP, published today, shows that …
Not only have emerging market economies, for the most part, come through this aggressive global tightening cycle without being plunged into a 1980s or 90s-style debt crisis. In many cases, their central banks were raising rates even as their advanced …
12th February 2023
South Africa: SONA or SO-NO? The declaration of a state of disaster in South Africa’s State of the Nation Address (SONA) over the deepening energy crisis has grabbed the headlines. Yet, in the small print, there were signs of a meaningful shift away …
10th February 2023
The surge in employment and rise in hours worked in January suggest that economic activity continued to expand at the start of 2023 and present clear upside risks to our forecasts for GDP growth. Nevertheless, we disagree with the market-implied view …
The US dollar is set to end the week a touch stronger against most currencies, adding to its gains last week. But, aside from the Japanese yen round-tripping on news over the next BoJ governor, it’s been a relatively quiet week for the greenback – not …
Core inflation worries prompt hawkish response This week’s central bank communications suggest that worries about strong underlying price pressures are putting policymakers in a more hawkish mood than we had anticipated. Admittedly, Peru is something of …
Given that US economic outperformance has tended to coincide with a stronger dollar, we suspect a “soft landing” in the US economy would provide a favourable backdrop for the greenback, if it also meant that growth in the US remained more resilient than …
It was a fairly quiet week in commodities markets, although oil prices rose on concerns about earthquake-related disruption to exports from the Turkish port of Ceyhan and Russia’s announcement of a 0.5m bpd cut to production in March. By contrast, the …
We think annual US core CPI inflation fell to 6.1% in January… (Tue.) …while CPI inflation in the UK declined to 10.2%, from 10.5% in December (Wed.) We think Q4 GDP growth weakened in Colombia, Hungary, Romania, and Israel Key Market Themes Kazuo Ueda …
We think stock markets in several commodity-intensive countries will benefit from China’s ongoing reopening, which, in our view, will mean commodity prices rise further by the end of the year. The end of the zero-COVID policy and a renewed focus on …
Markets have continued to swing round to the Fed’s view that rate cuts are unlikely this year. We still believe that those cuts are coming, however, as economic growth disappoints and core inflation falls more rapidly than the Fed is expecting. Markets …
Overview – Housing market activity is likely to recover only gradually from its current lows, which means we think 2023 will be the weakest year for sales since 2012. Affordability will remain stretched by past standards, especially in the first half of …
Worse still to come for exporters China’s exports boomed throughout much of the pandemic with global consumers, stuck at home and flush with cash from fiscal transfers, spending more on Chinese-made goods. But the unwinding of those pandemic …
Confidence still near historic lows, despite recent rebound The further modest rise in the University of Michigan consumer sentiment index in early February still only left it in line with its average level during the depths of the financial crisis in …
Surge in employment eases recession fears The surge in employment and rise in hours worked in January suggest that GDP growth will be stronger than we anticipated this quarter. However, the decline in wage growth means that unexpected strength is unlikely …
Almost three years on from the pandemic, only middle-income households are yet to recover financially. In the face of a looming downturn, we expect this will drive growth for discounters as middle-income households trade down their spending habits, …
The UK dodged a recession in 2022 but it won’t be so lucky this year. That’s why we expect the biggest wave of corporate insolvencies since the Global Financial Crisis. UK Economists Paul Dales, Ruth Gregory, Ashley Webb and Olivia Cross held a briefing …
