Policy shifts pave the way for a cyclical recovery New home sales ended 2022 46% below their spring 2021 peak. But this could mark the bottom for China’s housing market. Daily data suggest that sales have rebounded strongly in recent weeks – they are …
27th January 2023
GDP up in Q4, but still struggling to reach past peaks Spain’s GDP increased in Q4 and is performing better than we expected only a couple of months ago. But Spain is still a laggard in Europe, with the economy smaller than it was before Covid. We think …
Balanced risks to our 2023 inflation view Tokyo inflation rose to 4.4% in January as fresh food and services inflation rose. But with the boost from the weaker yen fading and lower commodity prices due to feedthrough, inflation should fall this year. …
January print likely the peak for inflation Tokyo inflation rose to 4.4% in January as fresh food and services inflation rose, signalling a similar jump at the national level. But due to the government’s energy subsidies we expect it to fall below the …
26th January 2023
Optimism around China’s rapid re-opening and stronger-than-expected data out of Europe have put continued pressure on the US dollar over the past month or so. In turn, we have revised down our forecasts for the greenback against major currencies. But we …
We expect Chile's central bank to leave its policy rate on hold at 11.25% (Thu.) Spain’s economy probably stagnated in the fourth quarter of last year (Fri.) We think US real consumption declined in December (Fri.) Key Market Themes “High-beta” …
We held a Drop-In today to discuss the big economic and financial market development across Emerging Asia. (You can see an on-demand recording here .) This Update answers several of the questions that we received, some of which we couldn’t answer during …
Resilient new home sales set for gradual recovery The small rise in new home sales in December confirmed that the new build sector is holding up better than the wider market. This likely reflects builders offering generous incentives to attract buyers as …
Although we think there is still a decent case for UK equities to continue outperforming those in the US over the next few years, we don’t expect the UK’s stock market to perform significantly better than stock markets in the euro-zone over that period, …
World trade has fallen in recent months on the back of slowing global growth. COVID-related weakness in Chinese activity in Q4 weighed notably on China’s exports, and while its seemingly rapid recovery has somewhat improved the global picture, weak …
Market sentiment declined further in Q4 as the outlook deteriorated The latest RICS Survey conveyed a further decline in confidence following a turning point in the previous quarter. Comments from surveyors point to high interest rates as the main …
The South African Reserve Bank’s (SARB’s) smaller-than-expected 25bp interest rate hike today and large cuts to its growth forecast make clear that its focus is pivoting to concerns about activity rather than inflation. The next meeting will be a close …
We expect a more modest 150,000 gain in non-farm payrolls in January. The annual benchmark revisions may also show a sharper slowdown in employment growth over the second half of last year than previously reported. Payrolls on borrowed time The labour …
Underlying pace of growth weakens The 2.9% annualised rise in fourth-quarter GDP was a little stronger than we had expected, but the mix of growth was discouraging, and the monthly data suggest the economy lost momentum as the fourth quarter went on. We …
China’s rapid move away from zero-Covid and the resulting rally in commodity prices present upside risks to our GDP forecasts, but we remain of the view that 2023 will be a challenging year for Latin American economies and that growth will slow sharply. …
Underlying pace of growth already much weaker The 2.9% annualised rise in fourth-quarter GDP was a little stronger than we had expected, but the mix of growth was discouraging, and the monthly data suggest the economy lost momentum as the fourth quarter …
Overview – 2023 will be the most difficult year for the housing market since 2008. Mortgage rates remain very high by the standards of recent years and can’t drop materially until the Bank of England shifts from raising interest rates to cutting them. …
A 50bp rate hike next week seems to be literally a done deal. The recent strength of the economy means ECB will hike further. Quantitative tightening looks set to accelerate from June. With a 50bp rate hike at next week’s ECB meeting seemingly a done …
OPEC+ cuts to dampen Gulf growth in early 2023 OPEC+ is widely expected to agree to continue with its existing oil output quotas next week, although this means that oil sectors will act as a drag on the Gulf economies over the early part of this year. …
We forecast the 10-year Treasury yield to decline between now and the end of the year, as inflation eases further and the Fed transitions to monetary loosening. A key risk to this projection, in our view, is the weak outlook for demand for Treasuries, …
Despite some good news, another 50bps rate hike is most likely Next phase will be MPC pausing to assess influence of higher rates, but we’re not there yet Next big surprise may be that rates are cut by more than investors expect in 2024 Another 50 basis …
The growth outlook for 2023 across Central and Eastern Europe has brightened a bit over the past month. Wholesale European natural gas prices have continued to fall sharply and survey measures of activity have generally improved. The outlook for external …
Central bankers let their hair down Climate change was front and centre of the discussions earlier this month when a host of heavy-hitters from the world of central banking descended on Stockholm for an International Symposium on Central Bank …
As the world’s biggest polluter and its biggest investor in renewable energy, China is a study in contradiction on the climate question. The government’s success in reining in emissions and its industry’s growing dominance of green technology supply will …
Occupier demand contracts further as the economy slows The slowing economy led to a further fall in occupier demand in Q4, with retail seeing the largest contraction. So far, the fall in rental expectations has been relatively modest and surveyors expect …
Inflation looks to have peaked across Emerging Asia, and is likely to fall back more sharply than most analysts expect over the coming year as fuel price inflation drops, the disruption from the pandemic eases and economic growth slows. With inflation …
Growth slowed in Q4 and we expect the economy to weaken further over the coming quarters against a backdrop of weak global demand, high interest rates and elevated inflation. According to the advanced estimate published today, GDP rose by 2.4% q/q in Q4 …
Growth set to weaken in 2023 Growth slowed in Q4, and we expect the economy to weaken further over the coming quarters against a backdrop of weak global demand, high interest rates and elevated inflation. According to the advanced estimate published …
Economic output fell in the final quarter of 2022, and we think the economy will continue to struggle over the coming year as high interest rates and weak overseas demand weigh on prospects. Our 2023 growth forecasts are well below the consensus. …
25th January 2023
Difficult year ahead Economic output fell in the final quarter of 2022, and we think the economy will continue to struggle over the coming year as high interest rates and weak overseas demand weigh on prospects. Our 2023 growth forecasts are well below …
Sharper markdowns mean worst quarter for total returns since Q2 2009 The 4.45% hit to all-property capital values in Q4 was more substantial than our end-2022 forecasts implied, although recent news of bigger valuation markdowns in December made this less …
China’s statutory retirement ages for men and women are low. But raising them would not make a big difference to the size of the workforce since most workers today keep working once they have passed retirement age. Only a quarter of men drop out of the …
Clear signs of weakening product demand Even though the recovery in refinery activity stalled last week, petroleum product stocks rose amid weakening demand, which we expect to persist for a bit longer as the US economy slows further. The EIA’s weekly US …
We think the US economy expanded by nearly 2% annualised in Q4... (13.30 GMT) South Africa’s central bank will probably hike by 50bp on Thursday Sign up here for our Drop In on the latest economic and market developments in Asia Key Market Themes …
The Bank of Canada accompanied its smaller 25 bp hike with new guidance that it intends to hold the policy rate at the current 4.5% while it assesses the impact of the cumulative interest rate increases so far. While the Bank did not rule out future …
We think equities in Japan will come under renewed pressure in local-currency (LC) terms over the coming months, amid an economic slowdown and further strengthening in the yen. So far this week, equities in Japan have generally outperformed equities in …
China’s re-opening will have a significant impact on the rest of the emerging world by lifting commodity prices. That will improve the terms of trade of EM commodity producers, particularly Chile, Peru and the Gulf economies. However, we think that this …
Bank hints that smaller 25 bp hike likely to be the last The Bank of Canada accompanied its smaller 25 bp hike with new guidance that it intends to hold the policy rate at the current 4.5% while it assesses the impact of the cumulative interest rate …
Saudi Arabia’s economy enjoyed bumper growth in 2022, but there were signs that activity was slowing in the final months of the year and we expect this trend to continue into the early part of 2023. Saudi Arabia’s economy was one of the best performers in …
Markets still nervous over EU natural gas supply, despite high storage This is the first edition of a new monthly publication in which we will outline the latest moves in commodity futures markets and assess how they relate to our own view on …
Many officials support downshift to 25bp hike at upcoming policy meeting. But officials still see multiple hikes beyond next week. We expect rates to peak just below 5%, with cuts starting later this year. We expect the Fed to downshift to a 25bp rate …
S ince the end of last year, developments have been more positive in the retail sector. However, we still think 2023 will be a difficult year. The weak outlook for consumer spending and more spending online and in out-of-town shops point to rising high …
Recession might be avoided, but outlook still poor The further increase in the Ifo Business Climate Index in January confirms that the recovery in German business sentiment that started at the end of 2022 has continued this year. But the fall in its …
The Bank of Thailand hiked interest rates today by a further 25bps (to 1.50%), and hinted that more rate hikes were likely in the near term amid worries about rising underlying price pressures. We expect one more 25bps increase this year before the …
Recession might be avoided, but outlook still poor The renewed increase in the Ifo Business Climate Index in January confirms that the recovery in German business sentiment that started at the end of 2022 has continued this year. But the fall in its …
The losses which central banks are now incurring on the bonds they bought via their quantitative easing (QE) programmes are not a big cause for concern. These losses will not compromise central banks’ ability to operate monetary policy. And while …
More tightening still to come The Bank of Thailand hiked interest rates today by a further 25bps (to 1.50%), and hinted that the tightening cycle still has further to run. The decision was correctly predicted by 21 out of the 23 economists polled by …
Sri Lanka’s central bank (CBSL) kept interest rates unchanged today, and we expect it to leave rates on hold for the rest of the year as it aims to strike a fine balance between supporting a struggling economy and clamping down on high inflation. The …
Rates set to stay on hold in 2023 Sri Lanka’s central bank (CBSL) kept interest rates unchanged today and we expect it to leave rates on hold for the rest of the year as it aims to strike a fine balance between supporting a struggling economy and clamping …
