Higher interest rates continue to weigh on the economy November’s money and credit figures showed further signs that higher interest rates are dampening activity, particularly in the housing market. This will be a constant theme over the year ahead, …
4th January 2023
Approvals collapse as adjustment to higher rates begins in earnest The impact of the surge in mortgage rates following the “mini” budget on 23 rd September was realised in November as mortgage approvals collapsed. The modest drop back in fixed mortgage …
Higher interest rates continue to weigh on the economy November’s money and credit figures showed further signs that higher interest rates are dampening activity, particularly in the housing market. And this will be a constant theme throughout the year …
Developments of the past two weeks reinforce the message that the world economy is headed for recession and disinflation in 2023. With the full effects of policy tightening yet to be felt, and re-opening disruption to China’s economy set to linger, things …
Gulf non-oil sectors lost steam at the end of 2022 December’s PMIs suggest that non-oil sectors across the Gulf lost some steam at the end of 2022, with the worsening global backdrop weighing particularly heavily on the UAE. Elsewhere, there were signs …
Further improvement, but recession still likely December’s final PMIs suggest the euro-zone economy held up better than we expected in Q4, but are still consistent with a mild recession. They also suggest price pressures remain very high. The upward …
Fall in headline rate but core rate rises Headline inflation in Switzerland fell in December but the rise in the core rate will be a concern for SNB policymakers. We still think that the Bank will raise rates by just 25bp in March, compared to the 50bp …
It is three years since a cluster of cases of severe pneumonia started to draw attention in Wuhan. Chart 1 maps economic developments in China since then. The blue bars show cumulative growth since the end of 2019 and the black outlines show growth over …
Strong PMI readings at odds with the hard activity data India’s manufacturing and services PMI readings rose to multi-month highs in December but are at odds with the hard activity data that point to a slowdown in domestic and external demand. India’s …
Although the manufacturing PMIs for December picked up in some highly-open EMs in Asia and Central Europe, industry in these countries remains very weak. And the surveys suggest that activity has softened further in major EMs including China (due to …
3rd January 2023
The US ISM Manufacturing Index may have dipped further in December (15.00 GMT) We expect Poland’s central bank to keep rates on hold on Wednesday Read our key calls for the global economy and financial markets in 2023 here Key Market Themes After …
London house prices are likely to continue to underperform even if the shift in buyer demand away from the capital due to remote working ends. More stretched house prices in the capital prior to the jump in mortgage rates means the impact of higher …
Table of Key Forecasts Overview – Inflation is finally falling and we envisage further sharp declines in almost all economies during 2023. (See Chart 1.) In most cases, this disinflation will be more dramatic than either the consensus of economists or …
Economists from our Global Economics service held a special discussion about the trajectory of inflation across advanced and emerging economies in 2023. During this 20-minute briefing, the team addressed key issues from their latest Global Inflation Watch …
We estimate that employment growth slowed more sharply in December, with non-farm payrolls rising by 160,000. The unemployment rate probably edged up to an 11-month high of 3.8%. Although employment growth has been solid in recent months according to the …
India’s current account deficit is likely to have widened to 3% of GDP in 2022, the largest in a decade. We expect the deficit to narrow slightly in 2023 as commodity prices ease and domestic demand comes off the boil. While this still leaves the rupee …
Plunge in inflation in December likely to reverse in January The sharp fall in German inflation in December was due to one-off energy subsidies so it will probably reverse in January. Headline inflation is still likely to decline rapidly in March, but we …
The December survey data out of China were uniformly downbeat. The plunge in the official services PMI points to a fall in oil demand, but we suspect that the hit to industrial activity (and metals demand) has been more modest. Looking ahead, we expect …
Drop in inflation in December likely to reverse in January The sharp falls in CPI inflation in several major German states in December suggest that inflation figures for Germany as a whole and for the euro-zone (due later today and on Friday, …
Further weakness ahead Manufacturing PMIs across the region rose slightly in December but remained weak overall. We continue to expect weaker global demand, high inflation and interest rates to drag on manufacturing ahead. December PMIs have been released …
Breakneck housing downturn has much further to run Australia’s house prices have never fallen so fast in such a short period of time and the risks to our forecast of a 15% peak-to-trough fall are shifting to the downside. The 1.2% m/m fall in house prices …
Headwinds from reopening continue into 2023 The latest surveys suggest that the reopening wave delivered another blow to the economy in December. Services activity looks to have slumped. Industry was not spared, although the hit appears more modest. But a …
Growth slowed sharply in the first two months of Q4 and we expect a further slowdown over the coming months as high inflation, multi-decade high interest rates and weaker global demand weigh on prospects. The flash estimate for Q4 GDP, largely computed …
Headwinds from reopening continue into 2023 The latest manufacturing surveys suggest that the hit to factory activity intensified further in December following the surge in infections. A combination of recurrent virus waves, a deepening global downturn …
The economy is likely to teeter on the brink of recession in 2023 Economic growth slowed sharply during the first two months of the fourth quarter and we think a further slowdown is likely over the coming quarters. The flash estimate for Q4 GDP, largely …
Falls in house prices will continue throughout 2023 The slowdown in house price falls in December is little comfort when leading indicators point to further sharp declines. Despite mortgage rates edging lower in recent weeks, we continue to think that …
30th December 2022
US demand looks set to hold up well, despite slower economic growth Commercial crude stocks rose last week owing to a rebound in net imports, which was largely the result of the reopening of the Keystone pipeline. More interesting was the jump in implied …
29th December 2022
Click here to read the full report. We now expect a small fall in rents next year in a handful of metros as affordability constraints and falling employment take their toll on demand. At the same time, a wave of completions in some of the markets with the …
New home sales increase despite jump in mortgage rates New home sales increased for the second month in a row in November. That is at odds with other measures of market activity, which have fallen sharply in response to the jump in mortgage rates. We …
23rd December 2022
This week brought further signs of slowing activity growth and falling inflation, trends we expect to intensify next year. Meanwhile, Congress has averted a government shutdown, but there appears to be a growing risk of another damaging stand-off over the …
The November CPI data were a mixed bag, with deflationary pressure on goods starting to feed through but strong price rises for several key services. The 3-month annualised measures of core inflation that the Bank of Canada follows will probably drop back …
Click here for full report: Overview – Consistent with our national office story, we expect a few years of insipid rent growth and returns for most US office markets. Expensive coastal metros will continue to see weak demand as high rates of sublease …
Q4 growth looking ok, but economy losing momentum Real consumption is on course for solid growth of 3.5% annualised in the fourth quarter, but the income and spending data show that it stalled in November. The soft durable goods orders data for last month …
Economy starting to lose momentum The modest gain in GDP in October and upward revision to activity in previous months suggest the economy was coping well with higher interest rates at the start of the fourth quarter, but the preliminary estimate that …
A year to write home about 2022 was in many ways a memorable year for Latin America. With Argentina’s World Cup victory the trophy returned to Latin America for the first time in 20 years. And it’s been a good year off the pitch too. GDP growth has …
Economy beginning to lose momentum The modest gain in GDP in October and upward revision to activity in September suggest the economy was coping well with higher interest rates at the start of the fourth quarter, but the preliminary estimate that GDP was …
Q4 growth looking ok, but economy losing momentum Real consumption is on course for solid growth of around 3.5% annualised in the fourth quarter, but the income and spending data show that it stalled in November. The sharp fall in durable goods orders …
Energy sanctions starting to take effect in Russia This week brought signs that newly imposed Western sanctions and recent falls in global energy prices are putting renewed pressure on Russia’s economy. It’s still too early to fully assess the impact of …
The BoJ’s surprise decision to widen the tolerance band around its yield curve control target earlier this week will hopefully prove the final curveball of what has been an eventful year across currency markets. The yen has surged around 3% against the …
This week we learned that the economy contracted by more than we previously thought in Q3. The 0.2% q/q fall in real GDP in Q3 was revised down to a 0.3% q/q decline. More striking is that real GDP was a huge 6% below our pre-pandemic forecast in Q3. …
Big falls in inflation now behind us The Brazilian mid-month inflation figure for December was unchanged from the November full-month figure of 5.9% y/y, which provides an early sign that the big falls in inflation have now happened and it will be a much …
It was a fairly quiet week in commodity markets. The only notable move was a slump in natural gas prices. The EU eventually agreed its long-discussed natural gas price cap early in the week, but it comes with so much conditionality that it is difficult to …
2022 will be a year to forget for most African economies – one marked by a slowdown in growth, tighter external financing conditions and balance sheet strains. This culminated in Ghana opting to default on much of its external debt earlier this week. …
Demand growth for industrial metals slowed in October and almost certainly weakened further last month. We expect demand growth to remain sluggish, or even contract, in the first half of 2023 as the global economy slides into recession, whereas investors …
Recent trade data from Emerging Asia have been downbeat and, with the global economy heading for recession, worse is still to come. China, Taiwan, Korea and Singapore all reported big falls in exports in November. For the region as a whole, we estimate …
Will policy loosening come onto the agenda? A s we explained in our Outlook for Q1 2023 , the hiking cycle that has dominated the discourse for much of 2022 is likely to come to an end early next year. The question then is, when will thoughts turn to …
Yet another surprise from Governor Kuroda The Bank of Japan surprised everyone on Tuesday by widening the tolerance band around its 0% target for 10-year Japanese Government Bond (JGB) yields by 25bp to 0±50bp. The Bank argued that this decision was …
The next couple of weeks will be crucial in China’s battle with COVID. It is possible, given reports of how widespread infections currently are, that the outbreak in Beijing is close to a peak (the official infection data are no longer reliable, so we …
NZ activity outlook plunges to near record low Following the Reserve Bank of New Zealand’s hawkish 75bp rate hike last month, several clients asked us if New Zealand is the canary in the coalmine. The evidence suggests it may well be: the RBNZ was the …
Inflation will fall below 2% by mid-2023 Inflation edged up in November and will peak at around 4% around the turn of the year, but we expect it to fall back below the Bank of Japan’s 2% target by mid-2023. The increase in inflation from 3.7% to 3.8% in …
