The performance of African economies diverged early this year, but the latest data provide clearer signs that growth across the region is now slowing. Economic weakness seems most pronounced in Ghana, where the impact of the country’s sovereign debt …
20th December 2022
Group Chief Economist Neil Shearing held this special 20-minute online briefing with Chief Markets Economist John Higgins and Chief Commodities Economist Caroline Bain on the outlook for financial and commodity markets. The team answered client questions …
Chief Global Economist Jennifer McKeown and colleagues from across our macro services held a special briefing on what to expect from major DMs and EMs in 2023. In this 20-minute session, the team will be answered client questions as they discussed the …
Wider YCC band not start of tightening cycle The Bank of Japan today tweaked its Yield Curve Control (YCC) settings by widening the tolerance band around its yield target but we don’t expect it to hike its short-term policy rate anytime soon. The Bank’s …
Bank won’t follow band widening with rate hikes The Bank of Japan today widened the tolerance band around its yield target but we don’t expect it to hike its short-term policy rate anytime soon. The Bank’s decision to keep its short-term policy rate at …
End of RBA’s tightening cycle is nearing The fact that the RBA discussed keeping the cash rate unchanged for the first time since the start of the current tightening cycle at its December meeting suggests that it won’t hike rates much further, though we …
The return of inflation for the first time in the inflation-targeting era has led to the biggest jump in Bank Rate and mortgage rates since the late 1980s. (See Chart 1.) The steady downward trend in mortgage rates from 6.5% in 2008 to 1.5% at the end …
19th December 2022
We expect the PBOC to keep the Loan Prime Rate on hold (01.15 GMT) The BoJ will probably keep its policy settings unchanged… …and we think Hungary’s central bank will do likewise (13:00 GMT) Key Market Themes Investors seem to have priced in a more …
Click here to read the full report. Overview – We think the euro-zone is now at the start of a recession, driven by high inflation, tightening financial conditions and weak external demand, and anticipate two quarters of contraction followed by a gradual …
Click here to read the full report Overview – The sharp rise in interest rates this year has prompted a price correction, which is now coming through in valuation-based indices. Combined with the mild recession we are forecasting for 2023, this will weigh …
Five key reads from 2022 It’s that time of year when economists set out their views of what to expect over the next twelve months. You can find our contribution on a dedicated “ World in 2023 ” page, and listen to our latest podcast , in which I discuss …
Central banks across Central and Eastern Europe (CEE) have left interest rates on hold over the past month or so but their communications have continued to strike a relatively hawkish tone. Hungary’s central bank has suggested that interest rates may be …
Click here to read the full report. Overview – The challenging external backdrop means that growth across Sub-Saharan Africa is likely to slow in 2023, and by much more than most expect. Currencies are likely to weaken and public debt fears will grow, …
Tight labour market suggests that wage growth will stay strong Euro-zone wage growth has accelerated this year and we expect it to stay strong. In turn, this will contribute to core inflation remaining above 2% in 2023. Data released this morning showed …
Click here to read the full report. Table of Key Forecasts Global Overview – We continue to expect the world to slip into recession in 2023 as the effects of high inflation and rising interest rates are felt. Our forecasts are below the consensus across …
Sentiment recovers further, but recession still coming The further increase in the Ifo Business Climate Index in December and the general improvement in the surveys over the past two months suggests the outlook for the German economy has improved. But …
A mooted adjustment to the joint statement between the Bank of Japan and the government has been widely interpreted as a step towards the withdrawal of ultra-loose policy. However, the policy implications of giving the Bank more flexibility in meeting its …
Sentiment recovers further, but recession still coming The renewed increase in the Ifo Business Climate Index in December and the general improvement in the surveys over the past two months suggests the outlook for the German economy has improved. But we …
After a choppy few days in financial markets, the US dollar is ending the week a touch stronger against most other major currencies as risk sentiment has worsened sharply in the wake of the latest round of central bank meetings. We suspect this will …
16th December 2022
Ramaphosa still in, De Ruyter out, economy down This week, South Africa’s president dodged impeachment and is likely to be re-elected as leader of the ruling ANC party over the weekend, but the country’s economic challenges have only grown. Early this …
We expect the BoJ to leave its policy settings unchanged next week… (Tue.) …and we think central banks in Hungary, Czechia and Turkey will do likewise Indonesia’s central bank will probably slow its pace of tightening to 25bp (Thu.) Key Market Themes …
CEWC points to further policy support The Central Economic Work Conference (CEWC) ended today with a readout in state media promising further policy support for consumers and property developers in particular. China will “expand domestic demand” and …
The raft of inflation data and central bank policy decisions were key drivers of prices this week, but to some extent China stole the show. We now think that a dismantling of the zero-COVID policy is well underway. On paper, the removal of restrictions …
Chile’s constitutional re-write: Attempt number two After three months of intense negotiations, Chile’s government and opposition parties agreed on a new process to re-write the constitution. This differs from the previous one (which led to a draft …
December’s flash PMIs suggest that the economic downturn in Q4 in Europe might not be as bad as previously feared. But the PMI fell sharply again in the US. And the surveys are still consistent with GDP in advanced economies contracting in Q4. But at …
Say what you want about 2022, but it wasn’t a dull year. After 12 months of geopolitical upheaval, the biggest inflationary spike in decades, central bankers going full Volcker and giant swings in financial markets, what will 2023 bring? In this special …
One third of the rise in household net worth during the pandemic has now been reversed and the further fall in house prices in November points to another deterioration this quarter. Lower net worth, in turn, is a headwind to consumption in 2023. Net …
Despite the Fed’s continued hawkishness, the further softening in core inflation and weakness of the early activity data in November leave us more convinced that the FOMC will be cutting interest rates again by the end of next year. Fed’s new …
Hungary strikes last minute deal, but risks remain The EU’s approval of Hungary’s COVID-19 recovery plan this week is a welcome development for Hungary’s economy and financial markets, but it won’t immediately transform the near-term outlook. On Monday, …
Click here to read the full report. Overview – Property values in Scandinavia and Switzerland have taken a hit as yields jumped in recent quarters. With valuations still stretched, we are forecasting a further 50bps and 30bps of rises at the …
Despite action, inflation will stay high It was a big week with for central banks with the Fed, BoE and ECB all raising rates by 50bp. The minnows were also in on the action with 50bp hikes for the SNB and Denmark’s Nationalbank and a 25bp hike by the …
ECB a long way from pivot… Thursday’s ECB meeting has sparked significant turmoil in euro-zone financial markets. Ten-year Bund and BTP yields recorded some of their largest one-day rises in the past decade and are up ~25bp and ~50bp respectively from …
We think the three main economic themes of 2023 will be falling inflation, peaking interest rates and recession. We explained these forecasts in detail in our recent UK Economic Outlook , which carried the title a “A tough year”. (See here .) In short, …
Click here to read the full report. Overview – Tight financial conditions and China’s biggest COVID outbreak yet mean global economic growth will slow further in the first quarter of next year, dragging most commodity prices lower. The slowdown will be …
PMIs suggest we’re in recession, but inflationary pressures continue to ease The flash PMIs for December are consistent with our view that the economy is probably in a recession, although a relatively shallow one at the moment. While the price indices …
Tourism boost and risk of factory disruption Chinese authorities appear to have given up on efforts to contain the spread of COVID-19 much earlier than we had previously anticipated. (See here .) We suspect that China’s economy will experience a …
CBR now set for extended pause Russia’s central bank kept its main policy rate unchanged at 7.50% today as it emphasised that inflation risks have become slightly more skewed to the upside. This reinforces our view that the easing cycle is unlikely to …
This is part of a series of reports outlining our key macro and market calls for 2023. Click here to view the full series. We think most commodity prices will ease back in early 2023, at the height of the global recession and monetary tightening in …
Rise in lending rates has further to run D ata released this week reinforce our view that domestic demand is softening. Industrial production dropped by 4% y/y in October – our in-house adjustment points to a similar-sized drop month-on-month. And …
Improvement, but surveys still point to recession The flash PMIs for December provide more evidence that businesses in some parts of the euro-zone have become a bit less gloomy about their current situation. But they still point to a contraction in the …
PMIs suggest we’re in recession, but inflationary pressures continue to ease The flash PMIs for December are consistent with our view that the UK economy is probably in a recession, although a relatively shallow one at the moment. While the price indices …
Improvement, but surveys still point to recession The flash PMIs for December provide more evidence that businesses in some parts of the euro-zone have become a bit less gloomy about their current situation – but they still point to a combination of …
No early festive cheer for retailers The 0.4% m/m fall in retail sales volumes in November was well below both our and the consensus estimates for 0.5% m/m and 0.3% m/m gains, and resumes the downward trend seen across most of the year. While we think …
No early Christmas cheer for retailers The 0.4% m/m fall (consensus +0.3%) in retail sales volumes in November resumes the downward trend seen across most of the year. Sales volumes in November were 4.5% lower than at the start of the year. And despite …
Large build-up in manufacturing inventories One important detail in the Bank of Japan’s Q4 Tankan this week that we didn’t fully address in our Data Response was the large build-up in manufacturing inventories. These are a coincident indicator of economic …
Revisiting the energy price cap The Australian government revealed details of its energy price cap on Friday and there are two points worth making. First, the $125 cap on coal prices refers to a lower-grade type of coal than we had thought, which means …
Annual falls in industrial output to continue while services recover December’s flash PMIs point to further annual contractions in industrial output but suggest services spending rebounded towards year-end. According to today’s flash estimate, the …
Divergence between manufacturing and services to continue According to today’s flash estimate, the manufacturing PMI fell slightly deeper into contraction from 49.0 in November to 48.8 in December. The output sub-index rose to 46.4 but is still the second …
Banxico delivers smaller 50bp dose of tightening, end of cycle close Mexico’s central bank slowed down the pace of tightening with a 50bp interest rate hike, to 10.50%, today and the accompanying statement made clear that the tightening cycle will soon …
15th December 2022
