Marked pick-up in growth unlikely following Q3 slump GDP growth in Nigeria slowed to 2.2% y/y in Q3 as woes in the oil sector intensified and key parts of the non-oil economy, such as agriculture and manufacturing, performed poorly. Even with …
24th November 2022
Stronger core inflation will support the hawks at Banxico The further fall in Mexico’s headline inflation rate, to 8.1% y/y, in the first two weeks of November was driven by easing non-core price pressures. But core inflation picked up, which will …
Metals demand growth improved markedly in the third quarter, but demand is unlikely to hold up as global economic activity deteriorates further. Our Capital Economic Demand Proxies, which we update every month here , aim to gauge the true state of …
Malaysia’s new prime minister, Anwar Ibrahim, lacks a majority in parliament and his appointment is unlikely to bring to an end the political instability and uncertainty that has held Malaysia’s economy back since 2018. Just keeping the government …
CBRT final act? Turkey’s central bank (CBRT) delivered another 150bp interest rate cut, to 9.00%, at today’s meeting and suggested that this marked the end of the easing cycle. We’ll take the CBRT for its word but there is clearly a risk that President …
The latest IPF Consensus survey showed a significant upgrade to 2022 European office rent growth expectations, largely due to strong rent outturns in Q2 and Q3 this year. A slowdown is expected in 2023, but in our view the consensus is still too …
Monetary tightening cycles in EMs are advanced relative to DMs, and are now drawing to a close in many countries. Elevated inflation will mean that policy will stay tight over the coming months, but the conditions for several EM central banks to start …
This morning’s 75bp increase in the Riksbank’s policy rate was in line with expectations, and both the press statement and Monetary Policy Report are consistent with our view that policymakers will raise rates to a peak of around 3% next year. Beyond …
Small improvement in business climate won’t prevent recession The increase in the Ifo Business Climate Index in November does not change the big picture that the German economy is likely to contract in Q4. November’s uptick in the Business Climate Index …
Tightening cycle not yet finished This morning’s 75bp increase in the Riksbank’s policy rate was in line with the consensus and market expectations while the press statement is consistent with our view that policymakers will raise rates to a peak of …
The proposed multi-employer wage agreements risk further fuelling inflation by disruptive industrial action. And while employers could circumvent them by striking traditional enterprise agreements, there’s a risk that this locks in strong pay growth for …
The Bank of Korea (BoK) today raised interest rates by a further 25bps (to 3.25%) and the accompanying hawkish statement suggests the tightening cycle still has a little further to run. We are tweaking our forecasts for next year and now expect one more …
Inflation to fall alongside November output price index November’s flash PMIs point to further weakness in the manufacturing sector, corroborating firms’ forecasts. At the same time, services activity appears to be struggling due to the rapid rise in …
The Bank of Korea today raised interest rates by a further 25bps (to 3.25%), but with growth slowing and inflation easing, we think there is a good chance this marks the end of the central bank’s tightening cycle. Today’s decision came as little surprise …
Downbeat readings reinforce 2023 recession narrative November’s flash PMIs point to further weakness in the manufacturing sector, corroborating other data. At the same time, services activity appears to be struggling under the weight of rising inflation. …
How many is “various”? The minutes of the Fed’s early-November policy meeting suggest that although most officials were in favour of slowing the pace of rate hikes at upcoming meetings, there was no consensus on how high the peak in rates would ultimately …
23rd November 2022
Commercial crude stocks fell for a second consecutive week and are likely to come under further pressure if strategic reserve releases wind down. Despite this, oil prices slid on demand worries and as rumours around the G7’s plan to cap the price of …
Banks are likely to tighten credit conditions over the next year to protect themselves from house price falls. But their more cautious approach to lending in this cycle means we don’t think they will have to tighten conditions as significantly as in …
November’s flash PMIs were a mixed bag, with unexpected increases in Europe and a sharp fall in the US. However, the headline indices are now at levels consistent with falling activity in all major advanced economies. And the surveys continue to suggest …
We expect central banks in Korea, Sweden and South Africa to hike policy rates… …but think Turkey’s central bank will cut rates, and that a RRR cut is imminent in China Client can sign up here for our Drop-In on Asia’s big macro and market stories …
Sales level off, but leading indicators point to declines New home sales have levelled off in recent months, but leading indicators support our view that sales will fall a little further by the end of the year. Looking ahead, we expect stretched …
Despite the resilience evident in the latest round of hard data, our recession tracker models suggest the odds of a downturn next year are still rising. Odds of recession rising Our recession tracker indicators all but guarantee the economy will contract …
We estimate that non-farm payroll employment increased by a more modest 175,000 in November, although that should be sufficient to leave the unemployment rate unchanged at 3.7%. Payroll gains slowing only gradually The pace of monthly gains in non-farm …
The record-low yields on rental properties and fall in house prices we forecast imply poor returns for Buy-to-Let (BTL) landlords over the next few years. Moreover, the jump in mortgage rates means a significant minority of them will see mortgage …
Equipment investment refusing to roll over despite surging rates The solid 1.0% m/m rise in durable goods orders in October indicates that business equipment investment continues to hold up reasonably well in the face of higher borrowing costs, helped by …
Despite its strength this month, we think the headwinds facing the South African rand remain in place and expect it to reach fresh lows against the US dollar through the middle of next year. Amid the broad-based weakness in the dollar following the …
We think that headline inflation in the euro-zone is nearing its peak and will begin to fall quite sharply early next year. But the core rate will probably peak a little later and decline more slowly. Data released on Monday showing a sharp fall in German …
With the global economy headed for recession and commodity prices likely to come off their recent highs, Latin American exports will struggle over the coming quarters. Weakening global growth is also likely to cause risk appetite to deteriorate and large …
With fiscal policy no longer expected to be ultra-loose and some signs emerging that domestic price pressures will ease further ahead, we no longer expect the Bank of England to raise interest rates to a peak of 5.00%. Our new forecast of an increase …
Having surged for the best part of two years, EM inflation appears to have passed the peak in this cycle. Our measure of aggregate EM inflation dropped from 7.8% y/y in September to 7.4% y/y in October. (See Chart 1.) Looking ahead, we think that …
PMIs suggest we’re already in recession While the composite flash PMI improved marginally in November, it stayed firmly below the no-change level of 50.0, which is consistent with our view that the economy is already in recession. However, with domestic …
Property yield rises stepped up in Q3, causing all-property capital values to fall on a quarterly basis in the CEE markets except for Bucharest. (See Chart 1.) This was despite solid office and industrial rental growth. Looking ahead, stretched …
Industrial metal prices are starting to come under pressure again, after rallying by 10% in the first two weeks of November. We think that weak global demand will drag prices lower over the next few months. After rallying to a five month high, …
Economies across North Africa have endured severe balance of payments strains this year and governments in Egypt and Tunisia finally secured staff-level agreements with the IMF over the past month. Markets have welcomed the news with sovereign dollar bond …
Our China Activity Proxy (CAP) suggests that virus disruption led to a further decline in output in October. The combination of tightening COVID restrictions, voluntary isolation in the face of rising cases, problems in the property sector and falling …
PMIs suggest we’re already in recession While the composite flash PMI improved marginally in November, it stayed firmly below the no-change level of 50.0, which is consistent with our view that the economy is probably already in recession. The composite …
Recent monthly data from the advanced economies have tended to exceed analysts’ gloomy expectations. This is partly due to an easing of supply shortages, which could offer some further support to output and spending in the near term. However, this …
Soft start to Q4 October’s activity data for Poland suggest that the economy lost some steam at the start of Q4 and we think it was probably at the start of recession. We expect that evidence of a deeper downturn taking hold over the coming months will …
Contraction in Q4 very likely, inflation nearing a peak The flash PMIs for November add to the evidence that the economy will contract in Q4. The price indices suggest that inflation will soon peak, but they remain extremely high by past standards. The …
Surprisingly strong inflation to keep hawks in majority South Africa’s headline inflation rate picked up unexpectedly in October, to 7.6% y/y, and the jump in core inflation will be a particular worry for policymakers. Another 75bp hike in the repo …
Contraction in Q4 very likely, inflation nearing a peak The flash PMIs for November add to the evidence that the economy will contract in Q4, with the downturn in the services sector intensifying. The price indices suggest that inflation will soon peak, …
Revised GDP data confirm that the economy rebounded strongly in the third quarter. However, we don’t expect this strength to last. A combination of weaker global growth, high inflation and tighter monetary policy will weigh heavily on activity over the …
The Reserve Bank of New Zealand hiked the overnight cash rate by 75bp as most had anticipated but signalled a much higher peak in the OCR than in August. We’re now forecasting another 75bp hike in February followed by a final 50bp hike in April, but we …
RBNZ will hike rates above 5.0% The Reserve Bank of New Zealand hiked the overnight cash rate by 75bp as most had anticipated and it now seems likely that rates will peak closer to 5.5% instead of our current forecast of 5.0%. The statement was very …
Although the annual rates of core inflation increased in October, we suspect the Bank of Canada will point to the declines in the 3-month annualised rates of CPI-trim and CPI-median to justify dropping down to a 25 bp interest rate hike at its meeting …
22nd November 2022
