Virus disruption has continued to intensify over the past week even after measures to optimise the COVID response were released. Implementation has been haphazard so far. Local officials have struggled to strike a balance between minimising disruption and …
18th November 2022
Media blaming weak yen and virus for Q3 GDP fall The economy shrank by 0.3% q/q in Q3 due to a surge in real imports, as well as disappointing private consumption and investment growth. Some media outlets have blamed the weak yen and COVID for the …
Having increased sharply throughout the year, we think that emerging market (EM) local currency sovereign bond yields will probably only increase by a little more in the first half of next year, despite a looming world recession. Yields may then start to …
Domestic demand coming off the boil Recent data paint a mixed picture of the state of domestic demand. On the one hand, survey evidence remains relatively upbeat. The PMI readings for India have recently held up much better than in most other EMs and …
Even though wage growth surpassed 3% for the first time since 2012 last quarter, and unemployment is back at a record low , the tight labour market has not been a major driver of the recent surge in inflation. In contrast to the US or New Zealand, wage …
Only a temporary halt to the downward path The 0.6% m/m rise in retail sales volumes was larger than both we (0.0% m/m) and the consensus (+0.2% m/m) had expected. Sales volumes were probably supported by the reversal of bank holiday effects in October. …
Boost from reversal of bank holiday effects won’t last The 0.6% m/m rise in retail sales volumes (consensus +0.2% m/m, CE 0.0% m/m) was probably supported by the reversal of bank holiday effects in October. But, given that the high inflation that weighed …
Government intervention to tame inflation Headline inflation set a new three-decade high in October on aggressive rises in food inflation excluding fresh food and will remain near those highs this quarter. That said, government support measures will lower …
Bank of Japan to maintain policy despite soaring inflation Headline inflation remained set a new three-decade high in October and will remain near those highs this quarter. That said, the Bank of Japan will remain steadfast in maintaining its ultra-easy …
17th November 2022
Japan’s headline inflation probably rose to 3.5% in October (Thu., 23.30 GMT) We think UK retail sales volumes were flat in October (07.00 GMT) We suspect Chile’s GDP contracted by 0.3% q/q in Q3 (11.30 GMT) Key Market Themes The market reaction to …
In his Autumn Statement, the Chancellor, Jeremy Hunt, appears to have pulled off the tricky task of reassuring the financial markets of the government’s fiscal discipline while also managing not to deepen the recession. Our economic forecasts suggest he …
Our current view is that we see a mild recession in H1 2023, but if we were to see a more substantial drop in GDP, we think the extra downside impact would be felt most in the apartment sector. Indeed, if GDP were to fall by an additional 1% …
Egypt’s privatisation drive stepping up a gear? Egypt’s state ownership policy document finalised could come into effect before the end of 2022, but it remains to be seen whether the latest privatisation drive will better the fortunes of ones before. The …
Weak builder confidence points to further declines in starts Single-family starts fell to 855,000 annualised in October which was much stronger than what was implied by the low level of homebuilder confidence. We expect further declines in new home sales …
Data released over the past month or so suggest that most economies across the region fared well in Q3. GDP growth in Mexico and Colombia came in well above expectations and hard activity data from Brazil point to another solid expansion last quarter too. …
With inflation still more than five times the Riksbank’s target, Stefan Ingves may be tempted to end his marathon stint as Governor with another 100bp rate hike. But we think the Bank is more likely to raise rates by 75bp, to 2.5%, while signalling more …
Next year will be characterised by falling headline inflation, which should help to prevent interest rate expectations and bond yields from rising much further. But we also expect core inflation to remain above 2% for some time. As a result, we think …
Chancellor satisfies the markets and helps the economy when it needs it The £55bn (2.0% of GDP) tightening in fiscal policy announced today by the Chancellor, Jeremy Hunt, appears to have been enough to satisfy the financial markets. What’s more, he’s …
November's briefing on Asia’s big macro and market stories included discussion of US-China relations in the wake of the Xi-Biden meeting as well as the economic impact of Beijing’s looser zero-COVID rules and property sector support measures. Plus, as …
Bank Indonesia (BI) today raised interest rates by a further 50bps (to 5.25%) and we think further hikes are likely as the central bank looks to support the rupiah and clamp down on inflation. In its press conference the central bank stated that …
Higher interest rates and larger private sector debt burdens mean that debt interest service ratios could rise to levels last seen in the 1990s in many EMs next year. This is unlikely to be a major problem in a handful of EMs such as South Africa, India …
Little sign of goods price pressures easing Final inflation data for October confirm that price pressures strengthened and became more broad-based. Unlike in the US and UK, there is little sign that goods inflation has passed its peak. While headline …
Recent policy announcements have raised hopes that the property downturn may be coming to an end. But while the measures made public so far reduce some of the downside risks by giving developers and their creditors a little breathing room, they fall short …
The central bank of the Philippines (BSP) today raised its main policy rate by a further 75bps (to 5.0%), and we think further tightening is likely in the near term. But with inflation having probably peaked, headwinds to the recovery mounting and the …
More hikes coming in Indonesia Bank Indonesia (BI) today raised interest rates by a further 50bps (to 5.25%) and we think further hikes are likely as the central bank looks to support the rupiah and clamp down on inflation. While a rate hike today was …
Further hikes likely in the near term, but tightening cycle to be over by early next year The central bank of the Philippines (BSP) today raised its main policy rate by a further 75bps (to 5.0%), and we think further tightening is likely in the near term. …
Unemployment rate to rise sharply next year Australia’s labour market held up well in October, consistent with our expectations for a near-term acceleration in wage growth and a further 100bps of rate hikes by the RBA. But we think employment will start …
Deficit to narrow by end-2022 The trade deficit widened but stayed below the record high in August, but with the yen strengthening significantly in recent weeks, the deficit should narrow later this quarter. Export values rose by a slower 25.3% y/y …
Yen rally to help narrow trade deficit The trade deficit widened but stayed below the record high in August, but with the yen strengthening significantly in recent weeks, the deficit should narrow later this quarter. Export values rose by a slower 25.3% …
16th November 2022
Weak new home sales weigh on housing starts The plunge in new home sales in Toronto in September points to further falls in housing starts, although there are at least some signs that the worst may be behind us for home sales and that the pressure on …
We suspect the underperformance of US equities that has accompanied the US dollar’s slump so far this month will become a feature from mid-2023, as the currency eventually comes under sustained pressure. Since the end of October, MSCI’s USA Index has …
More declines in store for commercial crude oil stocks Oil prices were little swayed by the latest EIA data showing the biggest decline in commercial crude stocks in about three months last week, given that the data were similar to industry data released …
We think US housing starts fell in October on the back of rising mortgage rates (15.00 GMT) We expect the central banks of Indonesia and the Philippines to raise rates Clients can sign up here for our Drop-In on the UK Autumn Statement (16.00 GMT) Key …
Euro-zone industrial production and GDP have been stronger than we had expected so far this year. Several factors have contributed to this, but one of them is the distortions to Ireland’s economic statistics. The picture in the rest of the euro-zone is …
Economy stabilising Russia’s economy appeared to stabilise in Q3 as the 4% y/y contraction in GDP reported by Rosstat today is consistent with output rising marginally in seasonally-adjusted q/q terms. That said, there’s little sign in the latest monthly …
The negative correlation between the US dollar and the price of oil has reasserted itself in recent months, and we think it will persist as the looming global recession pushes the dollar higher and oil price lower. Although the price of oil hasn’t risen …
The small increase in vacancy in Q3 supports our view that the rental market is turning a corner and makes us increasingly confident in our call that rents will fall next year. Conditions remain tighter in the homeowner market. But higher interest rates …
The “global” pledge to cut methane emissions by 30% this decade is a worthy aim, but the fact that the world’s biggest emitters have not signed up is far from helpful, and many of the obvious ways to reduce emissions should happen in spite of …
Consumers refuse to buckle under weight of higher rates The strength of underlying retail sales despite higher borrowing costs is encouraging, but manufacturing is slowly succumbing to the global malaise. The consumer is hanging in there, with retail …
Core inflation pressures better than they look Although the annual rates of CPI-median and CPI-trim edged up in October, the 3-month annualised rates that the Bank of Canada is now focussed on declined. As that for CPI-median is now in the 1% to 3% …
Manufacturing close to stagnation In contrast to the earlier news of consumer resilience, there are signs of a deterioration in the manufacturing sector, with output rising by only 0.1% in October, September’s gain cut from 0.4% to 0.2%, and downward …
Core inflation pressures better than they look Headline inflation was unchanged at 6.9% in October and the CPI-median and CPI-trim measures of core inflation increased, but the latter was mainly due to unfavourable base effects. It appears that the …
Consumer refuses to buckle under weight of higher borrowing costs The US consumer is hanging in there under the weight of rapidly rising borrowing costs, with retail sales increasing by a solid 1.3% m/m in October. Admittedly, sales last month were …
Foreign capital inflows into EM financial markets have risen sharply so far this month, as investor risk appetite has improved. But with the global economy set to enter recession, we aren’t convinced that this will last as EMs are likely to find it more …
Economy now entering slower growth The slowdown in GDP growth in Israel in Q3, to 2.1% q/q annualised, was in line with expectations as private consumption contracted and net trade exerted a drag. We think Israel’s economy will hold up better than other …
September’s hard activity data out of South Africa were a mixed bag, but it looks like the economy narrowly avoided another contraction in Q3 (and thus a technical recession). Even so, with headwinds mounting, economic activity is likely to stay subdued …
Morocco has been hit hard by the spillovers from the war in Ukraine and, while its external strains aren’t anywhere near as sever as those in Egypt and Tunisia, we think the authorities will need to resume their shift to a more flexible exchange rate …
This checklist helps clients keep track of the key economic and public finances forecasts announced during the Chancellor’s Autumn Statement at 11.30am on Thursday 17 th November. We will send a Rapid Response shortly after the speech, we are hosting a …
