China’s rapid uptake of clean power means that it is on track to overachieve on its target of reaching peak carbon dioxide emissions before 2030. That said, the pace of decline will be slow at first, not least because it will probably take time for …
13th June 2024
We doubt the outcome of the UK’s general election will have a big impact on UK equities in general. Nonetheless, we still expect them to continue to underperform US equities. We don’t think the Labour Party’s return to power – which the polls suggest is …
This page has been updated with additional analysis since first publication. Output fell and outlook for industry is poor The 0.1% m/m decrease in euro-zone industrial production in April was slightly weaker than the published consensus forecast of 0.2% …
With economic activity strengthening across Emerging Europe and inflationary pressures resurfacing in several countries, we think that the scope for monetary easing in the region this year is relatively narrow. Our interest rate forecasts in most …
Taiwan’s central bank (CBC) left its main policy rate unchanged today (at 2.0%), and with growth set to remain strong we expect rates to remain on hold throughout 2024 and 2025. In contrast, the consensus is expecting rate cuts next year. The decision to …
Faltering demand and rising supply mean prices will slip back The May RICS survey was the weakest so far this year, as new demand faltered and sales slowed. With the quantity of homes coming onto the market increasing at the same time, prices are likely …
This page has been updated with additional analysis since first publication. Although the unemployment rate fell anew in May, leading indicators continued to point to a marked rise in the months ahead. All told, the data suggest that the RBA will remain …
Fed projects one cut this year, but notes inflation progress The median FOMC projection now shows only one 25bp rate cut this year, but it was a relatively close run thing. Four officials expect no cut this year, a further seven anticipate one cut, while …
12th June 2024
Fed forecasts one rate cut this year, but notes inflation progress This publication was resent to correct the error in the headline in an earlier version. The median FOMC projection now shows only one 25bp rate cut this year, but it was a relatively close …
Today’s release of the US CPI data for May offered some respite in markets after last Friday’s stronger-than-expected May payrolls data. On balance, we continue to anticipate that the Fed will eventually cut by a bit more than what is currently priced …
Global Economics Chart Pack (June 2024) …
The green transition and the accompanying rollout of renewables means that global coal demand could peak this year, followed by oil around 2030. Meanwhile, the importance of natural gas as a transition fuel means that it will peak a few years later around …
Although the EUR/USD exchange rate is not far above multi-decade lows, we think structural factors mean that the euro is close to “fair value” relative to the US dollar and most other major currencies. So we doubt the euro will rebound against the dollar …
This page has been updated with additional analysis since first publication. Inflation cooler than most expected Consumer price inflation came in cooler than most expected last month, which should reassure the RBI as it considers when to begin its easing …
First month of target-consistent price data this year Core CPI increased by a more modest 0.2%m/m in May and, although we still need to see the PPI data tomorrow, it looks like core PCE, the Fed's preferred inflation metric, increased by significantly …
The current fiscal framework is not perfect and could be reformed to improve investor confidence in the management of the public finances, tilt the composition of spending towards investment and reduce political uncertainty. However, the importance of the …
EU protecting domestic producers but not ending Chinese EV imports Reports that the European Commission will “provisionally apply” additional duties of up to 25% on imports of EVs from China from July, on top of the 10% tariff already in place, are in …
BoT on hold, but cuts likely later in the year Thailand’s central bank (BoT) today left interest rates unchanged and appeared in no rush to loosen policy. We think the weakness of the economy and very low inflation will persuade the central bank to …
This page has been updated with additional analysis since first publication. Despite stagnating in April, economy will be a tailwind for the next govt The stagnation in GDP in April (consensus 0.0%, CE -0.1%) doesn’t mean the economic recovery has been …
While the official job openings figures have fallen since late-2022, the bulk of the evidence suggests that firms are facing increasingly severe job shortages. One explanation for the fall in job vacancies could be a change in firms’ recruitment …
This page has been updated with additional analysis since first publication. Producer prices will likely fall again soon due to overcapacity Producer prices picked up for the first time in eight months and consumer price inflation held steady in May. We …
France’s National Rally has advocated policies that would increase the budget deficit and provoke clashes with the EU. During the election campaign, it will probably moderate these views, but the chance of France reducing its deficit to 3% of GDP by 2027, …
11th June 2024
NB. Our new and improved interactive US Commercial Property dashboard, home to key macro and commercial real estate forecasts, can be found here . Overview – The market remains in the doldrums, with the mood negative and activity weak. We think this …
We think that China’s “tech” equities could resume their rally, but that they’re unlikely to see anything like the gains their developed market peers have. China’s tech sectors fared better than most of its equities today, falling only a little amid a …
Sluggish economic growth in the euro-zone’s trading partners and a deterioration in competitiveness caused an extremely rare absolute decline in euro-zone export volumes last year. Poor competitiveness will remain a perennial problem, but global growth …
The granular data on mortgage lending in Q1 contained some signs of relief following the dip in mortgage rates at the end of last year. But given that decline in rates has since reversed, we don’t think it signals a further improvement in activity to …
Rise in services inflation takes rate cuts off the table The rise in inflation in Brazil to 3.9% y/y in May and, more importantly, the re-acceleration in underlying core services inflation means we no longer expect a rate cut at the Copom meeting next …
Net capital inflows into EMs have climbed back into positive territory in recent weeks, driven by a sharp rise in foreign investors’ purchases of Turkish government debt. This strength could continue if investor confidence in the country’s policy shift is …
The ramp-up in public capital expenditure in the last five years has helped to ease some of the bottlenecks that had previously acted as a constraint on India’s economy. Despite the Modi government’s weakened electoral mandate, there are good reasons to …
RBA to stay put at its June meeting Inflation remains high, but spare capacity is starting to open up in the economy Forthcoming easing cycle will be modest in scope, with rates returning to neutral We expect the Reserve Bank of Australia to leave rates …
This page has been updated with additional analysis since first publication. S ticky wage growth a lingering concern for the BoE The stickiness of wage growth in April will be a lingering concern for the Bank of England. But with employment falling …
The latest data has been a bit stronger than we had anticipated and suggests that the recovery in euro-zone activity may continue at a moderate pace. The labour market remains tight, with unemployment falling to a fresh record low and wage growth picking …
10th June 2024
French President Emmanuel Macron’s decision to call for snap elections has triggered a negative reaction in markets, not only in France but also in the rest of the EU. Even though the far-right National Rally has abandoned its most extreme economic …
Canada Chart Pack (Jun. 2024) …
Although we expect equities in general to fare well over the next year or so, we think that falls in most commodity prices will weigh on the energy and materials sectors. That would be bad news for stock markets with big energy/materials exposure and …
Mexican President-elect Claudia Sheinbaum’s strong environmental credentials mean that a shift away from fossil fuels and towards renewables is likely during her tenure. We doubt that she’ll fully open up the energy sector to private investment and think …
The State Bank of Pakistan (SBP) kicked off its easing cycle today with a 150bps rate cut, and while further cuts are likely, ongoing negotiations with the IMF for a new long-term loan deal mean that the pace of further loosening is likely to be …
Capital Economics clients can download a complete pdf version of this report by clicking the download button top right. If you can't see a download option, please speak to your account manager. You can also explore the individual Spotlight chapters below: …
US economic dominance has not always translated into stock market outperformance. Since the Global Financial Crisis (GFC), however, US equities have largely outperformed those in the rest of the world. The main driver for this has been higher growth in …
The US’s economic leadership is partly related to its sheer size, but its population also works more than other countries and it fares better on productivity. While the US economy faces various threats, from fracturing to regulation, we doubt that it will …
For all its flaws, the US has long been a world-leading economy in a number of important respects. It has been an economic leader as the largest economy in the world since the late 1870s. While GDP growth has sometimes been faster elsewhere, none of its …
We expect the US to remain the world’s pre-eminent global economy for the foreseeable future. Not only will its own economic performance remain comparatively strong – not least as the advent of AI plays to its advantages – but the other key contenders for …
The elections that have concluded in major emerging economies over the past couple of weeks have been notable for several reasons: Mexico elected its first female president, Narendra Modi secured an historic third term as Prime Minister of India, albeit …
An interactive guide to the future of global macro and markets leadership. This content was last updated on 10th June 2024. If you have subscriber access to the data underlying this dashboard, you can download it via the menu options in the top right …
The shock results of Europe’s parliament elections have roiled markets as investors respond harshly to news of President Macron’s surprise decision to dissolve France’s National Assembly and hold early elections. What will Macron’s gamble mean for the …
Inflation hits slowest pace in over a year Egypt’s headline inflation dropped back from 32.5% y/y in April to 28.1% y/y, the lowest outturn since the start of 2023. Inflation is likely to rise again in June and July due to government price hikes, …
Macron’s gamble adds to risks for public finances Support for the centrists has held up quite well in European elections but this was overshadowed by the jump in votes for the far-right in France and President Macron’s surprise decision to dissolve …
