Confirmation that France’s budget deficit was much higher last year (5.5%) than assumed in the government’s 2024 budget (4.9%) adds to concerns about Europe’s public finances. Indeed, Germany, France and Italy are all likely to be tightening fiscal policy …
28th March 2024
We expect non-farm payroll growth to ease to 180,000 in March. The jump in the unemployment rate in February is unlikely to be repeated, and is more likely to be partly reversed. We are sceptical that the recent reacceleration in non-farm payroll growth …
Africa Chart Pack (Mar. 2024) …
Hungary shifting down the monetary easing gears The post-meeting communications from Hungary’s central bank (MNB), after it slowed its easing cycle on Tuesday , support our view that the pace of rate cuts is set to slow further over the coming months. The …
China is driving the global renewable rollout… It came as no surprise to see China loom large in the International Renewables Energy Agency’s provisional statistics on renewable energy capacity in 2023. As shown in Chart 1, China added more than twice as …
Everyone knows that one reason why the recession was so small and short is because higher interest rates had a smaller drag on the economy than in the past. But it’s less appreciated that future interest rate cuts may not boost the economy as much either. …
Before Neil Shearing gets on to discussing the key takeaways from our latest Global Economic Outlook, he talks to David Wilder about the inflationary risks stemming from the collapse of the Francis Scott Key Bridge at Baltimore’s port. The Capital …
Streets of Baltimore The collapse of the Francis Scott Key bridge, which was hit by an out-of-control container ship this week, could result in a lengthy disruption to the Baltimore port. Nevertheless, since that port is the 15 th largest in the country, …
Strong growth reduces urgency for interest rate cuts The broad-based strength of GDP growth in January and February means the economy almost certainly outperformed the Bank of Canada’s expectations in the first quarter and reduces the immediate risk of …
CEO visits underscore China’s continued appeal President Xi held a rare, highly-publicised meeting in Beijing with a visiting US business delegation this week. The optimistic take is that, facing economic weakness and collapsing FDI, China’s leadership is …
Table of Key Forecasts Global Overview – In the quarters ahead, economic activity in most of the world will be characterised by soft landings. We expect GDP growth to be below trend, but meaningful recessions should be avoided and the US will continue to …
Egypt policy shift to get final seal of approval Egypt’s recent policy shift has been met with a lot of optimism among investors but it will not be painless and economic growth will be sluggish this year and next. And there is a lot more work to do to …
February’s money and credit data suggest that the effect of tighter monetary policy has eased slightly. But the data are still very weak and we think that rate cuts later in the year will lead to only a gradual rebound. The narrow (M1) money supply …
This page has been updated with additional analysis since first publication. Mild recession confirmed, but recovery probably already underway The final Q4 2023 GDP release confirmed that the UK economy was in the mildest of mild technical recessions at …
Inflation risks linger on At first glance, it would appear that much of the data released this week went the way the RBA was hoping. First, we found out that CPI inflation is on track to undershoot the Bank’s expectations this quarter. Second, retail …
Singapore’s core inflation not as sticky as it seems Singapore experienced one of the biggest post-pandemic inflation spikes in Asia. Core price pressures even now are among the highest in the region. (See Chart 1.) Chart 1: Core Inflation (%, y/y) …
BoJ won’t provide much help in supporting yen With the yen hitting a 34-year low of just under 152 against the dollar on Wednesday, the Ministry of Finance’s Masato Kanda noted that the government will respond resolutely to “excessive” yen weakness and …
External position looks secure Balance of payments data released this week show that India’s current account deficit narrowed from US$11.4bn (1.3% of GDP) in Q3 2023 to US$10.5bn (1.2% of GDP) in Q4. Taking a longer perspective of the four quarters to Q4, …
This page has been updated with additional analysis since first publication. Private consumption set to trudge along The modest uptick in retail sales in February was as we had anticipated. The data confirm our view that consumer spending is likely to …
We think the bulk of the fall in corporate credit spreads is now in the rearview mirror, especially in the US. After falling markedly since November last year , the option-adjusted spreads (OAS) of the US ICE BofA Corporate Bond Indices have stabilised …
27th March 2024
Our Emerging Europe Chart Pack has been updated with the latest data and our analysis of recent developments. Inflation continued to fall across Central and Eastern Europe (CEE) last month and in most countries it is now back within central bank …
We continue to think that policymakers in China and Japan will do enough to keep their currencies from weakening much further, but the risk of a break lower in one, or both, is increasing. Push-back from the authorities in China and Japan has stabilised …
We expect the spreads between the yield of the 10-year German bund and its ‘riskier’ counterparts in other euro-zone economies to narrow only a little further this year. If anything, we think that the fiscal outlooks in France and Italy mean that the …
Overview – China’s economy has fared better recently and policy support is likely to remain a near-term prop to growth. But we remain less sanguine about the medium-term outlook. Domestic Demand – State investment can make up for lacklustre consumption, …
Overview – Sub-Saharan Africa will record a pick-up in growth over the coming years, helped by an improving external environment reducing the threat of further large currency falls as well as sovereign defaults. Monetary and fiscal policy will generally …
We still expect the Canadian dollar to depreciate against the US dollar as interest rate differentials relative to the US widen and Canada’s terms of trade worsen. The Canadian dollar has held up well against the greenback relative to other G10 currencies …
Note: We will be discussing the outlook for European commercial real estate markets in a 20-minute online briefing at 10am BST on Wednesday 10th of April. (Register here .) After a solid 2023, we expect Paris prime office rental growth to slow markedly …
Overview – With inflation easing and domestic demand struggling in much of emerging Asia, central banks are likely to start cutting interest rates soon. The one remaining concern for policymakers is the fear of further falls in their currencies. But this …
Our China Activity Proxy (CAP) suggests that the economy has performed reasonably well over the last few months – better than much recent commentary would suggest. We expect activity growth to slow later this year as policy support fades. The CAP is our …
The South African Reserve Bank left its repo rate unchanged at 8.25% for a fifth consecutive meeting today and the continued hawkish rhetoric from Governor Kganyago supports our view that rate cuts will only happen after May’s election. Even then, a …
We think investors are underestimating the extent of rates cuts that the Riksbank will make this year. Policymakers are, rightly in our view, increasingly confident that inflation will soon return sustainably to the 2% target. Accordingly, we think they …
Regional sentiment hits two-year high The European Commission's Economic Sentiment Indicators for Central and Eastern Europe (CEE) generally rose in March, and support our view that regional GDP growth strengthened at the start of this year. Economic …
This page has been updated with additional analysis since first publication. EC Survey points to stagnant economy and still-high price pressures The EC business and consumer survey for March reinforces the message that the economy is close to recession …
We wouldn’t be surprised if the “non-tech” sectors of the S&P 500 continued to make gains over the rest of 2024, but we don’t expect them to keep pace with the tech giants as well as they have lately. It’s been a second consecutive great quarter for the …
MPC to keep repo rate on hold at 6.50% next week Committee to wait until headline inflation reaches 4% before pivoting, probably in Q3 We think rates cuts will be a bit more aggressive this year than consensus forecasts We agree with consensus …
The past month has seen Egypt’s economic crisis turn around with the devaluation of the pound, aggressive interest rate hike, and unlocking of a new IMF deal. There have been false dawns before, but this shift back toward economic orthodoxy feels more …
Riksbank Policy Announcement (March 2024) Riksbank confirms rate cuts imminent The Rikbsank’s decision to leave interest rates unchanged at 4.0% today was no surprise and the press release confirms that policymakers expect to cut rates soon. We are …
Data released today showed that Spanish inflation picked up from 2.9% in February to 3.2% in March. We think it is likely to increase further over the coming months due to base effects in energy inflation, higher VAT rates on energy and foods, and …
Overview – Australia’s GDP growth will remain soft throughout the first half of the year so the recent stalling in inflation should be followed by a renewed moderation. However, as the labour market remains very tight, we’re pushing back our forecast for …
This page has been updated with additional analysis since first publication. Inflationary pressures are letting up, but risks linger Headline Inflation in February once again came in below the expectations of both the analyst consensus and the RBA. But …
Software increasingly driving productivity gains We still believe that the current productivity boom is mainly a cyclical phenomenon, as tight labour market conditions have forced firms to expand output by boosting the efficiency of their existing …
26th March 2024
The drivers of industrial rental growth were turned on their head during the pandemic, but we expect the pre-COVID-19 relationships will soon be reestablished. That points to consumer spending as an important factor, reflecting the growing importance of …
While w e think that equities in the UK will continue to rise over the next couple of years, we suspect they will keep underperforming those in the US, and we see little scope for valuations to help them relative to other developed market equities. UK …
Overview – We expect weak GDP growth of 0.8% this year, and a fall in inflation to less than 2% next year, to persuade the Bank of Canada to cut its policy rate back to 2.5% by mid-2025. A recovery in productivity and looser policy should drive a rebound …
A pause in the fall in mortgage rates and a rise in the number of homes coming onto the market mean house price growth will stall in the near term. But our forecast that Bank Rate will be cut further than expected suggests that further reductions in …
Emerging Asia Chart Pack (March 2024) …
Overview – Economies in Central and Eastern Europe (CEE) ended last year in stagnation, but headwinds to growth are lifting and we think that 2024 will be a year of modest recovery. Inflation has fallen sharply in recent months but in some parts of the …
The Central Bank of Nigeria continued its hiking cycle today, raising rates by 200bp to 24.75%, providing further evidence that officials are fighting aggressively to tackle the inflation problem and restore its damaged credibility. We think that the CBN …
House price growth reaccelerates in January The fairly large gain in house prices in January points to a rebound in price growth driven by the fall in mortgage rates towards the end of last year. Although its early in the year, today’s data fit with our …
Pace of easing slows, and will slow further before long The decision by the Hungarian central bank (MNB) to slow the pace of its easing cycle today, with a 75bp cut to its base rate (to 8.25%), will probably be followed by a further slowdown in the pace …
