Growth slowdown begins Nigeria’s GDP growth slowed to 3.0% y/y in Q1, driven by a halving in the oil sector growth rate, alongside high inflation and tighter monetary conditions continuing to drag on the non-oil economy. We expect growth to remain …
24th May 2024
Worrying or reassuring? The wage growth data published this week were not good for the inflation outlook, but they weren’t as bad as they first appeared. As a re-cap, data released by the ECB showed that negotiated wages rose by 4.7% y/y in Q1, slightly …
Resolution of China’s property crisis would result in residential sales being substantially higher than today. Sales could rise by a third. But we wouldn’t expect prices to increase by much, if at all. And property construction activity will be weaker in …
Pullback in deposit growth is not a bullish signal After picking up during the pandemic, growth in bank deposits has slowed sharply recently. (See Chart 1.) They even fell outright in April, by a record RMB3.9trn, though this may partly reflect …
We think the kiwi and the aussie strength will continue over the next couple of years as we expect they will be among the last developed economies to start an easing cycle. The aussie and the kiwi have been among the best performing G10 currencies since …
The mammoth general election is entering its final week, with just 115 of the 544 constituencies left to vote before the result is announced on 4 th June. Clients can see all of our election insights here . We will also be discussing the election result …
Singapore’s economy to remain weak this year The second estimate of first quarter GDP (published on Thursday) confirmed that growth in Singapore slowed sharply last quarter. In q/q terms, the economy expanded by just 0.1%, down from 1.2% in the final …
The sharp drop in frontier market sovereign dollar bond spreads this year has caught many by surprise. We think there’s a case that the bond rally may have gone too far in Argentina, Ecuador and Tunisia. But the decline in spreads in some frontiers, …
Spanish industrial rent growth beat expectations in Q1 this year, outpacing rises elsewhere in the euro-zone. However, this was mainly due to Barcelona, where we have raised our prime rent forecast. Madrid rent gains were more sluggish and this trend is …
Inflation rapidly losing momentum The economic data released over the last couple of weeks hardly suggest that the Bank of Japan should tighten monetary policy any further. After all, GDP plunged by 0.5% q/q in Q1 and the April inflation data released …
Outlook for retailers remains bright despite soggy start to Q2 The 2.3% m/m fall in retail sales volumes in April was much bigger than our forecast for a 0.5% m/m fall and the consensus forecast for a 0.4% m/m decline as the unusually wet weather …
Households seem keen on saving more The minutes of the RBA’s May meeting confirmed that the Bank discussed a rate hike in response to the upside surprises in inflation and the labour market, but ultimately decided against it. One reason was that the …
This page has been updated with additional analysis since first publication. Underlying inflation will fall below 2% over coming months The sharp slowdown in underlying inflation in April had little to do with the slashing of high school fees in Tokyo …
The latest flash PMIs suggest that GDP growth in advanced economies has continued to gain momentum in Q2. And central banks may take comfort in the fact that services price pressures seem to be easing. Our estimate of the flash DM composite output PMI …
23rd May 2024
US pulling Saudi back from China’s orbit US officials this week suggested that a mooted grand deal with Saudi Arabia could be signed off in the coming weeks. This would redraw how the Kingdom aligns itself in a fracturing global economy. Jake Sullivan, …
Croatia has established itself as one of the fastest growing economies in the EU and we think that it will maintain GDP growth of around 3% p.a. over 2024-26. Income convergence – which has been rapid in recent years – will continue over the rest of this …
We still think inflation will fall faster than the Bank of England is expecting, but in the light of April’s CPI release we now expect the downward trend to be slower and smaller. As a result, we have shifted back our forecast for the timing of the first …
While the prospect of the Labour Party returning to government in the UK for the first time in 14 years might raise a few eyebrows in the financial markets, we wouldn’t put much store by the fact that some of its times in office since first forming a …
Putting the politics aside, the high number of migrants coming to the UK for work is the main reason why the number of people willing and able to work isn’t shrinking. The provisional data show that net inward migration to the UK was 685,000 in the year …
Corporate credit spreads have been near historical lows in recent weeks, and we think they will remain close to these levels in the coming months. The first two charts below illustrate how narrow the latest levels of US corporate credit spreads are …
New home sales fall in April due to high mortgage rates The spike in mortgage rates to 7.3% in April caused a sizeable drop in new home sales, as buyers decided to wait for a chance of getting a lower rate. We think this will partly reverse in May as …
The strength of healthcare employment and spending growth is because the sector is still recovering from the pandemic and also thanks to the jump in Affordable Care Act (ACA) enrolments. Employment and spending have almost caught up with their …
We think equities in the Asia-Pacific (APAC) region may benefit most from improving sentiment towards China in the near term. But we think that economic / market exposures to the AI revolution, not to China, will be the bigger influence on the relative …
Having underperformed most other EMs since the pandemic, we think that returns of financial assets in South Africa will continue to disappoint. The outlook would worsen if the African National Congress (ANC) ends up forming a coalition with radical …
South Africa’s upcoming election looks set to herald a new era of coalition government. There are lots of permutations ranging from a centrist ANC-DA coalition to a so-called ‘doomsday coalition’ in which the ANC teams up with the left-wing EFF (although …
Strength of services inflation still a point of concern for Banxico The rise in Mexico’s headline inflation rate to 4.8% y/y in the first half of May was driven by another jump in agricultural price inflation. But core services inflation remained …
The metals-intensive nature of green technologies will add to demand for a host of industrial and battery metals, with green demand for copper and aluminium likely to grow twice as quickly as traditional demand for both metals has in the past. That said, …
Rates to stay on hold throughout the year Turkey’s central bank left its main policy rate unchanged at 50.00% again today and the statement continued to emphasise the need to keep interest rates high for a prolonged period. While the consensus view is for …
We don’t think the pick-up in euro-zone negotiated wage growth in Q1 will stop the ECB from cutting interest rates in June. But the continued strength of pay pressures reduces the chance of the ECB cutting rates rapidly in the second half of the year. The …
Survey provides support for summer rate cut Today’s May flash PMI survey will have provided the Bank of England with some comfort after yesterday’s stronger-than-expected inflation data for April. Crucially, the further fall in the services output prices …
Retail sales disappoint Poland’s activity data for April revealed that retail sales growth softened a bit more than expected last month, but that the weakness in industry in March was just a temporary blip. On balance, we remain comfortable with our …
This page has been updated with additional analysis since first publication. Recovery continuing The PMIs for May suggest that the euro-zone economy continued to expand in Q2 while price pressures eased but remained high in the services sector. The ECB is …
UK election 2024 …
The Bank of Korea left its policy rate on hold today (at 3.5%) and appeared to indicate that interest rates would not be cut until it was confident that inflation would fall back to target. Given our view that price pressures will ease further over the …
India has made impressive progress in raising its share of global high-end electronics exports over the past few years. But, worryingly, it has failed to capture any additional market share in the lower-end manufactured goods which are typically more …
On hold, but easing likely before year-end The decision by the Bank of Korea to leave the policy rate unchanged (at 3.5%) today came as no surprise, of more interest will be the tone of the central bank’s statement and Governor Rhee’s press conference. …
FOMC stresses higher for longer The minutes of the Fed’s early May policy meeting are, not surprisingly given the backdrop of data releases ahead of that meeting, somewhat hawkish. The resilience of economic growth and employment, and particularly the …
22nd May 2024
We’ll be discussing what the election means for the economy and financial markets in a 20-minute online briefing at 9.30am BST on Thursday 23rd May. (Register here .) The general election on Thursday 4 th July, which the Prime Minister announced today, …
The winner of the UK general election – which has been called for 4th July – will inherit an economy suffering from stagnant growth, high levels of debt and the highest tax burden in 70 years. Can they turn things around? During the briefing, Chief UK …
While GDP growth in the Andean economies will be stronger this year than last, the opposite is likely to be the case in Brazil and Mexico. Core services inflation, which central banks are paying close attention to, is showing signs of easing. But with …
While stronger-than-expected inflation data from the UK have led us to push back a bit our forecast for the start of the Bank of England’s easing cycle, we still project many more rate cuts than most anticipate. This feeds into our view that Gilt yields …
Existing home sales slide in April, with further falls likely ahead The drop in existing home sales in April will be followed up by further falls in the coming months, supporting our view that the recovery in transactions we expect this year will be …
Weak investment activity and continuing cap rate rises in Q1 fit with our view for another tough year for real estate. All-property values are now down by 17% from their mid-2022 peaks. But we still think cap rates need to climb by c. 80-100 bps to reach …
The results of India’s multi-week general election on 4th June aren’t expected to hold many surprises about the country’s next government, with polls suggesting Narendra Modi will win an unprecedented third term. But what influence could this election …
After exiting recession in Q1, Saudi Arabia’s economy should continue to expand over the rest of this year on the back of strong private non-oil growth and higher oil output. But next month’s OPEC meeting is likely to be a close call and if the group (led …
