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Advanced economy headline inflation rates are set to jump by an average of nearly 2%-pts in the coming months as energy inflation picks up and, in some cases, the effects of last year’s temporary cuts in VAT cuts go into reverse. But with core inflation …
15th January 2021
Our GDP forecasts for this year sit some way above the rest of the market. The greatest risks to this upbeat view stem from unanticipated shifts in the virus and the fight against it, rather than the more orthodox macro events that typically derail …
13th January 2021
While the economic fallout will not be as severe as it was with the first lockdowns, the surge in virus cases will weigh on activity in Q1. Vaccine rollouts should provide a boost to the global recovery, but not until the second half of the year. …
12th January 2021
The risks to vaccination programmes fall into three groups: procurement, deployment, and effectiveness. In the coming few months, deployment issues will be a key limiting factor in most countries. These should be overcome relatively quickly in DMs, but …
8th January 2021
The pandemic – and the associated increase in working from home – may cause a fundamental shift in the way that cities function in future. But this shift will not necessarily trigger a more fundamental economic decline in the world’s largest urban …
5th January 2021
Developments from the past two weeks reinforce the message that 2021 will be a year of two halves for the world economy. In the near term, high/rising infections in most major economies mean that restrictions will be tightened or kept in place for longer, …
4th January 2021
The relative resilience of real global merchandise trade during the pandemic has reflected several factors, most importantly robust goods spending in advanced economies. Merchandise trade flows are likely to flatten off next year as the removal of …
23rd December 2020
Table of Key Forecasts Overview – Energy price base effects will drive up inflation in the first half of 2021, but central banks will look through this. Indeed, in most cases, inflation should be around or below target over the second half of 2021 and …
17th December 2020
We expect 2021 to be a better year for the global economy than most envisage. GDP growth in many major economies will surprise on the upside, with those that suffered the sharpest downturns this year generally rebounding fastest. Nonetheless, policy …
December’s flash PMIs revealed that restrictions in the euro-zone and the UK continue to weigh on services activity and that advanced economy manufacturing is still faring well. Meanwhile, building price pressures in the US point to inflation there rising …
16th December 2020
One of the biggest upside risks to our forecasts is that households spend the extra savings that they have accumulated during the past few months. If they do, North America and the UK look likely to benefit more than the euro-zone. Chart 1 shows that …
11th December 2020
Recent data confirm that global economic activity has continued to recover from the height of coronavirus restrictions in Q2. But while activity in China is now above its pre-virus level, there is still a major shortfall in other economies, including …
10th December 2020
In Q3, the balance sheets of developed market banks were in good shape and credit losses stayed ultra-low. Defaults are likely to rise as policy support recedes, but we think the banks are well-placed to cope. Most banks in the US, Japan, and developed …
3rd December 2020
The global manufacturing PMI rose for the seventh consecutive month in November. Restrictions seem to have weighed on industry in parts of Europe, but nowhere near as much as in March and April. And with recoveries elsewhere still strong, global …
1st December 2020
While world GDP was probably still about 3% short of its end-2019 level at the end of Q3, world trade had recovered to 1.5% below its pre-virus peak. As long as industry remains relatively unscathed by renewed restrictions in Europe and the US, trade …
30th November 2020
While a difficult few months lie ahead for many economies, the news of effective vaccines has led us to revise up our world GDP growth forecast by 0.8%-pt and 0.5%-pt, to 6.8% and 4.6%, in 2021 and 2022. The positive effects will be biggest in DMs, while …
27th November 2020
Central banks keen to bridge a difficult period before vaccines are rolled out… … and reduced fiscal stimulus shifts onus of supporting recovery to monetary policy The legacy of the virus will warrant rock bottom interest rates for several years The …
25th November 2020
As expected, today’s batch of flash PMIs confirmed that manufacturing has fared better than services in the face of the renewed virus wave. The strength of the US surveys was surprising and indicates that the economy has shrugged off the latest …
23rd November 2020
A striking development in the past few months is how well housing markets in developed markets have generally been doing. We expect this to peter out next year, although in most cases house price falls will be avoided. In the meantime, the strength of …
19th November 2020
The news about effective vaccines has improved the global economic outlook and we think that most restrictions on activity in advanced economies will be removed by around Q2 next year. But distribution to many EMs including large parts of Latin America, …
17th November 2020
The COVID pandemic will leave a profound economic legacy. But unlike previous crises, this will not necessarily manifest itself in much weaker rates of long-term economic growth. Instead, the economic legacy of the pandemic will be felt in changes to …
Recent extensions to job retention schemes and hopes of a vaccine appear to have improved the outlook for labour markets. But there is still a risk that governments scale back support too quickly and it is almost inevitable that further job losses are to …
16th November 2020
Mobility data up to 8 th November suggest that the recovery in developed and emerging Europe has already gone into reverse and that recoveries in other parts of the world are losing steam. To recap, our proprietary Mobility Trackers* gauge economic …
13th November 2020
Hard GDP data have confirmed that most economies saw sharp rebounds in activity in Q3 after the lockdowns of Q2. But monthly data suggest that the pace of improvement slowed during the quarter and the latest renewed tightening of restrictions in advanced …
11th November 2020
Financial repression – defined in the current context as measures that artificially lower the cost of government borrowing – will become an increasingly used tool to cope with higher public sector debt burdens post COVID-19. After all, it is more …
10th November 2020
A vaccine with a 90% efficacy rate would clearly represent a major boost for both public health and the economy. While there remain issues around the likely speed of production and distribution of the Pfizer vaccine, today’s news raises the chances that …
9th November 2020
High-frequency mobility data have their flaws but have offered some guide to how economies have responded to government restrictions. As Europe enters a fresh set of lockdowns, careful interpretation of these data will again allow us to shine some light …
While the US election has dominated the news cycle across the world, the outcome is unlikely to have a significant impact on the world economy. Short-term global prospects will continue to be overwhelmingly driven by the evolution of the virus and the …
6th November 2020
Lockdowns in Q2 this year caused global GDP to drop by 7% q/q, with the hospitality, recreation, and transport sectors suffering most. The hit from second lockdowns should be much smaller since activity is below normal levels to start with, restrictions …
3rd November 2020
Manufacturing PMIs generally held their ground in October, suggesting that the industrial recovery made further headway, despite a resurgence of infections taking hold in the US and Europe. Manufacturing will succumb to weaker demand as restrictions …
2nd November 2020
Out of all the banking sectors in major economies, India’s warrants the most concern. It came into the crisis in the worst shape, and the scale of damage to private balance sheets means it will be one of the hardest hit from rising defaults. Policymakers …
29th October 2020
With headline labour market figures affected by the various government support schemes, survey measures may provide a better indication of the true amount of slack in the labour market. These suggest that wage growth in the coming months is likely to be …
28th October 2020
While the COVID crisis has prompted an unprecedented fiscal response worldwide, there have been major differences between economies. The US saw large and immediate support, which has already expired without disastrous consequences. China’s infrastructure …
27th October 2020
The further rise in world trade volumes in August was unsurprising given that there has been a strong recovery the demand for imported goods. Given the experience so far, we would expect world trade to continue holding up relatively well even if the new …
26th October 2020
October’s batch of flash PMIs supports our view that divergences have emerged in advanced economies, both between sectors and between countries. With Europe dealing with second waves of infections and a new round of restrictions, their recoveries are set …
23rd October 2020
Global Overview – The world economy has clawed back about 60% of the output lost in the first half of the year, but recoveries in most parts of the world have already slowed. Prospects now vary according to success in controlling the virus and the policy …
22nd October 2020
While there has been some good news on virus numbers in India and Latin America, Europe and parts of the US are grappling with a big resurgence in infections. Restrictions have already been tightened in several European countries, and more measures are …
19th October 2020
On the face of it, the rebound in retail sales in advanced economies suggests that the consumer sector is leading a V-shaped economic recovery. But other types of spending, including on consumer services, has been far weaker, and the import-intensity of …
16th October 2020
The state has taken on a much greater role in G7 countries during the pandemic and there is no guarantee that it will relinquish all its new powers when the coronavirus threat fades. The pandemic could accelerate the backlash against capitalism that had …
13th October 2020
While retail sales have rebounded rapidly and are now above pre-virus levels in most major DMs, overall consumer spending has failed to reach the levels seen at the end of last year. (See Chart 1.) That is largely because many of the consumer services …
12th October 2020
The latest data have revealed a marked divergence in inflation among advanced economies, with the core rate rising in the US but falling in the euro-zone and the UK. This largely relates to temporary factors, particularly the impact of government policies …
7th October 2020
With the US election result likely to have limited near-term implications for world GDP, the main issue for the global economy is how it affects US trade policy. Joe Biden would take a less aggressive approach, but he would not prevent a further …
5th October 2020
The output breakdown of Q2 GDP showed that virus containment measures hit the hospitality, recreation, and transport sectors hardest, while financial services were relatively unaffected. The more targeted nature of second wave restrictions suggests that …
2nd October 2020
Today’s batch of manufacturing PMIs suggest that production continued to rebound in September, albeit at a slower pace than earlier in the quarter. The big picture, though, is that the state of the recovery in manufacturing is unlikely to be a good guide …
1st October 2020
The immediate costs of the COVID crisis will be shouldered more by governments than the private sector. However, as fiscal support recedes in the coming years, a greater share of the costs will be borne by households and firms, and ultimately by their …
30th September 2020
At its trough, in May, world trade fell 17% below its December 2019 level. Data released today show that, by July, world trade had made up two thirds of the lost ground, standing at 6.6% below its December peak. Given the encouraging signs from the timely …
25th September 2020
The experience from second virus waves in Australia, New Zealand and Japan is that consumer spending falls even if governments don’t impose major restrictions. However, there are three key reasons why second waves may be less damaging to economic activity …
September’s weak batch of flash PMIs suggest that the rebound in activity in DMs seen over the past few months is losing steam, even in the countries where virus numbers are falling. The risk now is that renewed containment measures in the UK and the …
23rd September 2020
Global supply chains have functioned well this year despite the disruption of social distancing and lockdowns, and people in many places appear more appreciative of migrants. But the pandemic is widening the rift between China and the rest of the world. …
22nd September 2020
The fact that most governments were caught on the backfoot in the early stages of the pandemic meant that they had little alternative but to respond with widespread lockdowns. Six months on, a combination of a better understanding of the virus and …
