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Table of Key Forecasts Overview – The effects of demand weakness should continue to dominate those of supply constraints, leaving underlying inflation subdued in most parts of the world over the next few years. Policy measures including temporary VAT cuts …
21st September 2020
China’s economic rebound has been about as v-shaped as one could reasonably hope for – but it isn’t boosting growth elsewhere. One important point that gets missed in the debate over the likely shape of the post-virus recovery is that different economies …
18th September 2020
The macroeconomic consequences of the Covid-19 pandemic are likely to be very different from those of previous pandemics, largely because of the unprecedented response by governments and central banks. The most important lesson from history is that …
16th September 2020
Inflation has been close to the midpoint of the RBA’s 2-3% inflation target since its launch in the 1990s, but this has come at the expense of soaring house prices and household debt. Australia’s experience underlines that central banks need better tools …
15th September 2020
Our Global Covid Mobility Tracker* has risen in recent weeks, suggesting that the world economy has continued to recover despite rising virus numbers. But the national trackers reveal that renewed containment measures are having adverse effects in Spain …
14th September 2020
Economic activity rose sharply in most economies as lockdowns eased during May and June. But, outside China, GDP is still some way below pre-COVID levels and there are signs that renewed virus fears are already prompting a slowdown. Gains in industrial …
11th September 2020
Although low inflation is likely to be the story over the next couple of years, the huge amount of policy stimulus could push up inflation further ahead. Central banks, in theory, have the tools to nip any rise in the bud. So the bigger risk is if there …
10th September 2020
Other central banks won’t follow the Fed immediately… …but direction of travel is towards greater tolerance of inflation in advanced economies Japan’s experience highlights that some will have more success than others For the past thirty years the …
9th September 2020
August’s rise in the global manufacturing PMI was good news with improvements in economies hit hardest by the virus offering particular relief. But the index points to fairly modest growth and it is somewhat disappointing that the recovery has not gained …
1st September 2020
On the face of it, the rise in core inflation in several advanced economies in July seems to challenge the idea that lower demand will dominate lower supply in the tug of war over consumer prices. But we continue to think that spare capacity will keep a …
28th August 2020
The record monthly rise in global trade volumes in June was little surprise given both the size of the falls earlier in the year and that, by this point, most countries were past the worst of their lockdowns. While we think that the jump in June marks the …
26th August 2020
At first sight, the latest batch of flash PMIs suggests that recoveries in advanced economies are heading in different directions. However, this has a lot to do with individual economies being in different stages of fighting the virus and easing …
21st August 2020
In the advanced economies, the post-lockdown rebound in retail sales has been considerably faster than that in industrial production. But in China, the opposite has been true. This partly reflects the differing focus of policy and highlights the role of …
17th August 2020
GDP data for Q2 revealed sharp declines in activity in all major economies except China, driven primarily by slumps in consumer spending. Retail sales data for May and June pointed to an encouragingly sharp rebound, leaving sales above their pre-virus …
13th August 2020
The development of a vaccine would represent a breakthrough in the public health battle against Covid-19, but it would not necessarily transform the immediate economic outlook. President Putin yesterday announced that Russia had become the first country …
12th August 2020
Data for Q2 revealed widespread drops in GDP, but the extent of the damage varied markedly depending on the length and severity of lockdowns. Recoveries since then have followed the same pattern. Looking ahead, Asian economies including China and Korea …
6th August 2020
While high-frequency mobility data should be interpreted with caution, they are now consistent with a marked slowdown in the pace of recovery, dashing hopes of a V-shaped rebound in the world economy. July saw a pronounced acceleration in the spread of …
5th August 2020
While the future of the virus is very uncertain, three things seem clear from recent developments: the pandemic has entered its fifth phase; the Americas are still the global hotspots; and containment measures are more likely to be extended or tightened …
4th August 2020
While the global manufacturing PMI rose again in July, it masked a divergence in the strength of recoveries among major economies. With growing concerns in recent weeks over a resurgence in the virus in many parts of the world, the recovery of global …
3rd August 2020
While the auto sector was hit particularly hard by the virus lockdowns, sales and production now seem to be recovering. In the near term, this bodes well for economies which rely heavily on vehicle production including Germany, Japan and Czechia. However, …
Table of Key Forecasts Global Overview – The initial rapid pick-up in economic activity has offered encouragement after an almost unprecedented recession. But households and firms will remain in cautious mode, preventing a full V-shaped recovery. And …
27th July 2020
Data from the CPB Netherlands Bureau showed a further fall in world trade in May. Admittedly, the decline in trade so far this year has been smaller than the collapse in GDP might have led us to fear and timelier data are consistent with an improvement in …
24th July 2020
Jumps in the European PMIs and further increases elsewhere were another sign that activity in advanced economies continued to improve in July. However, the pace of the recovery is now likely to ease. We estimate that the developed markets composite PMI …
There has been an encouraging rebound in retail sales across advanced economies as lockdowns have eased, driven by a pick-up in sales of discretionary items such as clothing and furniture and a shift towards online sales. While the recovery should …
16th July 2020
In general, our Covid Recovery Trackers continued to improve at the end of Q2 and in the first ten days of July. Things are even looking up a bit in Latin America. But the US recovery risks going into reverse. Our global average tracker maintained its …
14th July 2020
On the face of it, history doesn’t offer much reassurance that the world economy will be able to return to the path it would have been on had it not been for COVID-19. Indeed, looking back at all the downturns that have taken place in the OECD since 1965, …
13th July 2020
Hard data for May generally revealed sharp improvements in activity, particularly retail spending, albeit not to pre-virus levels. This led us to revise our forecasts for several economies including the US, UK and euro-zone, where we now expect falls in …
9th July 2020
Renewed coronavirus outbreaks in some parts of the world have not caused us to rip up our economic forecasts. The initial stages of the recovery have been faster than we feared and we had always assumed that a limited recurrence of the virus would cause …
7th July 2020
Our Recovery Trackers suggest that activity generally continued to rebound heading into Q3. But higher infections seem to have taken a toll in some US states, while Latam is the weakest link in the global recovery. Our proprietary Covid Recovery Trackers …
2nd July 2020
Uptake of central bank lending facilities has been mixed But lending is reaching firms, either through governments or central banks… … and central bank backstops are offering important reassurance to investors This month has seen a further shift among the …
With lockdowns continuing to ease across the globe, it was of little surprise that the manufacturing PMIs rose in June. While the PMIs are still considerably below their pre-crisis levels, they have rebounded more swiftly than they did during the …
1st July 2020
It is by no means inevitable that the coronavirus crisis puts a big permanent hole in the supply capacity of economies (i.e. their ability to produce goods and services). With the right government policies, many economies should be able more or less to …
29th June 2020
April’s world trade data confirmed that coronavirus restrictions have taken a very heavy toll on trade flows. But the damage has been slightly less severe than we had feared and more timely data from early-reporting economies offer hope that the worst is …
25th June 2020
Table of Key Forecasts Overview – Over the next few months, inflation will be dominated by oil price effects as the previous slump unwinds and headline rates rise from their current lows. Some components of core inflation, such as airfares and …
The latest batch of DM flash PMIs generally came out below 50, which might suggest that output fell a bit further in June compared to May. But we should not read too much into the precise level of the PMIs. The point is that they have come back a long way …
23rd June 2020
As long as social distancing isn’t practised for many years, then those behavioural changes triggered specifically by the coronavirus crisis will probably prove temporary. But those changes that were already underway and which have been supercharged by …
Available data suggest that world GDP will fall by around 8% q/q in Q2. While China has seen some recovery, GDP in southern Europe probably fell by as much as 25% on the quarter and India appears to have seen a similar drop. (See Chart 1.) Thankfully, …
15th June 2020
To help clients get a better sense of the state of recoveries around the world, we have collated some daily indicators that are available in almost all major economies to construct composite Covid Recovery Trackers . The trackers are now published on our …
12th June 2020
This Update draws together the conclusions from the various pieces of research that we have published in recent weeks on how the fiscal costs of the crisis will be dealt with. In short, we are generally sanguine about the rise in government debt, which we …
10th June 2020
Data so far have shown a significant variation in how the virus has affected activity, with economies in Southern Europe hit very hard, the US suffering somewhat less and some Asian economies relatively unscathed. Differences are related to the timing and …
9th June 2020
Public sector debt to GDP ratios are going to rise sharply and, in most cases, governments can tolerate this. But to retain the faith of financial markets, they might still need to make sure that debt is on a stable trajectory. For most, this is not a …
5th June 2020
On the face of it, the surge in unemployment in the US implies that households are being hit harder by the crisis than those in Europe. But much of this reflects differences in the way that furloughed workers are being treated in the data. Taking this and …
3rd June 2020
May’s PMIs offer evidence that the global industrial sector is now on the slow road to recovery. But with demand extremely weak, activity is still far below normal levels and price pressures have eased. While the global manufacturing PMI partially …
1st June 2020
Given that the lockdowns were implemented in most countries in March, the 1.4% m/m contraction in world trade volumes seems fairly muted. However, the global number was flattered by a sharp rebound in China as shutdowns there eased. And more timely data …
27th May 2020
Unlike the period after the global financial crisis, we doubt that we will see a widespread trend of austerity to reduce public sector debt ratios. Nonetheless, austerity will still be undertaken in a few isolated cases, primarily in emerging markets. And …
26th May 2020
On the face of it, it might look like major economies have not yet reached the stage of debt monetisation. Where central banks are buying government bonds, it is on the secondary market, is supposed to be only temporary and the primary aim is not to fund …
22nd May 2020
May’s Flash PMIs revealed a partial rebound, suggesting that the global economy is past the nadir. But, the recovery in advanced economies appeared slower than that in China, and the services sector remains particularly weak. With lockdown measures …
21st May 2020
Inflation is the not the easy fix for the coronavirus-related rise in public sector debt that it might seem. Not only might it not actually do much to reduce public sector debt ratios, but higher inflation would impose other serious costs on economies. …
20th May 2020
After falling by around 6% q/q in Q1, world GDP looks set for an equally sharp slump in the second quarter. As major advanced economies are following Asia’s lead in easing containment measures, global activity has hopefully passed its trough. …
19th May 2020
The future of the coronavirus and measures to contain it are highly uncertain and beyond economists’ expertise. Nonetheless, both will be important in determining the outlook for the global economy and we have therefore made assumptions based on what is …
15th May 2020
