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Given the uncertainty about how the coronavirus will evolve, and how governments will respond, it is easy to envisage ways in which the hit to global GDP will be larger than the 1%-pt we have now built into our forecasts. However, in these more …
4th March 2020
Today’s G7 statement about likely measures to tackle the effects of the coronavirus fell short of hopes of a major coordinated policy response. This raises the risk that central banks will disappoint markets’ expectations in the months ahead. The …
3rd March 2020
It is now likely that the central banks of major developed markets (DMs) will follow Australia in loosening monetary policy to help their economies weather the impact of the coronavirus. But there is a limit to what this can achieve; more effective will …
In light of the accelerating spread of the coronavirus – and the economic disruption that is likely to follow – we are pulling down our GDP growth forecasts for Q1 and Q2 of this year. Growth is likely to rebound over the second half of the year, but most …
2nd March 2020
February’s slump in the global manufacturing PMI to its lowest level since May 2009 confirms that the nascent industrial recovery has been thrown into reverse. The hit to activity has been largely confined to China so far, but there are already signs of …
Despite the past week’s equity market rout, financial conditions in DMs generally remain accommodative. It’s still early days, but the sell-off would need to go much further before hampering GDP growth. Coronavirus fears have sparked the third-largest …
28th February 2020
While medical advances put the world in a better position than in the past to limit the health consequences of a global pandemic, globalisation and a bigger services sector mean that, other things equal, a pandemic is likely to cause greater short-term …
Falls in equity prices and bond yields so far this week reflect fears that coronavirus cases outside China will mark the start of a wider outbreak that deals a blow to the world economy. For now, we envisage a moderate hit to global GDP growth of 0.5ppts …
26th February 2020
World trade volumes rose slightly in December in another sign that global trade was stabilising at the end of 2019. In the months since, early evidence suggests that the coronavirus has dealt a heavy blow. So far, the effects seem to have been …
25th February 2020
Coronavirus on its own won’t suddenly precipitate a big decoupling between China and the West, but the virus adds to a list of other reasons why a process of de-globalisation lies ahead. The big threat to globalisation in the past couple of years has come …
24th February 2020
The Flash PMIs for February suggest that, while Japan’s economy has taken a hit from coronavirus-related disruption, there has not yet been much impact on other advanced economies. Today’s batch of PMIs offered the first indication of the effect of the …
21st February 2020
While we agree with investors’ general view that monetary conditions will be accommodative in DMs this year, there’s a group of countries – including the US – where the markets look too dovish. At the same time, we think too little easing has been …
20th February 2020
We side with the optimists regarding the chances of another major technological step forward, although we can only guess at the timing. We expect the US to remain at the forefront of these advances for now, but it will not lead in all areas of new …
18th February 2020
Central bank action so far focused on crisis management in virus-hit countries. Likely fallout reinforces our existing dovish views on several EMs. But the temporary shock does not yet warrant a response from advanced economies. With the coronavirus …
14th February 2020
The new coronavirus has reshaped the global economic outlook for at least the next couple of quarters. From what data are available, it looks like the hit has been big enough for global GDP to contract this quarter. So, where the euro-zone crisis, China …
13th February 2020
For now, our best guess is that the economic disruption related to the coronavirus will cost the world economy over $280bn in the first quarter of this year. If we’re right, then this will mean that global GDP will not grow in q/q terms for the first time …
7th February 2020
While several central banks are undertaking reviews of their monetary policy frameworks this year, the result is likely to be only small tweaks to the existing inflation-targeting frameworks. But this doesn’t rule out a potential widening of central …
6th February 2020
Emerging Asia is most vulnerable to the coronavirus-related disturbance to manufacturing supply chains. Industry-level data suggest that temporary disruption should have little macroeconomic impact in DMs. But the effects are highly uncertain, and at very …
5th February 2020
Final manufacturing PMIs for January add to evidence that the sector’s fortunes have turned a corner in recent months. However, due to the coronavirus-related disruption, this general trend of improvement in the surveys should come to an abrupt halt in …
3rd February 2020
The extensive efforts to contain the coronavirus will cause GDP growth in China and emerging Asia to slow sharply in Q1. We still hope the economic and market disruption will prove temporary. But, given China’s prominent position in global supply chains …
31st January 2020
Having deteriorated throughout 2018-19, the most reliable global economic indicators have stabilised recently, suggesting that the world economy is passing the worst. A range of data for the G7 show this story holds at the country level too. However, …
30th January 2020
Table of Key Forecasts Global Overview – We think that global growth is at or near a trough, with leading indicators picking up around the world and some EMs already experiencing a revival. But the global recovery will be gradual and uneven. The US should …
27th January 2020
World trade volumes fell in November after a slight rise in October. But leading indicators suggest that a turnaround in global trade growth is just around the corner, though the recovery will be gradual. Recent data published by the CPB Netherlands …
24th January 2020
Flash PMIs for January offer further evidence of stabilisation in the world economy. With forward-looking indicators pointing to a gradual improvement, advanced economies are probably past the worst. Composite PMIs rose in the US, UK and Japan at the …
The deal signed yesterday between the US and China was broadly as expected and has not led us to change our economic forecasts. The apparent ceasefire in the battle over tariffs removes a downside risk to growth. But tariffs remain high and we suspect …
16th January 2020
Our estimates of Q4 GDP based on national monthly data and surveys imply that global growth slowed from 3.1% to about 2.6% in quarter-on-quarter annualised terms. But we suspect that this will prove to be the low point before a gradual recovery begins. …
14th January 2020
The assassination of Qassem Soleimani, a major figure in the Iranian regime, in a US airstrike last night has significantly raised the chances of an outright conflict between the US and Iran. We’ve previously estimated that a US-Iran war could shave …
3rd January 2020
Final manufacturing PMIs for December weakened a touch in most major economies, suggesting that global industrial activity ended 2019 on a slightly softer note. The surveys are still consistent with a modest rebound in growth in the manufacturing sector, …
2nd January 2020
Table of Key Forecasts Overview –Inflation in developed markets is likely to be stable in 2020 as a rise in energy inflation is offset by a drop in core. We forecast oil prices to rise to over $70pb in the coming years, so energy prices should now begin …
20th December 2019
We expect the global economy to bottom out around the first quarter of 2020, with growth recovering thereafter. However, the pace of this recovery will be relatively slow and, perhaps most importantly, it will be spread unevenly across regions. The US …
17th December 2019
The details of the reported “Phase One” trade deal between the US and China are sketchy and we are not convinced that it will hold. While the deal removes a downside risk, it does not justify a change in our central forecasts for GDP growth in the US, …
16th December 2019
Flash PMIs for December are consistent with advanced economies having lost momentum in Q4, and forward-looking indicators are yet to suggest that a material rebound is around the corner. Using flash PMIs for the US, euro-zone, UK and Japan, we estimate …
One of the biggest disappointments of this decade has been the stubborn weakness of global productivity growth. While we do not think that this is a permanent shift, a turn-around does not look imminent. And any improvement depends in part on countries …
13th December 2019
The WTO looks set to lose its power to rule on trade disputes this week. This will not immediately transform the economic or policy outlook since the body had been effectively side-lined already. But the failure of world leaders to get it back on track is …
9th December 2019
Now that all major economies have released their Q3 national accounts, it is clear that the world economy pulled off a third consecutive quarter of around 3% annualised growth. (See Chart 1.) And over the past six weeks or so, there has been mounting …
6th December 2019
We do not believe that there has to be a trade-off between preventing global warming and achieving economic growth. Even so, there is a clear risk that the world fails to prevent a significant further rise in global temperatures. Although it is only in …
3rd December 2019
Manufacturing PMIs for November suggest that industrial activity strengthened in most regions. This provides another welcome sign that the global industrial downturn may be bottoming out. In November, the global manufacturing PMI picked up slightly from …
2nd December 2019
We doubt that recent developments in Hong Kong will prevent the US and China reaching a “phase one” trade deal in the coming weeks. But it would do little to boost global growth. And given the fundamental differences between the two sides, tensions will …
September’s fall in world trade volumes was a blow to hopes that the global economy may have reached a turning point. There are some signs of stabilisation in leading indicators of trade, and base effects should push the annual growth rate above zero …
26th November 2019
Flash PMIs for November provide further evidence of a stabilisation in the industrial sector. But with labour markets on the cusp of a marked slowdown, overall economic growth is likely to remain subdued for a while yet. Using flash PMIs for the US, …
22nd November 2019
While we doubt that the growth of collateralised loan obligations has set the stage for a financial crisis in the near term, the risks of one happening further ahead have risen. Collateralised loan obligations (CLOs) are securitisation vehicles that hold …
While policy loosening has caused a marked easing of financial conditions around the world, lending growth is still quite subdued. We doubt that this will change, particularly since demand for loans is now weakening again. This is another reason to expect …
14th November 2019
More EMs’ income levels have fallen relative to the US’s than have risen this year, the first time this has happened since the 1990s. This is likely to be a sign of things to come in the 2020s. There are lots of ways of defining catch-up growth, but our …
13th November 2019
While the Fed seems to have pressed pause, we wouldn’t rule out a December cut. Policy will be loosened further in the euro-zone, Australia and several EMs. But the impact will be modest, particularly in advanced economies. Following a wholesale shift …
11th November 2019
Given Q3 national accounts data from early-reporting countries and monthly data from other economies, it looks like world GDP growth actually picked up a touch last quarter to just over 3% annualised. And there have been some encouraging signs about the …
8th November 2019
Manufacturing PMIs for October suggest that global industry remained weak at the start of Q4. However, we take some comfort from the fact that, at the world level, the surveys have stopped deteriorating. The release of Markit’s global manufacturing PMI …
1st November 2019
Globalisation has peaked. It may stall over the next decade, but a period of de-globalisation is increasingly likely. If this is driven by new technologies, it will not be bad for the world economy. But it could take a more malign, policy-driven, form. If …
29th October 2019
After a jump in July, world trade volumes rose again in August. But this is unlikely to be the start of a material recovery – indeed, most indicators point to subdued trade growth in the closing months of 2019. Recent data published by the CPB Netherlands …
28th October 2019
Flash PMIs for October indicate that underlying momentum in advanced economies has continued to weaken at the start of Q4. The weighted average of the US, euro-zone and Japan composite PMIs imply that the index for developed markets as a whole fell in …
24th October 2019
This Briefing is a reference guide with our latest views and forecasts for the US economy, including the prospects for key macroeconomic and financial market variables such as gross domestic product, wages, the exchange rate and interest rates. … United …
22nd October 2019
