Filtered by Subscriptions: Global Economics Use setting Global Economics
The news that Angela Merkel will step down as head of the CDU has limited implications for the German economy since she will stay on as Chancellor for now and her likely successors broadly support her policies. But it may well slow decision-making over …
29th October 2018
Classic EM crises have caused waves, but have rarely triggered global downturns. And in any case the current risk of a 1980s-style EM crisis is low. The bigger risk is of a China ‘hard landing’ which could result in a painful slowdown in global growth …
We expect the Fed’s monetary policy tightening cycle, which is now well underway, to contribute to a slowdown in the US economy during 2019-2020. And tighter monetary policy may also trigger downturns in countries with high household debt burdens and in …
26th October 2018
Credit growth in advanced economies is likely to maintain a healthy pace despite quantitative tightening. Meanwhile, the recent spike in Italian government bond yields may increase firms’ borrowing costs. … Monetary Indicators Monitor …
Although world trade growth has ticked up in recent months, we think that it will slow sharply in the coming year or so as global demand weakens. For now, it looks like tariffs under consideration should play a less significant role in dampening world …
25th October 2018
Preliminary Markit PMIs provide tentative evidence that the euro-zone economy will lag behind advanced-economy peers in Q4, as growth holds up better in the US and Japan. … Fortunes diverge in advanced …
24th October 2018
The Italian Government’s reply to the European Commission suggests that there is unlikely to be a quick resolution to the current fiscal impasse. We expect yields to rise in the coming years. … No end in sight for Italian fiscal …
22nd October 2018
Global growth is likely to ease over the next two years, led by slowdowns in the US and China. Although headline inflation should drop back in many advanced economies next year, core inflation will continue to rise. Against this backdrop we expect the Fed …
The apparent success of the US’s recent fiscal stimulus, at least in the short term, begs the question of whether other countries should, or will, follow suit. However, we think that most would struggle to emulate the US experience. … Other countries …
19th October 2018
While a disorderly no deal Brexit might, depending on its nature, deliver a significant short-term blow to the UK economy and financial markets, any global fallout would probably be small. … Global fallout from a no deal Brexit would be …
18th October 2018
After years of falling unemployment, wage growth has finally been picking up in the major advanced economies this year. However, the forces that have kept a lid on pay growth over the past decade are likely to prevent it from rising sharply, even at …
16th October 2018
It would require a significant escalation from the measures seen so far for a trade war to be the trigger of the next global downturn. The bigger risks at this stage are that lower-level skirmishes over trade cause problems for individual economies …
15th October 2018
After slowing sharply since the start of the year, we think that trade growth will lose further momentum in the coming months. But we doubt that there will be anything worse than a modest slowdown. … World trade likely to slow, but not …
12th October 2018
We broadly agree with the IMF’s latest growth projections for the world economy for next year, but we still think its forecasts are too optimistic for the US and too downbeat for the UK. And in contrast to the IMF’s projection of unchanged growth in 2020, …
9th October 2018
The strong showing for Jair Bolsonaro and his party in yesterday’s general election in Brazil has increased the chances of pro-market reform. This is likely to prompt an initial rally in local markets – we think the real might rise by another 3-5% against …
8th October 2018
The impact of a no deal Brexit on the economy would depend on what sort of no deal it was, but there would be at least some negative effect in the short term. If the UK left the EU on bad terms, the damage could be substantial. But this would be a one-off …
While we expect oil prices to fall back from their four-year high, a continued rise to $100pb would not deal a big blow to global growth. But it would exacerbate current account pressures in some EMs. … Should we fear oil at …
5th October 2018
The world economy seems to have lost some momentum in the past few months and we expect it to slow further in the coming year. World trade growth has fallen sharply, though this is due to weakening global demand rather than new protectionist measures, …
4th October 2018
A year after the Fed began shrinking its balance sheet, global central banks’ net asset purchases have slowed sharply, and they are set to turn negative in January. However, we doubt that this will cause a sharp sell-off in global bond markets or that it …
3rd October 2018
The new trade deal agreed with Canada and Mexico won’t in itself have much impact on the US economy. Along with the deal recently agreed with South Korea, however, it provides another example of President Donald Trump backing down from his hard-line …
1st October 2018
The fall in Markit’s global manufacturing PMI in September supports our view that global growth peaked in Q2. We think growth will slow further over the next two years as the US and China lose momentum. … Surveys weaken at the end of …
There are now only six months left to negotiate the deal under which the UK will leave the EU and move into a transition period. This Update lays out five key questions and answers on what still needs to be done, and the pitfalls that could lead to a …
27th September 2018
We think the Fed is likely to raise interest rates three more times by the middle of next year. By 2020, however, we suspect that Fed officials will reverse course and cut interest rates in response to a slowdown in the economy. Other major central banks …
We expect the slowdown in world trade growth to continue next year as global demand weakens. Meanwhile, US-China trade tensions have risen – both countries imposed further tariffs on each other’s imports yesterday. But the aggregate impact on the global …
25th September 2018
Preliminary PMIs suggest that GDP was expanding at a steady pace in advanced economies in September. The euro-zone has not recovered from a weak first half of the year, and the US has continued to do much better. Meanwhile, there is no sign of a rebound …
21st September 2018
Global money and credit conditions remain accommodative. Broad money has been expanding at a decent pace and the latest lending data are encouraging. There are, however, some signs that higher interest rates in the US are beginning to weigh on household …
We have revised up our forecast for the price of Brent crude, but still expect it to fall in the coming year or so, helping to reduce headline inflation. However, we don’t expect this to have much impact on monetary policy, because central bankers in …
19th September 2018
With a further $200bn of US tariffs now confirmed, and China reiterating that it will retaliate with tariffs of its own, we take stock in this short note of where China stands in the trade war. … Taking stock of the new …
18th September 2018
Following a long period of tightening labour markets, wage pressures are mounting, and we think this will lead to a gradual pick-up in average earnings growth. Core inflation rate will probably rise quite sharply in the US next year but then drop back as …
17th September 2018
Ten years after the collapse of Lehman Brothers, there are concerns that the financial markets will bring the global economy to its knees again. We do not think, however, that they will be a major cause of the next recession, despite claims that the …
14th September 2018
Ten years after the collapse of Lehman’s, the risk of something similar occurring again in the near future appears to be low. But looking for the next Lehman’s misses the point – crises on the scale seen in 2008 are rare and, while a repeat looks unlikely …
13th September 2018
The risk that higher interest rates will trigger widespread corporate defaults and cause the next global downturn is low, not least because business finances are generally in good shape. But as monetary policy is tightened, companies may scale back …
12th September 2018
For many companies the effects of the US and China imposing tariffs on all their bilateral trade would be substantial. But the macroeconomic consequences for the two countries, let alone the wider world, would be surprisingly small. Both are fairly closed …
11th September 2018
Despite the steady flow of negative news about protectionism and crises in emerging economies, global growth is holding up well in Q3. Moreover, the labour market has continued to strengthen, particularly in the US, making two more rate hikes this year a …
7th September 2018
The EM sell-off appears to have become more broad-based in the last few days, although there is little evidence that – outside Turkey and Argentina – the market turmoil is resulting in macroeconomic strains. The bigger concern over the next 12-18 months …
5th September 2018
Global manufacturing growth continued to lose momentum in August, according to the latest PMIs, though they still point to world GDP growth holding up reasonably well in Q3. … PMIs slip …
4th September 2018
While the threat of a US-Mexico trade war may have diminished, the trade conflict between the US and China looks set to escalate. And overall, protectionist rhetoric and policies are likely to continue having a big impact on some sectors and markets. But …
31st August 2018
Fed officials look increasingly confident in their plans to raise interest rates twice more this year while ECB officials are on course to end their asset purchases by December. Next year, though, we expect the Fed to raise rates only two more times …
30th August 2018
The latest Turkish activity data suggest that the plunge in the lira since May, and the associated sharp tightening of financial conditions, has tipped the economy into recession. Things are only likely to get worse and our GDP growth forecasts lie well …
29th August 2018
The growth of world trade volumes seems to have stalled in the first half of the year. However, some more timely data and survey evidence suggest that it should pick up again in the second half of the year, provided that the global “trade war” does not …
24th August 2018
Preliminary business surveys for August point to a further loss of momentum in the manufacturing sector, but the composite surveys suggest that GDP growth is holding up reasonably well. Meanwhile, export orders have stabilised but at a much lower level …
23rd August 2018
Both the consensus and financial markets are coming around to our view that the Fed will cut interest rates in 2020, but we still think they are underestimating how soon and how fast the Fed’s policy cycle is likely to turn. We expect that a sharp …
22nd August 2018
Even if emerging market assets remain under pressure this year, we don’t expect the crises in Argentina and Turkey to be replicated in other emerging economies. Meanwhile, domestic conditions in the US and euro-zone support the case for gradual policy …
Developments over the past few weeks have made it more likely that Italy’s Government will implement some form of fiscal stimulus in next year’s Budget. This is likely to cause bond yields to rise further. However, contrary to some Italian politicians’ …
17th August 2018
Surveys of consumer confidence have been unusually strong in the past two years, but their usefulness as a guide to spending has deteriorated. What’s more, experience shows that both confidence and spending could fall abruptly if the economic outlook …
