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The G20 leaders’ summit, to be held in Los Cabos next week, will once again be overshadowed by the euro-zone crisis. Apart from confirmation of a substantial increase in resources for the IMF, which was already agreed earlier this year, we doubt the …
14th June 2012
Headline inflation has dropped this year in most major economies and is likely to come down further as global growth falters, the euro-zone crisis deepens and commodity prices continue to fall. We expect inflation to average just 1% in the G7 next year. …
12th June 2012
The break-up of the euro-zone would be an unprecedented event because the euro itself is unique. But there are still some useful lessons to be learnt from previous monetary splits. … Are historical monetary break-ups relevant to the …
29th May 2012
South African growth surprised on the upside in the first quarter this year, but leading indicators already suggest the economy has slowed in Q2. We expect GDP to grow by just 2.3% over the course of 2012 as a whole – leaving us at the very bottom of …
A partial break-up of the euro-zone, with the weakest economies leaving and the core holding together, could be part of the solution to Europe’s problems, rather than the disaster that many assume. As such it would ultimately be positive for the rest of …
23rd May 2012
The price of gold has dropped sharply in recent days and is barely changed in 2012 to date. The fact that gold has struggled despite the worsening crisis in Europe has added to doubts about its status as a refuge from turmoil in other markets. But we …
10th May 2012
Business surveys for April suggest the global economy began the second quarter at a steady but subdued growth rate of around 3%. They also suggest the divergence between moderate growth in the US and recession in the euro-zone is likely to persist. … …
4th May 2012
The lack of a reliable income stream makes gold notoriously hard to value objectively, whilst the key drivers constantly seem to be changing. The current price is around $1,645 per ounce, having been as high as $1,900 last September and as low as $710 in …
3rd May 2012
Fears that the recent jump in some agricultural prices will lead to an upturn in world inflation are wide of the mark. Overall, agricultural prices have barely changed this year and are still much lower than they were a year ago. As such, they will …
1st May 2012
While there may be no such thing as a risk-free loan, lending to the IMF is probably as close as it gets. Despite the IMF’s increasing exposure to the euro-zone, its preferred creditor status and ability to create money through SDR allocations make it a …
25th April 2012
We expect world GDP to grow by around 3% both this year and next. The US economy is set to recover steadily but the euro-zone recession will deepen, causing the sovereign debt crisis to flare up again and the euro-zone itself to begin breaking apart. …
24th April 2012
At their meeting later this week, G20 finance ministers are likely to focus on the risks to recovery posed by high oil prices and the euro-zone. Of these, the euro-zone crisis remains the most intractable problem and cannot, in our view, be resolved even …
17th April 2012
Argentina’s experience after the collapse of the peso ten years ago supports the view that Greece, and perhaps other peripheral economies, would ultimately be better off leaving the euro-zone rather than struggling on with the current mix of austerity, …
10th April 2012
Purchasing managers’ surveys for March suggest the recovery in global manufacturing may be faltering and remains heavily dependent on growth in the US. … Global PMI suggests manufacturing recovery …
2nd April 2012
Financial markets have staged an impressive rally since late-2011 but world growth has probably not yet accelerated. Looking forward, we expect a gradual recovery in most major economies during the coming quarters, but this will be offset by a relapse in …
30th March 2012
Credit growth and lending conditions are improving gradually in the US but are still extremely weak in the euro-zone. This divergence looks likely to continue or widen in the coming months, potentially contributing to the outperformance of the US economy. …
28th March 2012
The divergence between the performances of the US and the euro-zone economies looks set to widen even further than we had previously expected this year and next. … US economy to pull further ahead of …
14th March 2012
Inflation will climb further in most major economies over the coming months, reflecting both higher energy prices and higher food prices. The peaks should still be lower than those in 2008 as long as the price of oil does not continue to rise. Headline …
7th March 2012
The recent strength of oil prices means that headline inflation may not decline as quickly as it would otherwise have done, but inflation in energy costs is still set to fall. What’s more, while oil prices have risen to their highest levels since 2008 in …
6th March 2012
Purchasing managers’ surveys for February suggest that, although activity has recovered from late- 2011, the global manufacturing recovery may be losing momentum already … Global manufacturing recovery …
1st March 2012
Governments in most advanced economies have been tightening fiscal policy since 2010 and will continue to do so this year. Our best guess is that growth in 2012 will consequently be around 0.5 percentage points lower than it would be if policy was not …
23rd February 2012
Oil prices are still below the levels that would represent a serious threat to the global economic recovery. But even now Europe is significantly more vulnerable than the US, despite the higher sensitivity of the price of lowly-taxed US gasoline to what …
22nd February 2012
World trade growth slowed in 2011 as economic activity faltered. There was a slight pick-up in the last quarter, which looks set to continue early this year, but we think trade is likely to remain sluggish in 2012 too, in line with our expectations that …
20th February 2012
The advanced economies have started the year strongly, led by the US, but the recovery is not secure. Growth could still be derailed by fiscal policy tightening, ongoing debt deleveraging, further near-term strength in oil prices and, above all, a renewed …
The global fall-out from a long-anticipated Greek government default alone should be small and manageable, even if it takes the form of a “disorderly” default without the agreement of private creditors or the other euro-zone members. Nonetheless, there …
16th February 2012
Emerging Asia and Latin America should continue to grow relatively fast even if the euro-zone slides into prolonged recession, as long as the US avoids the same fate. The outlook for emerging Europe is much worse. … How well will growth in emerging …
Oil prices have jumped on the announcement that Iran intends to suspend crude exports to six EU countries, taking Brent back above $120 per barrel. We expect the impact to be short-lived for three main reasons. However, if oil prices do rise significantly …
15th February 2012
Emerging economies will continue growing rapidly this year and next while, despite a strong start to the year, we expect advanced economies to manage sub-trend growth, at best. But rapid growth in emerging markets will be of limited help to the advanced …
13th February 2012
After slowing in the final quarter of last year, the global economy appears to have made a strong start to 2012. But we suspect that a combination of fiscal austerity, weak consumer confidence and a deepening euro-zone crisis mean growth is likely to slow …
7th February 2012
The economies of Asia and Latin America should be able to weather any financial contagion stemming from Europe’s debt crisis. But the economies of emerging Europe – notably Hungary, Turkey and the Balkan countries – look far more vulnerable to possible …
6th February 2012
Yesterday’s remarks by Chinese premier, Wen Jiabao, have yet again raised the possibility that China may put its financial weight behind international efforts to shore up the euro. We remain sceptical. … China will not bail out euro-zone …
3rd February 2012
The increase in manufacturing PMIs for January confirms that the global economy began 2012 in better shape than seemed likely a few weeks ago. But the improvement is from a low base and there are large regional disparities. Moreover, we doubt that this …
1st February 2012
The prices of most commodities, like those other riskier assets, have been rising after Wednesday’s Fed statement was widely interpreted as a “pledge” to keep US interest rates on hold until the end of 2014. But not only is this interpretation plain …
27th January 2012
As the IMF released its latest forecasts yesterday and we published our Global Economic Outlook last week, this seems a good time to take stock of how our forecasts compare with others. Overall, although the IMF’s growth forecasts were revised downwards, …
25th January 2012
The euro-zone is slipping into a recession which we expect to be deep and prolonged and to result in the break-up of the single currency area. This will be a major drag on other European economies. The US will be less affected, but we expect its growth …
16th January 2012
Manufacturing surveys for December suggest the US economy continued to resist the slowdown in Europe right up to the end of 2011. Although US growth is likely to slow this year, we expect this divergence between the US and Europe to persist throughout …
3rd January 2012
This year’s sizeable falls in most commodity prices have highlighted two points that have actually been clear for much longer but are still not yet acknowledged by many commentators. First, even if some commodities are in the early stages of a multi-year …
20th December 2011
Inflation is now on a downward trajectory almost everywhere as global commodity prices drop back and demand conditions weaken. Disinflation will gather pace in the first half of 2012 and inflation in G7 economies is likely to average 1% or less in both …
13th December 2011
We broadly agree with the consensus view that most emerging economies will hold up well in 2012. But with the US set to slow and the euro-zone heading towards break-up, the path ahead is going to be bumpy. Here are five developments that emerging market …
7th December 2011
November’s purchasing managers’ surveys suggest the euro-zone is sinking into an even deeper recession even while the US manufacturing sector has strengthened. … Growing divergence between US and euro-zone …
1st December 2011
Faced with the potential for a systemic financial crisis, the G20 group of leading nations may eventually agree a big increase in resources for the IMF. However, even if they do so, we doubt whether the IMF will be able to provide the majority of the …
14th November 2011
We are forecasting some pretty substantial falls in commodity prices over the next few years, which should provide some support for global growth. However, the experience of 2008 and 2009 shows that even a collapse in commodity prices may not be enough to …
7th November 2011
As expected, the G20 summit concluded today without agreeing anything of substance. Euro-zone leaders were effectively told to get their own house in order, something they have conspicuously failed to do so far, and were given only very vague pledges of …
4th November 2011
October’s manufacturing surveys suggest Europe was slipping into recession even before the latest twist in the euro-zone crisis, while the rest of the world experienced low but positive growth. As the euro-zone crisis deepens, however, it is likely to …
2nd November 2011
The G20 leaders’ summit this week will be an exercise in damage limitation. The agenda has been completely over-taken by the euro crisis, where there is no agreement on the role non-euro-zone countries should play. Nor is there likely to be progress on …
The immediate fall-out from a Greek default should be manageable and much less damaging than that which followed the collapse of Lehmans, even if it does count as a “credit event”. However, this assumes that policy-makers are able to prevent contagion to …
26th October 2011
While there are no direct historical parallels with the current situation in Europe, a review of past experience suggests policymakers may need to resolve the euro-zone’s sovereign debt crisis conclusively in order to fix its banking system. Bank …
25th October 2011
Emerging markets are not immune from the deepening debt crisis in the developed world, but most are well-placed to deal with the fallout. China faces a difficult structural transition of its own but, along with the rest of emerging Asia, has policy …
21st October 2011
We expect growth to be very low or negative in most advanced economies next year. The euro-zone is already heading for recession, and if its public debt and banking crisis is not contained, the rest of the developed world may follow suit. Emerging …
20th October 2011
