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Over a year ago, we warned that surging shipping costs posed an upside risk to inflation going into 2022, and it looks like these risks did indeed materialise. But now that global shipping costs have collapsed, we expect them to drag down on inflation …
25th November 2022
November’s flash PMIs were a mixed bag, with unexpected increases in Europe and a sharp fall in the US. However, the headline indices are now at levels consistent with falling activity in all major advanced economies. And the surveys continue to suggest …
23rd November 2022
Recent monthly data from the advanced economies have tended to exceed analysts’ gloomy expectations. This is partly due to an easing of supply shortages, which could offer some further support to output and spending in the near term. However, this …
The Ukraine war has sent the risk of Russian cyberattacks on the West soaring up the agenda, with an attack on critical infrastructure potentially bringing whole economies to a halt. In most cases, a few days of disruption would not actually put much of …
22nd November 2022
The October inflation data highlighted a contrast between the US and Europe, with core price pressures easing materially in the US but staying stronger in the euro-zone and UK. We think this will be an enduring feature of relative inflation prospects in …
18th November 2022
This week’s G20 summit in Bali, Indonesia, has so far exceeded low expectations. There is broad condemnation of the war in Ukraine and bilateral talks between China and the US seem to have been amicable. But with the meeting dominated by geopolitical …
15th November 2022
Although credit growth in advanced economies remained strong in September, it has largely been used to help economies cope with the effects from rising costs and inflation. But lending criteria is now tightening and demand for loans – particularly …
Many of the Q3 GDP releases of early-reporting economies have beaten consensus expectations in the past few weeks, especially in Europe. Not only did energy-crisis-laden Germany grow in Q3, rather than contract as expected, but the economy managed to …
11th November 2022
The pace of global monetary policy tightening is slowing But neither history nor central bank guidance give a reliable steer of the future profile Early signs are that the Bank of Canada and US Fed will lead the retreat next year In recent weeks, …
10th November 2022
The impending global recession will see sluggish growth or outright contractions in GDP in most major economies, with Europe faring the worst. Accounting for changes in trend growth over time, we think that the depth of the global downturns in the 1990s …
7th November 2022
The latest manufacturing PMIs are consistent with a significant downturn in global industry. As higher interest rates take a further toll on demand, shortages should continue to alleviate, helping to ease price pressures. However, as the PMIs suggest, …
2nd November 2022
This dashboard gives a holistic overview of financial conditions across major developed economies. It presents our proprietary financial conditions indices (FCIs) as well as a selection of input variables used in our FCIs. Our FCIs indicate the ease with …
The dovish tilt among central banks has led to more talk of “pivots”, but this will mean different things for different banks. The ECB may be shifting to a slower pace of tightening, but the peak in rates is still some way off. That peak is closer for …
1st November 2022
Russia’s decision to withdraw from the Black Sea Grain Initiative will exacerbate sky-high prices and tight global supply, and adds to the likelihood that prices hover around historical highs for the next few months. To recap, the Kremlin announced at the …
Our Global Economics team held a 20-minute online briefing on the outlook for the global economy and policy on Tuesday, 8 th November. During this session, the team answered client questions as they highlighted key takeaways from their recently published …
27th October 2022
There is growing evidence that weakening demand in major economies is taking a toll on world trade. While trade volumes rose in August, early reporting Asian economies revealed a decline in imports in September, exports orders have fallen sharply across …
26th October 2022
Table of Key Forecasts Global Overview – Persistently high inflation and more aggressive monetary policy tightening now seem set to cause a global recession. While we had previously anticipated contractions in several economies, the gloom has spread …
25th October 2022
October’s flash PMIs provided further evidence that several of the major advanced economies are heading into recessions. The surveys suggest that activity was already contracting at the start of Q4. And apart from during the initial COVID outbreaks, new …
24th October 2022
The latest data suggest that the labour market strength, which has been a key feature of advanced economies this year, might be coming to an end. Admittedly, unemployment rates have generally been stable at very low levels. However, falling job vacancy …
14th October 2022
Strictly speaking, recent measures by the Bank of England do not qualify as so-called “fiscal dominance”. But this could be the thin end of the wedge, and not just for the UK. While we are a long way off central banks in developed economies directly …
13th October 2022
The dollar’s appreciation is bad news for the global economy, as it will weigh further on demand for traded goods and add to global inflationary pressures. It is another reason why we expect the global economy to fall into recession next year, and risks …
12th October 2022
Central banks have the tools to deal with liquidity crises arising from rising interest rates and falling asset prices. Instead, the bigger threat is that higher interest rates produce large and simultaneous falls in asset prices that threaten the …
11th October 2022
China’s economy has essentially stalled. This does not mean that aggregate growth in the rest of the world will automatically slow, but there will be winners and losers at a country level. Recent economic news from China has been dismal. (See here .) We …
One result of the rise in near-term interest rate expectations is a deterioration in the outlook for global housing markets. We already expected house price falls in a handful of countries. Now those falls look set to be bigger, while corrections are …
7th October 2022
With pr ic e pressures still strong, the looming global recession is unlikely to derail central banks’ tightening plans in the months ahead. While the RBA quoted the deteriorating global outlook when it recently decided to slow the pace of rate hikes in …
6th October 2022
Inflation persistence has strengthened the drive for higher rates… … while weak exchange rates and fiscal policy concerns add to challenges for some. Peaks will be higher than we had assumed and the risk of policy mistakes has grown. Recent developments …
4th October 2022
The latest manufacturing PMIs suggest that global industry has already weakened significantly and is set to perform worse in the coming months as high inflation and rising interest rates take their toll. While higher commodity prices caused price …
3rd October 2022
The sharp increases in gas and electricity prices in Europe mean that households there – particularly in Germany and Italy – will see a steep rise in their costs of energy consumption. Accordingly, governments have announced support packages worth …
28th September 2022
While world trade was resilient in the first half of this year, there is growing evidence that it has since weakened, and we suspect that it will contract outright in 2023 as the world economy falls into recession. Weaker demand for traded goods and …
It is now clear that central banks in advanced economies will raise interest rates even further than our above-consensus forecasts had implied, making the current tightening cycle the most aggressive in three decades. While this may be necessary to tame …
27th September 2022
Another month, another batch of PMIs pointing to Q3 GDP having fallen in major advanced economies. Yet despite the deterioration in real activity, as well as some further signs that pipeline price pressures are easing, September’s PMIs will do little to …
23rd September 2022
Table of Key Forecasts Overview – There has been growing evidence that pipeline price pressures have eased, underlining our view that inflation will fall sharply next year. Commodity prices and shipping costs have fallen, product shortages have …
The post-pandemic recovery in travel and tourism still has some way to go in parts of the world that have been slower to lift restrictions, such as in Asia. And China’s reluctance to move away from its zero-COVID approach means tourism for leisure …
15th September 2022
The latest data have revealed that the world’s major economies are all struggling, but for different reasons. In Europe, the energy crisis is largely behind the recent softness in consumer and industrial activity. In the US, higher interest rates are …
14th September 2022
Hopes that policymakers can engineer a soft landing rest heavily on the belief that wage growth can be tamed without a surge in unemployment. This ‘Phillips curve’ relationship has changed recently, with G7 pay growth now higher than it was before 2020 …
6th September 2022
The fall in the global manufacturing PMI in August implies that global industrial activity is contracting, and the further decline in the new orders and export orders sub-components suggests that things will only get worse. The good news is that weak …
1st September 2022
World trade was broadly unchanged at a high level in June, and timelier data suggest that the continued easing of supply constraints in China helped lift exports in Asia in July. But forward-looking indicators suggest that global demand for goods …
26th August 2022
August’s flash PMIs suggest that activity has weakened considerably, and, at face value, suggest that both the US and euro-zone have fallen into recession. What’s more, the forward-looking components of the PMIs point to further falls in output ahead. The …
23rd August 2022
In addition to revealing that higher interest rates had barely affected household and corporate finances, national accounts data for Q1 suggested that, with the exception of households in a handful of medium-sized economies, private sectors are …
19th August 2022
Given that unemployment rates have usually risen significantly in recessions, it is tempting to conclude that history is about to repeat itself, to the frustration of policymakers seeking soft landings in labour markets. But the pandemic has produced …
15th August 2022
There have been growing signs that we are at the turning point in global inflation. Commodity prices and shipping costs are down both in y/y and level terms, while product shortages have alleviated as softer demand and fewer bottlenecks have opened up …
12th August 2022
Taiwan matters far more to the world economy than its 1% share of global GDP would indicate. A further escalation in cross-strait tensions that cut Taiwan’s export off from the rest of the world would lead to renewed shortages in the automotive and …
8th August 2022
Banks are frontloading rate hikes to stem inflation risks and avoid more pain later on. Early signs are ok, with inflation expectations down and demand weakening somewhat. But rates could need to fall back before long, especially where housing risks …
4th August 2022
China’s leadership has options other than invasion to coerce Taiwan to submit to its political control. The immediate economic and financial ramifications would differ in each case. But any scenario that upset the existing cross-Strait balance would come …
2nd August 2022
July’s fall in the global manufacturing PMI supported other evidence that the industrial sector is in or close to recession and the forward-looking indicators point to further weakness to come. At least the weakness of demand has caused backlogs of work …
1st August 2022
We held an online Drop-In event yesterday to discuss our Q3 Global Economic Outlook and the forecasts within it (see an on-demand recording here ). This Update addresses several of the client questions that we did not have time to answer during the event. …
28th July 2022
A sharp rebound in Chinese exports helped lift world trade higher in May, and could boost trade further in the coming months. But outside of China, forward-looking indicators still suggest that weaker global demand will weigh on trade, meaning that …
27th July 2022
The news today that Gazprom will further reduce its natural gas supply to Europe increases the likelihood of recessions in the euro-zone, UK and parts of Emerging Europe. It also supports our view that inflation pressures will be relatively persistent in …
26th July 2022
Another month, another set of downbeat PMIs for advanced economies. The demand indicators weakened markedly in the US and the euro-zone for the second month in a row, crossing over into recessionary territory. The flipside of the softer demand is that …
22nd July 2022
