Acceleration in growth, with rebalancing under the surface The strength in Turkey’s economy in Q1 – GDP expanded by a whopping 2.4% q/q – was driven by a large boost from net trade while private consumption growth slowed sharply. This offers signs that …
31st May 2024
Persistently high mortgage rates cause prices to stagnate Despite a small increase in the Nationwide house price index in May, the big picture is that the slight rise in mortgage rates since the start of the year has caused house prices to stagnate. The …
This page has been updated with additional analysis since first publication. GDP should rebound this quarter On balance, the modest decline in industrial production and the rebound in retail sales in April point to a decent rebound in GDP this quarter. …
This page has been updated with additional analysis since first publication. Slowdown in underlying inflation has further to run May’s rebound in inflation in Tokyo largely reflects a jump in electricity inflation that has further to run, but underlying …
Rates on hold, SARB to keep a close eye on election results The South African Reserve Bank’s decision to leave the repo rate unchanged at 8.25% was never in doubt. Governor Kganyago said as little about the election as was possible, but the MPC will be …
30th May 2024
Recovery in regional sentiment takes a breather The European Commission's Economic Sentiment Indicators for Central and Eastern Europe (CEE) were a mixed bag in May and our regional-weighted measure edged down slightly. Even so, that still leaves …
This page has been updated with additional analysis since first publication. EC Survey points to weak economic growth and easing price pressures The EC business and consumer survey for May is consistent with weak growth in euro-zone GDP, while price …
Early signs point to low ANC vote, rand on the backfoot The early results from South Africa’s election which took place yesterday point to the ruling ANC securing a vote share closer to the low end of projections (at just over 40%), increasing the chances …
German state data point to smaller-than-expected rise in euro-zone inflation CPI inflation data published by the major German states this morning suggest that both German and euro-zone HICP inflation may come in a bit lower than expected and that though …
29th May 2024
Stalling disinflation means rates will remain higher for longer While inflation picked up further in April, we doubt that the Reserve Bank of Australia will respond with another interest rate hike. The 3.6% increase in the Monthly CPI Indicator was …
House prices March on The solid 0.3% m/m rise in house prices in March suggests that competition among buyers for the limited number of second-hand homes on the market remains strong. We expect that to continue for the rest of the year, consistent with …
28th May 2024
Fall in inflation means rate cut in June still in play The decline in Brazilian inflation to 3.7% y/y in the first half of this month, coupled with signs of easing price pressures in some core categories, will provide relief to policymakers at the central …
Falling real consumption will help to reduce inflation The weakness in retail sales is consistent with our view that inflation will reach the top end of the RBA’s 2-3% target band in the second half of the year. The 0.1% m/m rise in retail sales values in …
Retail sales point to soft consumption growth The broad-based nature of the weakness in retail sales in March show that high interest rates are weighing on demand and, at the margin at least, provide a bit more justification for the Bank to cut interest …
24th May 2024
Durable goods orders slowly trending up Headline and core durable goods both did better than we expected in April, suggesting that the earlier decline in corporate borrowing costs may be feeding through. Nonetheless, with growth in underlying capital …
Growth slowdown begins Nigeria’s GDP growth slowed to 3.0% y/y in Q1, driven by a halving in the oil sector growth rate, alongside high inflation and tighter monetary conditions continuing to drag on the non-oil economy. We expect growth to remain …
Outlook for retailers remains bright despite soggy start to Q2 The 2.3% m/m fall in retail sales volumes in April was much bigger than our forecast for a 0.5% m/m fall and the consensus forecast for a 0.4% m/m decline as the unusually wet weather …
This page has been updated with additional analysis since first publication. Underlying inflation will fall below 2% over coming months The sharp slowdown in underlying inflation in April had little to do with the slashing of high school fees in Tokyo …
New home sales fall in April due to high mortgage rates The spike in mortgage rates to 7.3% in April caused a sizeable drop in new home sales, as buyers decided to wait for a chance of getting a lower rate. We think this will partly reverse in May as …
23rd May 2024
Strength of services inflation still a point of concern for Banxico The rise in Mexico’s headline inflation rate to 4.8% y/y in the first half of May was driven by another jump in agricultural price inflation. But core services inflation remained …
Rates to stay on hold throughout the year Turkey’s central bank left its main policy rate unchanged at 50.00% again today and the statement continued to emphasise the need to keep interest rates high for a prolonged period. While the consensus view is for …
Survey provides support for summer rate cut Today’s May flash PMI survey will have provided the Bank of England with some comfort after yesterday’s stronger-than-expected inflation data for April. Crucially, the further fall in the services output prices …
Retail sales disappoint Poland’s activity data for April revealed that retail sales growth softened a bit more than expected last month, but that the weakness in industry in March was just a temporary blip. On balance, we remain comfortable with our …
This page has been updated with additional analysis since first publication. Recovery continuing The PMIs for May suggest that the euro-zone economy continued to expand in Q2 while price pressures eased but remained high in the services sector. The ECB is …
On hold, but easing likely before year-end The decision by the Bank of Korea to leave the policy rate unchanged (at 3.5%) today came as no surprise, of more interest will be the tone of the central bank’s statement and Governor Rhee’s press conference. …
FOMC stresses higher for longer The minutes of the Fed’s early May policy meeting are, not surprisingly given the backdrop of data releases ahead of that meeting, somewhat hawkish. The resilience of economic growth and employment, and particularly the …
22nd May 2024
Existing home sales slide in April, with further falls likely ahead The drop in existing home sales in April will be followed up by further falls in the coming months, supporting our view that the recovery in transactions we expect this year will be …
Inflation eases, but rate cuts still some way off South Africa’s headline inflation rate eased further to 5.2% y/y in April but the Reserve Bank will want to see more evidence that inflation and, crucially, inflation expectations are coming under control …
BI on hold, cuts by year-end Bank Indonesia today left interest rates unchanged (at 6.25%) and the comments from the press conference suggest this marks the end of the tightening cycle. Following April surprise hike, today’s decision came as no …
This page has been updated with additional analysis since first publication . Limited scope for tax cuts April’s public finances figures got the new 2024/25 fiscal year off to a shaky start and cast further doubt on the Chancellor’s ability to unveil big …
We’ll be discussing the outlook for UK inflation and interest rates in a 20-minute online briefing at 9.30am BST today. (Register here .) This page has been updated with additional analysis since first publication. Stickiness of services inflation makes …
RBNZ signals rate cuts may have to wait Although the RBNZ suggested that there was a high bar for further policy tightening, the Committee stated that interest rates may have to remain at their current restrictive level well into 2025. In our view, the …
Another large hike, MPC feels it is winning inflation battle The Central Bank of Nigeria delivered a larger-than-expected 150bp hike to its policy rate, to 26.25%, at its meeting today, reinforcing Governor Cardoso’s recent comments that officials will …
21st May 2024
Easing in core inflation is being sustained The fourth consecutive 0.1% m/m average increase in the Bank of Canada’s preferred core price measures in April will give the Bank confidence that the further easing in core inflation is being sustained. That …
Easing cycle about to enter a slower phase The decision by the Hungarian central bank (MNB) to cut its base rate by 50bp again today, to 7.25%, will be followed by more cautious monetary easing over the rest of this year. We currently forecast just 100bp …
This page has been updated with additional analysis since first publication. Construction outlook is poor Euro-zone construction output rose slightly in March but we think the sector will struggle over the coming months. The 0.1% m/m rise in construction …
RBA is done tightening policy The RBA continued to tout the line that all options are on the table as far as its next move is concerned. However, we still expect the Bank’s next move to be down, not up. The minutes of the RBA’s May meeting confirmed that …
A strong start to the year The 1.9% q/q rise in Chile’s GDP in Q1 confirms that the economy is gathering momentum following a weak 2023 and has prompted us to revise up our (once above consensus) 2024 GDP growth forecast to 2.8% (from 2.3%). It also …
20th May 2024
Thailand’s economy rebounded in Q1 and we expect steady, if unspectacular, growth this year driven by a further rebound in tourism and strong government spending. The 1.1% q/q rise in Q1 GDP, following the 0.4% decline in Q4, was well above consensus …
Economy running hot in Q1, inflation pressures build further The 5.4% y/y rise in Russian GDP in Q1 was a touch stronger than expected and, taken together with the rise in inflation in April, adds further evidence to the view that the war effort is …
17th May 2024
The second estimate of Q1 GDP confirmed that the economy rebounded last quarter but we continue to expect below-trend GDP growth this year as a whole. The softening labour market, tighter fiscal policy and soft foreign demand are all likely to weigh on …
This page has been updated with additional analysis since first publication . Recovery hits a speed bump Industrial production continued to accelerate thanks to strong exports, but growth on most other indicators slowed, pointing to softer domestic …
Soft IP adds to downside surprises on activity The 0.3% m/m decline in manufacturing output in April , together with the downward revision to the March gain, from 0.5% to 0.2%, continues the run of weaker activity data and will further solidify …
16th May 2024
Weaker than expected recovery in housing starts The modest rebound in housing starts in April confirmed that the slump the month before was a weather-related blip. But the recovery wasn’t as strong as we had anticipated, which potentially casts some doubt …
This page has been updated with additional analysis since first publication. Activity rebounds, but net trade remains a large drag The 14.1% q/q annualised rebound in Israeli GDP in Q1 was slightly weaker than expected and left GDP almost 3% below its …
Dovish BSP hints at first rate cut in Q3 The central bank in the Philippines (BSP) today left its main policy rate unchanged (at 6.50%), but the tone of the statement was much less hawkish than at its April meeting. Not only did the central bank cut its …
Labour market will continue to loosen The continued rise in the unemployment rate in April further diminishes the likelihood that the Reserve Bank of Australia will deliver another interest rate hike. The 38,500 rise in employment last month was stronger …
This page has been updated with additional analysis since first publication. Activity set to rebound this quarter The renewed drop in GDP in the first quarter mostly reflects production shutdowns at major carmakers and a pronounced rebound this quarter …
The 1.1% q/q expansion in Colombia’s GDP in Q1 confirmed that the economy made a strong start to the year and supports our view that the central bank won’t step up the pace of easing at its next meeting in June. The outturn was a touch below the Refinitiv …
15th May 2024
Manufacturing sector faltering The weakness of manufacturing sales in March suggests that the economy lost momentum heading into the second quarter, matching the message from the earlier preliminary estimates for retail sales and GDP. The 2.1% m/m fall in …
