Trade deficit swells as businesses front-run tariffs The trade deficit ballooned to a 3-year high of $98.4bn in December, up from $78.9bn, as imports surged by 3.5% and exports fell by 2.6%. The strength of imports appears largely driven by businesses …
5th February 2025
Strong end to 2024 but little reason for optimism in 2025 The surge in exports in December and recent improvement in the export order survey indicators add to the evidence that the economy was picking up momentum at the end of last year. The prospect of …
NBP a long way from resuming its easing cycle The National Bank of Poland (NBP) left its policy rate on hold again today, at 5.75%, and we think that interest rates will remain on hold throughout 2025. That’s a more hawkish forecast than the consensus …
This page has been updated with additional analysis since first publication. Jump in applications does little to brighten bleak sales outlook The steep rise in home purchase mortgage applications in January left applications at their highest level since …
Official figures released today suggest that economic growth in Indonesia was virtually unchanged again last quarter at about 5.0% y/y, but we don’t have much faith in the official data. Our own Indonesia Activity Tracker (IAT) suggests that the economy …
Regular earnings growth will hold strong at just under 3% for most of this year Growth in base pay rose the most since 1992 in December, and we think it will continue to hold strong in this year. According to today’s preliminary estimate, labour cash …
4th February 2025
This page has been updated with additional analysis since first publication. More slack than meets the eye With the labour market continuing to cool, another 50bp cut by the RBNZ later this month is all but nailed on. The 0.1% q/q fall in employment in Q4 …
A mixed start to 2025 as Egypt turns a corner January’s batch of PMIs showed a mixed result as the region’s two largest economies, Saudi Arabia and Egypt, recorded their strongest outturns in several years, while surveys from Kuwait and Qatar softened. In …
After initially promising unspecified "countermeasures", the Chinese authorities have now fleshed out their retaliation to the Trump administration's 10% tariff hike on all US imports from China. The measures are fairly modest, at least relative to US …
Manufacturing recovery to prove short-lived The ISM manufacturing index finally rose back above the theoretical no-change level of 50.0 in January, but the trade war kicking off across the continent means that the recovery is likely to be short-lived. …
3rd February 2025
January’s inflation data won’t change ECB policymakers’ minds about the likely near-term path for interest rates. The fact that services inflation remained high will mean that they will prefer to loosen policy in small steps. The small increase in …
Growth outlook continues to sour Hong Kong’s GDP growth picked up a touch in Q4, expanding by 2.4% y/y in Q4, up from 1.8% in Q4 (the Bloomberg median was +2.7% and our forecast was +2.3%). In q/q terms the economy grew by 0.8% after contracting by 1.1% …
Central Europe struggling as tariff threat looms The manufacturing PMIs in Central Europe rose slightly last month, but the big picture is that they remained at weak levels. And the threat of US tariffs on the EU poses an additional headwind for the …
Still on course for another large rate cut The sharp jump in the m/m rate of Turkish inflation, to 5.0%, was largely driven by one-off factors. And so long as the February CPI figures come in much softer (as we expect), we still think it’s most likely …
RBA's February rate cut is still on Although retail sales rose strongly last quarter, we doubt the pickup in consumer spending will keep the RBA from beginning its easing cycle later this month. The 0.1% m/m fall in sales values in December was a much …
Real spending growth solid, price pressures muted December’s personal income and spending report brought news of another strong gain in real consumption, but with price pressures muted. As expected, core PCE prices increased by a muted 0.16% m/m in …
31st January 2025
Still struggling for momentum ahead of potential tariff hit The larger-than-expected decline in GDP in November and flash estimate of only a moderate rebound in December suggest that growth was 1.6% annualised last quarter, a little lower than we and the …
Euro-zone inflation easing in January National and state level inflation data published so far suggest that euro-zone inflation may come in a bit lower than anticipated. (Euro-zone data due on Monday 3 rd February). This would support those on the ECB …
This page has been updated with additional analysis since first publication. Higher mortgage rates starting to weigh on prices, but it won’t last Although the muted 0.1% m/m rise in Nationwide house prices in January was slightly worse than expected …
Conditions for further tightening remain in place The end-month data rush vindicates the Bank’s decision to lift its policy rate last week and suggests that further tightening over the coming months is likely. Taking the activity data first, the 0.3% m/m …
Underlying economic growth remains solid The 2.3% annualised gain in fourth-quarter GDP was a little weaker than the consensus estimate at 2.6%, but expectations would have come down a little after the December advance economic indicators showed a big …
30th January 2025
ECB has much further to go The ECB’s decision to cut its deposit rate from 3% to 2.75% today came as no surprise and the accompanying statement implies that more cuts are coming, as is widely anticipated. We think the Bank will have to lower interest …
GDP collapse argues for larger 50bp cut The much larger-than-expected 0.6% q/q drop in Mexico’s GDP in Q4 is likely to strengthen the argument for a 50bp interest rate cut, to 9.50%, at next week’s Banxico meeting. That now looks like the most likely …
Weak economy means ECB will keep cutting The stagnation in euro-zone GDP in Q4 supports our view that the region’s economic prospects are worse than most think. We expect this to prompt the ECB to cut interest rates by more this year than is discounted in …
Net lending to property records strongest year since 2008 Net lending to property had a strong end to 2024, with the total of £1.28bn in December the highest since September. At £11.5bn for the year, commercial property net lending had its strongest year …
This page has been updated with additional analysis since first publication. Downbeat outlook isn’t heavily weighing on households’ financial decisions December’s money and lending figures suggest the downbeat economic outlook isn’t weighing on households …
Signs of improvement, but growth still likely to underwhelm in 2025 GDP data released out of Hungary and Poland today were broadly in line with expectations and suggest that both their economies returned to positive growth at the end of last year, but we …
Germany, France and Italy all weighing on euro-zone growth With national data now available for all larger euro-zone countries, it looks as if GDP growth in the region slowed to 0.1% q/q or even zero in Q4 last year. (Euro-zone GDP data are out at 10.00 …
A softer end to 2024 Saudi Arabia’s flash estimate of GDP showed that the economy grew by just 0.3% q/q in the final quarter of 2024, marking the slowest rate of expansion in a year. We think GDP growth will accelerate this year as oil output cuts are …
Interest rate cuts to support growth in 2025 GDP growth in the Philippines picked up slightly in the final quarter of last year, and we expect decent growth in 2025 as interest rate cuts help offset the drag from weaker exports and tighter fiscal policy. …
Copom sticks to its promise Brazil’s central bank delivered on its pledge to deliver another 100bp hike to the Selic rate, to 13.25%, and another 100bp increase at March’s Copom meeting is all but certain. For now, we are sticking with our view that that …
29th January 2025
Fed moves to the sidelines The Fed left its key policy rate unchanged at between 4.25% and 4.50% and the accompanying statement suggests the FOMC is happy to remain on the sidelines, as it awaits more clarity on the potentially stagflationary mix of …
Bank cuts by 25bp as 25% tariff threat hangs over the economy With the economy doing better recently, the Bank of Canada’s decision to cut by 25bp today might have been a much closer call were it not for the looming threat of US tariffs. Any tariffs could …
This page has been updated with additional analysis Riksbank makes final rate cut of the cycle We think that the Riksbank will keep its policy rate at 2.25% for the foreseeable future after delivering a 25bp cut today. While there is a lot of uncertainty, …
Spain’s strong growth showing no signs of abating The 0.8% q/q increase in Spain’s GDP in Q4 2024 was a bit stronger than expected as the economy brushed off the negative effects of the flooding in Valencia. The economy is likely to continue to increase …
Soft CPI data paves the way for RBA to cut in February With underlying inflation on track to enter the RBA’s 2-3% target band this quarter, we now expect the Bank to begin its easing cycle at its next meeting in February. The 0.2% q/q rise in consumer …
Housing market continues to cool The modest rise in house prices in November adds to the sense that the housing market is experiencing a bit of a slowdown amid weak buyer demand and gradually rising supply. We think this trend has a bit further to run, …
28th January 2025
Fourth-quarter business equipment investment set to decline The fall in durable goods orders in December was due to the volatile transport component, whereas core and underlying capital goods orders both rose. While real underlying capital goods shipments …
MNB waiting patiently to resume the easing cycle The Hungarian central bank (MNB) left its base rate on hold again today, at 6.50%, and we think that the inflation backdrop will result in less easing over the rest of the year than most expect. Today’s …
Newbuild demand remains a bright spot in otherwise frozen market The 3.6% increase in new home sales in December wraps up a solid year for newbuild demand in an otherwise stagnant housing market, with sales up nearly 3% over 2024 as a whole. We expect new …
27th January 2025
German economy starts year on weak footing The Ifo Business Climate Index (BCI) remained in contractionary territory in January which supports the consensus and our own view that that Germany will eke out only a small expansion in GDP this year. The …
Small rise in sales does not mark beginning of the recovery The small rise in existing home sales in December reflects deals that came together in September and October, when mortgage rates hit a nadir of 6.2%, getting across the line. Given the recent …
24th January 2025
Inflation eases, but Copom still set to deliver 100bp hike next week Brazil’s headline inflation rate eased to 4.5% y/y in the first half of January, but signs that underlying price pressures continued to build mean that Copom will press ahead with …
This page has been updated with additional analysis since first publication. Stagflation concerns remain at the start of 2025 Despite the small rise in the composite activity PMI from 50.4 in December last year to 50.9 in January, at face value it is …
This page has been updated with additional analysis since first publication. Growth remained sluggish in January We expect data released next week to show that the euro-zone economy grew by only 0.1% q/q in Q4, and January’s PMIs point to a similarly poor …
Strong exports and investment supporting the economy Taiwan’s economy picked up in Q4, and we expect GDP growth to remain robust over the coming quarters, helped by continued strong growth in information and communication technology exports. The advance …
Bank of Japan will lift policy rate to 1.25% next year The Bank of Japan hiked its policy rate to 0.5% today and we think it will lift it to an above-consensus 1.25% by the middle of next year. The Bank’s decision to resume its tightening cycle with a …
MAS loosens policy, further easing likely amid low inflation Singapore’s central bank loosened monetary policy today and with inflation likely to remain low and economic growth soft, we expect further easing in the coming quarters. The MAS conducts …
Flash PMI points to pick-up in activity this quarter The continued rise in the composite PMI to its highest point since Q3 last year supports our view that activity will pick up again this quarter. Today’s flash estimate showed that the manufacturing PMI …
Strength in underlying inflation points to further tightening The acceleration in headline inflation and strength in underlying inflation in December should add to the Bank’s confidence that it can resume rate hikes today and over the coming months. In …
23rd January 2025
