Recent data show the current wave of virus infections weighing on the economy, with retail sales falling again in December and the labour market recovery stalling. We think fourth-quarter GDP growth slowed to 4.5% annualised, but the relatively softer end …
21st January 2021
The Reserve Bank of India (RBI) is set to tighten regulation of non-bank financial companies (NBFCs) over the coming weeks. Alongside stricter audits of many smaller lenders, the RBI is likely to require NBFCs to maintain larger buffers of liquid assets. …
Our forecast for a 1.5% q/q fall in consumption in Q1 rests on the assumption that some businesses in virus hotspots will be forced to close in order to contain Japan’s most severe wave of the pandemic yet. But signs that new infections may already have …
20th January 2021
House price growth surged to 8.4% y/y in October, as booming home sales have combined with record low inventory to boost values. But that rise in prices has already offset the improvement to affordability provided by record low mortgage rates. (See Chart …
15th January 2021
The latest data suggest that activity was more resilient in Q4 than we had previously feared, with GDP in Norway and Sweden likely to have grown relative to the previous quarter, for example. That said, mobility data indicate that retail activity was hit …
14th January 2021
While the economic fallout will not be as severe as it was with the first lockdowns, the surge in virus cases will weigh on activity in Q1. Vaccine rollouts should provide a boost to the global recovery, but not until the second half of the year. …
12th January 2021
Overview – The prices of industrial metals continued to surge in December, capping off a strong 2020. However, we expect that prices will fall this year as growth in China’s demand slows on the back of the gradual withdrawal of fiscal stimulus and tighter …
8th January 2021
The extension of lockdowns has dashed hopes of an early rebound in economic activity. Instead, the economy is likely to contract in the first quarter of this year. After falling quite steeply at the end of last year, the number of new virus cases in the …
7th January 2021
Overview – Energy commodity prices for the most part ended 2020 on a high, buoyed by strong seasonal demand, an increase in investor risk appetite and a weaker US dollar. And while energy commodities were the underperformer in 2020, they should be the …
Overview – Commodity prices rose in December in spite of a tightening of COVID-19 restrictions in a number of developed economies, which will weigh on commodities demand at the start of this year. Markets seem to be focusing on a brightening demand …
5th January 2021
COVID-19 has wreaked havoc on the world economy, which is set to contract the most since WWII this year. China has not been immune – it is on track for its slowest growth since the Mao era – but set against the gloomy global backdrop, its economic …
23rd December 2020
COVID-19 has ravaged India’s economy in 2020, and GDP is all but certain to have suffered its largest slump on record this year. But there are reasons for optimism as the year draws to a close. Several activity indicators point to a continued recovery in …
The province-wide shutdowns recently announced in Ontario and Quebec raise the downside risks to our near-term forecasts, although the start of the coronavirus vaccination program last week provides a reason to be hopefully about prospects in 2021. The …
22nd December 2020
Korea , Hong Kong, Malaysia and Thailand are all experiencing major new outbreaks of the virus, which pose a significant downside risk to our relatively upbeat GDP forecasts for these countries for 2021. The lesson from Vietnam , which experienced a big …
The 7.9% q/q recovery in consumption in Australia in Q3 still left it 6.8% below pre-virus levels. Even excluding Victoria, consumption only recovered to around 4.5% below pre-virus levels. And since the huge stimulus payments continued and labour income …
The latest national accounts data from Sub-Saharan Africa tell a story of the good, the bad and the ugly. South Africa’s economy mounted a surprisingly strong recovery in Q3, and a solid rebound in Nigeria’s non-oil sector more than offset weakness in the …
18th December 2020
Rental falls slowed and capital values returned to growth in November, suggesting that we may be too pessimistic in predicting further falls in values. But, with tight virus restrictions remaining and structural shifts weighing on the rental outlook, we …
Positive vaccine news has not changed our view that monetary policy in many emerging markets (EMs) will generally remain loose for some time yet. That is a key reason why we still expect EM local currency government bonds yields to stay low by historical …
After falling in May and June, house prices shrugged off the collapse in GDP and the decline in employment to surge in the second half of the year. (See Chart 1.) As a result, annual house price growth in Q4 is on track to be just over 6%, the strongest …
The OPEC+ agreement earlier this month to increase oil supply will mean that downturns in hydrocarbon sectors across the Gulf will start to ease. And, of course, the Gulf countries will also benefit from higher prices – Brent crude broke through $50pb …
Daily new COVID-19 infections have levelled off or fallen in most parts of Central Europe and there are signs that activity has started to rebound. But the fresh rise in new cases this month in Slovakia and the Czech Republic underlines the challenges …
17th December 2020
PM Suga’s decision on Tuesday to halt the Go To Travel campaign for two weeks from 28 th December may put the recovery in services spending into temporary reverse. It comes after authorities in Tokyo, Osaka, and Nagoya this week extended requests for bars …
There is now clear evidence that the continued surge in COVID-19 infections and restrictions imposed to control its spread are once again weighing on the economy, with employment growth slowing sharply in November and retail sales dropping back. Moreover, …
16th December 2020
Recoveries in Latin America are under threat from a fresh rise in new COVID-19 cases, particularly in Brazil, Mexico and Chile. Policymakers in all three countries have tightened restrictions which will weigh on activity this month and into early 2021. …
The recent swings in sterling triggered by shifts in sentiment towards the chances of a Brexit deal have left little room for the pound to appreciate if there’s a deal, but plenty of room for it to depreciate if there’s a no deal. As the markets appear to …
We think there is scope for global equities to make more headway over the next couple of years, against the backdrop of a recovering global economy and supportive monetary and fiscal policy. November saw the biggest monthly increases in MSCI’s World Index …
As well as being a game-changer for economic prospects next year (see here ), the positive news on the vaccine front has also helped to ease the upward pressure on the Swiss franc against the euro. The franc briefly dropped to its lowest level of 2020 …
11th December 2020
Recent data confirm that global economic activity has continued to recover from the height of coronavirus restrictions in Q2. But while activity in China is now above its pre-virus level, there is still a major shortfall in other economies, including …
10th December 2020
The race to secure and approve COVID-19 vaccines is in full swing and, while roll-out will generally be slower in EMs than in DMs, immunisation of vulnerable populations over the next year or so is a realistic goal, which should allow lockdowns to be …
The surge in home sales looks to be running out of steam. The pending home sales index dropped back in September and October, and that points to a fall in existing home sales in November. (See Chart 1.) With pent-up demand from the spring now largely …
9th December 2020
The increase in working from home that appears to have led buyers to put less emphasis on location and more on space has not undermined London house prices. As of September, house price growth in the capital of 4.1% y/y was only marginally below that in …
Euro-zone GDP looks set to fall in Q4, but the prospect of vaccine rollouts has significantly improved the outlook. We think that containment measures will be scaled back when the most vulnerable members of society are inoculated, which will probably be …
4th December 2020
Overview – Industrial metals prices rallied in November. While we expect demand growth to stay strong in the months ahead, on the back of robust economic activity in China, we think that it will slow in 2021 as the Chinese government gradually withdraws …
Overview – The prospect of effective COVID-19 vaccines gave a lift to most energy commodities in November as they have raised the prospect of higher demand in 2021. We anticipate a particularly strong rebound in oil consumption next year and have raised …
COVID-19 vaccines have dramatically brightened the economic outlook. GDP probably still fell during the second lockdown in November, perhaps by up to 8% m/m, and the strict COVID-19 regional tier system will limit the rebound in activity in the coming …
3rd December 2020
Good news about progress on coronavirus vaccines in the past month has started, or fuelled, a number of trends which we broadly expect to last through 2021, as those vaccines help the global economy reopen and policy mostly remains supportive. The trends …
2nd December 2020
Overview – A flurry of positive news surrounding effective COVID-19 vaccines gave a lift to most commodity prices in November, as a faster easing of virus containment measures next year should provide a lift to demand. While we think that oil prices will …
1st December 2020
With rental and capital values falling at a slower pace in recent months, this had seemed to suggest that pricing was bottoming out. But the near-term outlook for most commercial property sectors has been dampened further by the second lockdown. We expect …
30th November 2020
National accounts data published over the past month or so confirm that many economies experienced record-breaking rebounds in GDP in the third quarter. However, there are significant variations across the region. Output is now back to its pre-crisis …
We have been arguing for some time that the unemployment rate would not rise as much as most believed in either Australia or New Zealand. We remain confident in those forecasts. Admittedly, the unemployment rate rose from 4.0% to 5.3% in New Zealand in …
Encouraging news about highly effective coronavirus vaccine trials has brightened Sub-Saharan Africa’s economic outlook. However, the region is facing higher barriers compared to many other parts of the world due to a lack of advance purchase agreements …
27th November 2020
Equities and bonds in emerging markets (EMs) rallied sharply on the vaccine news earlier this month, particularly outside of Asia. We think they will continue to fare well as the global economy recovers. The reaction of EM assets to the vaccine news …
The positive news on COVID-19 vaccines has provided a boost to the region’s economic outlook and this has underpinned a rally in local financial markets . The general improvement in risk appetite and the “rotation” back towards energy and financials has …
26th November 2020
The positive news on the efficacy of COVID-19 vaccines offers hope for the region’s economy. As things stand, Chile and, to a lesser extent, Mexico look well placed to benefit given their sizeable pre-orders. Purchases are relatively small in Peru and …
25th November 2020
There is no clearer sign that China’s economy is back to normal than the return to centre stage of concerns about property developers, the bad debts of SOEs and financial risks. Regulators’ tolerance for defaults ebbs and flows with their confidence in …
We continue to think that stock markets will make further headway against a backdrop of a recovering global economy and continued accommodative monetary policy, as investors increasingly focus on the rollout of effective vaccines rather than on rising …
The decline in restaurant visits in the past month suggests that over 100,000 jobs in the accommodation and food services sector were at risk even before most of the Greater Toronto Area moved into lockdown this week. The accommodation and food services …
24th November 2020
The positive news on COVID-19 vaccines in recent weeks has helped to lift the near-term outlook for the Middle East and North Africa. For the Gulf countries, oil prices have picked up with Brent crude reaching its highest level since March and we think …
Economic and property data for Q3 confirmed Switzerland and Scandinavia’s relative resilience in this pandemic. In fact, Scandinavian capital value growth improved across all sectors on an annual basis, albeit values continued to fall for retail. (See …
India’s government has not put in any pre-orders for the Pfizer and Moderna vaccines that were first to report encouraging Phase 3 trial results. But, alongside the US, India has the largest order of any country for the Oxford/AstraZeneca vaccine. (See …
