GDP data for Q2 revealed sharp declines in activity in all major economies except China, driven primarily by slumps in consumer spending. Retail sales data for May and June pointed to an encouragingly sharp rebound, leaving sales above their pre-virus …
13th August 2020
Despite the reintroduction of states of emergency in some prefectures, and renewed calls for jishuku (“self-restraint”) in many others, the steps taken by local authorities to curb the “second wave” of coronavirus cases have so far been tentative and …
Mortgage rates have continued to fall, hitting a record low 3.14% at the end of July. Alongside the reopening of parts of the economy, and pent-up demand from the spring, that has helped home sales bounce back strongly from their COVID-related dip. …
12th August 2020
Despite a rather lacklustre economic recovery, the housing market is already turning the corner. Demand has bounced back, helped by a decline in mortgage interest rates. The stamp duty cut will provide further support to housing transactions over the next …
11th August 2020
The economy is set to rebound strongly in the current quarter after its 12% slump in Q2, even if there is no further increase in GDP in August and September. Indeed, some of the high frequency data suggest that economic activity is almost back to its …
6th August 2020
The broad-based recovery in “risky” assets that got underway on 23 rd March has run out of steam since 8 th June. That is not because policy support has been dialled back. Instead, it appears to reflect renewed concerns about the spread of the coronavirus …
5th August 2020
The large share of consumer-facing services in the UK economy, combined with a deeper and longer lockdown than most other developed economies meant that the UK was always going to be hit harder than some other countries. But the larger fall in GDP in the …
The Gulf economies have been the epicentre of the coronavirus outbreak in the region but almost all countries have managed to put new daily cases on a downwards trend thanks to strict containment measures and aggressive testing. In contrast, new cases are …
31st July 2020
The number of new daily coronavirus cases in the region has continued to rise, with only Chile among the major economies appearing to get its outbreak under control. Restrictions have been lifted much more slowly in the region than elsewhere in the …
Private investment is down 7.3% y/y so far this year, held back by the uncertain economic outlook. State firms have stepped in to fill the gap. Despite a sharp downturn at the time of China’s lockdown in Q1, their capital spending rose 2.1% y/y during the …
The past month has brought further signs that countries across Sub-Saharan Africa are struggling to bring the coronavirus under control. Of course, the true extent of the spread of the virus is muddied by low levels of testing. South Africa has accounted …
Much of Latin America, South Africa, and parts of Asia – notably India and the Philippines – are still struggling to contain their first waves of coronavirus. And while policymakers in these countries have generally eased lockdowns over the past few …
Turkish financial markets have come under renewed pressure this month, underlining the risks posed by the country’s low level of foreign exchange reserves and large external financing needs. The threat of EU sanctions seems to have been the proximate …
30th July 2020
A new outbreak in Victoria has caused daily new cases to surge to a record high in Australia. By contrast, New Zealand has maintained its elimination of the virus with new cases remaining very low and only being detected in quarantine facilities for …
The second quarter GDP figures for the region that have already been published make for grim reading, but there is a big divergence between countries. In aggregate terms we estimate that Emerging Asia (excluding China) contracted by around 10% y/y last …
28th July 2020
Although there were further signs of stabilisation in June, we expect that the slow recovery in the economy will continue to put upward pressure on yields in the coming months. Meanwhile, rents fell by 0.4% m/m in June, the same pace as the previous …
27th July 2020
Operational changes announced by the Bank of Canada this week mean the pace of expansion of its balance sheet is set to slow. The Bank’s assets have surged by $420bn, or 350%, since February, a rise equivalent to 18% of GDP. The pace of expansion picked …
23rd July 2020
The rapid recovery in activity in May and June means that, after contracting by close to 30% annualised in the second quarter, GDP is already on course for a big rebound in the third quarter. But there are signs that the resurgence in coronavirus …
After hitting an all-time low in April, the rupee has strengthened by 3% against the US dollar as risk appetite has returned to global financial markets. (See Chart 1.) But while we think risky assets generally – and most EM currencies – will continue to …
22nd July 2020
Despite the Bank of England having slowed the pace of its gilt purchases to below that of gilt issuance (see Chart 1), our forecasts that it will expand the size of its quantitative easing programme by a further £250bn and won’t raise Bank Rate above …
With coronavirus cases hitting record-highs in Tokyo and rising in other urban areas, the government announced on Monday that it plans to give local governments greater power to request business closures. That could include penalties for firms that ignore …
21st July 2020
The various high-frequency data series that we have been following in our Recovery Trackers have indicated that activity in the Nordic economies has picked up sharply over the past three months. However, the release of monthly GDP data from Norway for May …
13th July 2020
After a brief pause in the second half of June, record low mortgage rates helped push applications for home purchase to an 11-year high in the first week of July. That will help reverse the earlier dip in existing home sales but, with credit conditions …
9th July 2020
Hard data for May generally revealed sharp improvements in activity, particularly retail spending, albeit not to pre-virus levels. This led us to revise our forecasts for several economies including the US, UK and euro-zone, where we now expect falls in …
Euro-zone bank lending growth has jumped in recent months, as firms borrowed to tide themselves over while their revenues collapsed during lockdown. (See Chart 1.) At the same time, banks’ willingness to lend has been boosted by government loan guarantees …
7th July 2020
Overview – Energy prices continued to recover in June, but they remain significantly lower than at the start of the year. What’s more, we do not expect them to recover to pre-virus levels until 2022 at the earliest. Supply will comfortably meet any rise …
Overview – June was another good month for industrial metals. The prices of base metals made further gains, although those used in steel alloys (e.g. zinc and nickel) performed less well as wet weather in Southern China disrupted construction projects, …
3rd July 2020
Overview – The more industrial commodities performed particularly strongly in June on the back of the ongoing revival in global economic activity. We have become more positive on the outlook for industrial metals prices this year given higher …
2nd July 2020
The coronavirus extinguished a nascent surge in London house prices in Q1. Instead, housing demand in the capital collapsed during lockdown, and has been comparatively slow to return. That underperformance is likely to continue in the near-term, as virus …
1st July 2020
A slump in Korea’s automotive sector, which accounts for around 10% of GDP, is weighing heavily on the country’s prospects. The latest industrial production data which were published today show that motor vehicle output fell by 35% y/y in May, compared …
30th June 2020
Restrictions on activity have lifted in both countries. (See Chart 1.) While some states in Australia still limit the size of groups and capacity at restaurants, New Zealand has now lifted all domestic restrictions. The reduction in restrictions has …
While rental values fell sharply in May, this was in part offset by yields increasing at a much slower pace than the previous month. In turn, this led to a less steep fall in capital values, but annual returns remained negative. As the negative impact of …
26th June 2020
Policymakers in the region have started to ease lockdowns but, with daily coronavirus cases still trending higher, restrictions are being lifted much more slowly than in most other countries. And Chile’s government has doubled down on its lockdown in the …
25th June 2020
Market conditions have generally improved in recent months, with government bond yields remaining low, corporate bond spreads almost back to their pre-coronavirus levels and the FTSE 100 recovering almost half of its 33% slump in February and March. (See …
Developments over the past month suggest activity is rebounding strongly as restrictions are lifted. The CFIB measure of small business confidence has now made up most of its post-virus slump, and the Ivey all-economy PMI also rose strongly in May. While …
Governments across MENA have taken steps to re-open economies over the past month and, after a sharp downturn in April and May, daily indicators suggest that economic activity has started to recover. That said, activity remains well below pre-virus …
24th June 2020
China’s exports have held up remarkably well in the face of the sharp slump in global activity. They contracted just 3.3% y/y in US dollar terms in May. The detailed trade data published today show that a large part of that resilience was the result of …
With monetary policy likely to remain loose for a very long time and the world’s largest economies gradually re-opening, we think that developed market (DM) “risky” assets will continue to recover from their pandemic-induced Q1 slump. To reflect this, we …
After tightening dramatically in March following the outbreak of the coronavirus, our proprietary index shows that financial conditions in India have eased substantially over the past couple of months. (See Chart 1.) This is in large part due to the RBI’s …
The recovery in global risk appetite and in commodity prices has eased strains in balance of payments across the region. But conditions remain much worse than the they were before the crisis flared up. And while many EM sovereigns have tapped global …
23rd June 2020
Lockdown measures dealt a heavy blow to economies across the region in April, but the latest data offer encouraging signs that activity has recovered quickly over the past couple of months. Economic activity in the first few weeks of June was at or above …
While the incoming economic data continue to point to a nascent recovery in aggregate EM activity, some countries are being left behind. Recent figures from parts of Asia (China, Korea, Vietnam and Taiwan) and Emerging Europe (notably Poland), where …
19th June 2020
The 17.7% m/m jump in retail sales in May showed that consumer spending is recovering far quicker than most had expected as lockdowns have eased, with headline retail sales reversing their April drop and underlying control group sales back at pre-pandemic …
18th June 2020
The recent spike in COVID-19 cases in Tokyo linked to nightlife establishments in Shinjuku underlines just how slow the road back to normality could be. Renewed outbreaks are likely to prevent a straightforward and swift economic recovery. Indeed, many …
While much of the rebound in EM currencies is now probably behind us, we think that many of them will rise a bit further against the US dollar as risky assets generally continue to recover. (See Chart 1.) We have revised up our forecasts for many emerging …
17th June 2020
Available data suggest that world GDP will fall by around 8% q/q in Q2. While China has seen some recovery, GDP in southern Europe probably fell by as much as 25% on the quarter and India appears to have seen a similar drop. (See Chart 1.) Thankfully, …
15th June 2020
The latest high frequency data indicate that economic activity in the Nordic economies has continued to recover in recent weeks, with trips to shops and restaurants now close to pre-crisis levels in Sweden, Denmark, and Norway. (See Chart 1.) Sweden’s …
12th June 2020
While the housing market has reopened, there are still limited data on the pace of improvement. Given the economic damage, uncertainty and weak pipeline of in-progress housing sales, we expect the recovery in activity to be gradual. Meanwhile, the main …
10th June 2020
By the end of May, mortgage applications for home purchase had fully reversed their earlier drop. (See Chart 1.) New home sales have also performed better than expected, with a surprise month-on-month rise in April. However, with credit conditions …
9th June 2020
Overview – The gradual easing of coronavirus-related lockdown restrictions around the world, along with falling global production, has supported the price of oil recently. By contrast, persistent oversupply and lacklustre demand continue to weigh on coal …
5th June 2020
