The turmoil in financial markets caused by the global spread of COVID-19 shows little sign of abating, despite policymakers’ efforts to contain the fallout. Our view remains that until evidence emerges that the spread of the virus is slowing down, risky …
17th March 2020
Overview – Energy prices have crashed in recent weeks as the coronavirus has disrupted economic activity and reduced demand. Meanwhile, on the supply side, OPEC+ failed to agree to deepen its oil output cuts. We suspect that energy prices could fall …
16th March 2020
Measures of activity and house price pressures were strong in February. But with the coronavirus set to disrupt activity and confidence over the next few months, the housing market recovery is unlikely to last beyond March. Economic indicators point to a …
13th March 2020
The real-time economic and market disruption from the coronavirus means that much of the backward-looking data released during the past month offers little insight into current developments in the world economy. Accordingly, this publication will now …
The spread of the coronavirus, and the related real-time economic and market disruption, means that a large swathe of hard and survey data released during the past month is old news. Consequently, this publication will now focus on fewer, timely and …
12th March 2020
With growing evidence that the coronavirus is turning into a pandemic, a hit to housing market activity is inevitable. No hard numbers have been released yet, but home sales are vulnerable to any disruption the virus will cause. Delaying a major purchase …
10th March 2020
February was another poor month for industrial metals. (See Chart 1.) However, prices fell by less than in January and policy loosening seems to have stabilised prices more recently. That said, the outbreak of COVID-19 is quickly becoming a global issue, …
6th March 2020
The economy started the year on a strong note, but it is only a matter of time before it succumbs to the effects of the coronavirus. To reflect the weaker global backdrop and the likelihood that measures implemented to limit the spread of the virus will …
5th March 2020
Other than a lengthening of supplier delivery times in February, there is little evidence that the shutdown in the Chinese economy has had much impact on the euro-zone economy so far. Indeed, business surveys generally point to a slight pick-up in …
4th March 2020
Overview – Commodity prices continued to fall in February as the coronavirus, which started in China, spread to most other regions of the world and sparked fears of a slowdown in global economic activity. We have revised down our forecasts of commodities …
A rise in all-property yields caused capital values to decline by 3% y/y in January. Although we expect yields to rise and rents to edge lower in the months ahead, the rate of decline in capital values is set to slow later this year. Economic indicators …
2nd March 2020
Chinese factories were slow to reopen even after the extended Lunar New Year holiday came to end. One week after most of the country officially went back to work on 10 th February, more than half of large industrial firms remained closed. That has now …
28th February 2020
Latin American currencies and equities have been among the worst performers in the emerging world this month as fears about the spread of the coronavirus have intensified. The region has limited direct economic ties with the countries suffering outbreaks …
27th February 2020
Recent news added to our general sense of pessimism about most African economies in 2020. While the region has yet to report any cases of the new coronavirus, falling commodity prices are already dealing a blow to exporters of oil and other industrial …
All-property rental growth eased across most markets in 2019, but the slowdown was concentrated in the retail sector. Admittedly, the Swiss markets remain a bright spot as prime retail rents increased in 2019. But there is no denying the retail sector in …
Concerns about the outbreak of coronavirus have taken their toll on the region’s financial markets over the past month. While the direct trade exposure of Emerging Europe to China is limited and there have been few reported cases of the virus in the …
26th February 2020
Consistent with softer economic growth, annual rental growth for office and industrial property in CEE markets slowed in Q4. However, rental growth picked up for retail, bucking the downward trend seen elsewhere in Western Europe. (See Chart 1.) And …
We estimate GDP growth in Australia continued to muddle along in Q4, edging up from 0.4% q/q in Q3 to 0.5% q/q. In New Zealand, we think a stronger contribution from net trade was offset by a decline in inventories and softer consumption growth, causing …
The past month has brought more bad news on Dubai’s economy. Markit’s Dubai PMI hit a four-year low in January and efforts to contain the coronavirus pose a threat to the Emirate’s transport and tourism sectors. And the real estate sector remains in the …
25th February 2020
While the further spread of the Covid-19 virus increases the chance of interest rate cuts, the Bank of Canada seems likely to approach the issue in the same way that it approached the US-China trade war. The Bank hinted several times last year that it was …
We still don’t have much in the way of hard data, but the figures that have been published so far suggest the coronavirus and the measures that China has taken to contain it, are having a severe economic impact. Tourist arrivals into Thailand have fallen …
Temporary disruption from the outbreak of the coronavirus should have limited macroeconomic impact on Indian industry. After all, India has a negligible supply-chain exposure to China (see Chart 1), where factory shutdowns are now having knock-on effects …
24th February 2020
Economic indicators have improved recently, but remain at low levels, meaning that the recovery in GDP growth is likely to be gradual. As a result, occupier demand is likely to continue to slow, keeping upward pressure on vacancy rates and causing rental …
21st February 2020
Although euro-zone rental value growth slowed in 2019, further falls in property yields supported capital values. Despite the soft economic backdrop, capital value growth should hold up in coming quarters. (See Chart 1.) However, a further slowdown in …
The coronavirus is severely impacting China’s economy and the incoming data suggest that this is spilling over to other economies, particularly in Emerging Asia. Tourist arrivals to Thailand are down by 50% y/y, while trade data for Korea collapsed in the …
20th February 2020
Although the Boeing shutdown and the coronavirus outbreak pose downside risks to the economy in the first quarter, there are mounting signs that underlying momentum in the economy is strengthening. We estimate the halt in 737 Max production could reduce …
19th February 2020
Given our view that investors’ expectations for further Fed rate cuts this year will be disappointed, we think that the twin rally in US equity and bond markets will end before long. After falling by about 3% in the immediate aftermath of the virus …
18th February 2020
While October’s sales tax hike and Typhoon Hagibis were partly to blame for the sharp drop in manufacturing output in Q4, the bigger picture is that any recovery this year rests on a pick-up in external demand. Japanese industrial production fell …
17th February 2020
The initial financial market reaction in Switzerland and the Nordics to the coronavirus followed the familiar pattern during times of uncertainty: the Swiss franc rose and Swiss bond yields tumbled on the back of safe-haven demand, while the Swedish krona …
13th February 2020
The new coronavirus has reshaped the global economic outlook for at least the next couple of quarters. From what data are available, it looks like the hit has been big enough for global GDP to contract this quarter. So, where the euro-zone crisis, China …
Even if the coronavirus outbreak in China is brought under control and the recent moves in equity and bond markets unwind, we think that most EM assets will not make significant gains this year. This reflects our long-held pessimistic view of China’s …
11th February 2020
A decline in apartment completions helped keep rental vacancy rates low over the latter part of 2019. But strong multifamily starts over the past couple of years suggest completions will pick-up in 2020. (See Chart 1.) That will lead to a modest rise in …
Signs of a recovery in industrial commodity demand were emerging at the beginning of 2020. Indeed, the economic data have improved and investor concern surrounding the US-China trade war has eased. But the recent coronavirus outbreak in China quickly put …
6th February 2020
House price growth and transactions picked up, as political uncertainty eased following December’s general election. In the near term, leading indicators hint at a further recovery over the remainder of Q1. But with house prices high and interest rates …
Signs that the economy has turned a corner support our view that interest rates won’t be cut from 0.75% this year. After all, the activity PMIs are no longer in the territory where rates have been cut by 25 basis points before. (See Chart 1.) And they …
Overview – Energy prices slumped in January owing to concerns about the hit to demand from the coronavirus outbreak. The evolution of the epidemic over the coming weeks will determine how lasting its impact will be on energy prices. For now, we are …
5th February 2020
The euro-zone economy ended 2019 on a weak note and the outlook for early 2020 remains gloomy. Euro-zone GDP slowed from 0.3% q/q in Q3 to 0.1% q/q in Q4, with contractions in French and Italian GDP. Although the euro-zone surveys for January point to a …
Overview – Commodity prices, and energy prices in particular, have been hard hit by the outbreak of coronavirus in China and the prospect of lower global commodities demand. There is still too much uncertainty to factor the virus into our forecasts. But …
4th February 2020
African central banks had a busy month in January. Policymakers in South Africa and Kenya surprised the markets (and us) by cutting their key rates by 25bp. We expect that both countries’ central banks will make one further cut, but that rising inflation …
31st January 2020
A combination of optimism about the prospect of a US-China trade deal and some better than expected economic data temporarily halted the decline in the Australian dollar towards the end of last year. Even so, the services balance surged into surplus in Q4 …
The decline in energy and metals prices caused by concerns about the coronavirus took a heavy toll on the region’s financial markets in the last few weeks. The Brazilian and Chilean currencies have been the worst performers in the emerging world this …
30th January 2020
The number of deaths inside China attributed to the new coronavirus is now on course to exceed those from SARS by early next week. The measures taken by the government and the public to limit transmission are having a significant economic impact. …
Before the coronavirus hit, the latest data suggested the region’s economies had turned a corner. Our regional GDP Tracker nudged up slightly at the end of last year, while GDP figures for Taiwan, Korea, Singapore and the Philippines (the only four …
We simply don’t know how far, or fast, the novel coronavirus outbreak will ultimately spread, so for the time being we are assuming that the response across asset classes will follow the same pattern observed during and after previous epidemics – that the …
29th January 2020
Fiscal plans announced across the Gulf over the past month suggest that governments will keep policy tight, a key reason why we think that economic growth will disappoint this year. The Saudi 2020 budget outlined that expenditure would be cut by nearly …
Regional GDP growth in Emerging Europe appears to have picked up from 2.2% y/y in Q3 to around 2.5% y/y in Q4. This was predominantly driven by a recovery in Turkey’s economy, where policymakers are pulling out all the stops to support activity. Russia …
Annual returns were just 2.1% in December, the lowest monthly figure since 2010. A marginal rise in yields in the retail sector caused all-property capital values to fall in December and was exacerbated by a slight fall in all-property rental values. (See …
Since the end of December, overnight index swaps have moved from pricing in no change in monetary policy over the next two years to implying 40 bp of loosening. (See Chart 1.) We had expected some move in that direction, as we thought that a further …
28th January 2020
There is no longer any doubt that China’s newly-identified coronavirus will hit its GDP growth in Q1 . And other parts of Asia (notably Hong Kong and Thailand) will suffer a drop in Chinese tourism receipts (see Chart 1), which could shave 1.5-2.0%-pts …
27th January 2020
The Fed’s interest rate cuts, a truce in the trade war, and a more positive global backdrop have all set the stage for an acceleration in economic growth this year. We calculate that GDP growth was a modest 2.0% annualised in the fourth quarter, as a …
21st January 2020
