There has been further evidence over the past month that resilient export growth, weak domestic demand and lower energy prices have helped to improve current account positions across Central and Eastern Europe this year. This has been particularly …
31st May 2023
The renminbi strengthened sharply against the US dollar in response to China’s move away from zero-COVID. But the currency has since reversed much of those gains and is now approaching 7.10/$, its weakest level since December. Optimism over China’s …
30th May 2023
As in the euro-zone, the rise in prime property yields in Scandinavia slowed sharply in Q1 after the surge in H2 2022. Along with decent gains in rents, where Oslo offices and industrial saw the fastest growth, this meant that the decline in capital …
26th May 2023
Central banks in the region’s two largest economies, Nigeria and South Africa, both hiked interest rates this month and, whereas attention elsewhere is turning to rate cuts, the risks seem to be tilted towards further increases in both countries. …
25th May 2023
The results of elections in major EMs over the past month have increased macroeconomic policy risks. Most notably in Turkey , President Erdogan now has the edge ahead of a second-round presidential election run-off next week. Hopes of an opposition …
The flash Q1 GDP figures for Saudi Arabia showed the economy grew at its weakest pace in two years at the start of 2023, reflecting the cut in oil production in line with the OPEC+ decision in October. And the even more recent voluntary output reductions …
24th May 2023
Metro level data for Q1 2023 showed the slowdown in occupier demand was widespread, with no market consistently outperforming across the sectors in terms of absorption. While office and industrial asking rents continued to grow, they did so at a slower …
The turnaround in the housing market, with sales and prices rebounding in April, has raised hopes that construction will hold up despite elevated borrowing costs. Media reports suggest that buyer enquiries for pre-construction projects have rebounded, …
A strong rebound in tourism provided a big boost to growth in Thailand and Hong Kong last quarter, which along with China, were the three best-performing countries in Emerging Asia in Q1. But for the rest of the region, the GDP figures painted a …
In contrast to the rest of Europe, CEE yields not only rose, but increased more sharply in Q1 than the previous quarter. (See Chart 1.) Strong rental growth cushioned the blow to all-property capital values, but that did not prevent a partial reversal …
The resilience of the April activity data and apparent stabilisation in housing have raised hopes that a recession may yet be avoided this year. That said, forward-looking indicators suggest that the huge rise in interest rates and tightening of bank …
23rd May 2023
The latest activity figures suggest that most Latin American economies held up better than we’d thought in the first few months of 2023. Mexico and Colombia made surprisingly strong starts to the year while Chile ’s economy appeared to be gathering some …
The past month has brought some encouraging news on the inflation front. Consumer price inflation dropped sharply in April to an 18-month low, keeping the headline rate comfortably within the RBI’s 2-6% target range. Both energy and food price inflation …
22nd May 2023
The economy has been relatively resilient so far, but with the banking turmoil set to weigh on activity, we continue to expect a recession this year. Slower growth has already translated to softer occupier demand across all property sectors. This will …
19th May 2023
The larger than anticipated rebound in mortgage approvals in March and a slowdown (or even partial reversal) of house price falls suggested that the housing market downturn may have ended much earlier than we anticipated. The unwinding of some of the …
Capital value falls slowed in Q1 as the surge in euro-zone all-property yields cooled. But, with rent growth decelerating across all sectors, the increase in yields was still enough to drive another 4% q/q fall in capital values. (See Chart 1.) Although …
Overview – Most commodity prices have moved lower over the past month as concerns about demand have intensified and risk appetite has soured. We think prices will continue to struggle over the next few months as tight monetary policy feeds into slowdowns …
16th May 2023
Australia’s house prices have rebounded over the last couple of months and most leading indicators suggest that the recovery has legs. However, we doubt that a sustained recovery is on the cards. While false dawns in the housing market are rare, they did …
15th May 2023
Q1 GDP releases have confirmed that the major economies avoided recession at the start of the year and some of the more recent survey data suggest that this resilience continued into Q2. The composite PMI output index for developed economies rose from …
12th May 2023
Governor Ueda presided over his first policy meeting late last month and opted to keep all monetary policy settings, including Yield Curve Control (YCC), completely unchanged. To be sure, Mr Ueda also announced that the Bank will conduct a thorough review …
11th May 2023
The US housing market has been largely unaffected by the banking sector turmoil. Indeed, buyer sentiment rose to an 11-month high in April and activity appears to have bottomed out. Tighter credit conditions could yet weigh on the market, but the latest …
10th May 2023
April’s inflation data provided little sign that underlying price pressures are easing. Admittedly, the core rate edged down from 5.7% y/y in March to 5.6%, which was the first decline in 15 months. But that was entirely due to a decline in core goods …
5th May 2023
We’ve been surprised that the rise in Bank Rate from 0.10% in November 2021 to 4.25% hasn’t triggered a contraction in GDP at the start of this year. Indeed, while higher interest rates were a further drag on net mortgage lending in March, the …
4th May 2023
Click here to read the full report. We think the economic recovery in China will support further gains in the country’s equity market. Despite some renewed evidence that China’s economy has been recovering more strongly than most anticipated in the first …
3rd May 2023
The MSCI USA Index has not made much further headway on net in April so far. But it has at least held on to its strong gains from earlier in 2023, returning about 8% YTD. Part of that strength presumably reflects the global economy proving more …
28th April 2023
All-property yields have stabilised since the start of the year and alongside continued rental growth, that means total returns were more-or-less flat during Q1. (See Chart 1.) But, while the worst is over, the economy is still set for a mild recession, …
Persistent and deepening electricity outages in South Africa are wreaking economic havoc. Almost half of generating capacity was offline this month, triggering severe “loadshedding”. Output in energy-intensive sectors – such as mining and manufacturing – …
27th April 2023
The renminbi surpassed the US dollar to become the most-commonly-used currency in China’s cross-border transactions for the first time last month. Part of the increase – the part that has received plenty of attention – is due to wider adoption of renminbi …
We think disappointing global growth will be a headwind for “risky” assets in developed markets (DMs) during the second half of this year. So far, this month has been a tale of two halves . Over the first part of the month, investors looked like they were …
The US dollar has weakened again over the past month or so, leaving it only somewhat higher in trade-weighted terms since the start of its rally at the start of 2022. In other words, the greenback has nearly reversed all of its gains from the Fed …
26th April 2023
The raft of inflation data over the past couple of weeks will have provided some relief for Latin American central banks, with headline rates in most countries now on a clear downward trajectory. In Mexico this means that a final rate hike in May now …
House prices edged up in March and the sharp rise in the sales-to-new listing ratio suggests there are further gains to come. (See Chart 1.) As the improvement has been driven mainly by a collapse in new listings, while buying power is still constrained …
Inflation has finally turned a corner. Headline inflation rates fell in March in all 14 economies that we cover, the first synchronised drop in more than a decade. This partly reflects base effects resulting from the sharp rise in prices after the war in …
In this new quarterly publication, the Capital Economics’ Climate and Commodities teams will track and analyse developments in the transition to a greener global economy. The sharp increases in the lifetime costs of wind and solar projects since 2021 …
Vietnam became the first country in the region to start loosening policy when it lowered its refinancing rate at the end of March. We don’t think it will be long before other central banks in Asia start to cut rates, with the Bank of Korea set to be next, …
Balance of payments strains have prompted Egypt, Morocco and Tunisia to turn to the IMF over the past six months or so, but agreements in Egypt and Tunisia are faltering. The IMF postponed its first review of Egypt’s deal amid the government’s slow …
EM central banks have, in general, remained in hawkish mood over recent weeks. Tightening cycles have continued in Mexico, Colombia and South Africa in response to high inflation, while policymakers in Egypt and Pakistan among others have raised …
24th April 2023
We expect rising interest rates and structural headwinds to trigger a deep rout in commercial real estate. The impacts on the real economy will be mostly indirect via the impact on small bank lending, however, rather than the direct impact on …
20th April 2023
India is benefitting from maintaining its historic unaligned stance in tensions between the US and Russia. Since the start of the war in Ukraine, India has been ramping up oil imports from Russia to take advantage of discounted prices. (See Chart 1.) And …
Central banks in Australia and New Zealand have taken starkly different approaches to managing the inflation-unemployment trade-off in their countries. Despite being behind the curve on interest-rate hikes relative to other advanced economy central …
17th April 2023
Recent data appear to confirm that economic activity held up better than feared at the start of 2023. Retail sales rose in most major economies over the first two months of the year, world industrial production was broadly stable and China’s zero-COVID …
13th April 2023
Japan has escaped the recent banking turmoil in the US and Switzerland relatively unscathed. While banks face some risks arising from their lending exposure overseas , there are no signs of liquidity stress. And unrealised losses on bonds are less of a …
12th April 2023
We think that the recent stress in the banking sector has had little impact on the outlook for monetary policy in the euro-zone. While there were significant outflows of bank deposits in the five months ending in February, that was due to higher …
11th April 2023
The Land Registry report that London house price growth slowed to 3.2% y/y in January and more timely data based on mortgage approvals show a 2.2% y/y fall in prices in Q1. The detail suggests that affordability is becoming the primary driver of pricing. …
6th April 2023
Recent data suggest the economy’s resilient end to 2022 was sustained at the start of this year. But while the worst of the falls in real household incomes are in the past, we still think around two-thirds of the drag on real activity from the rise in …
5th April 2023
Consumer spending jumped during the first two months of the year as virus disruptions faded. The March retail sales data won’t be published for another couple of weeks. But the data we have so far suggest that the consumer recovery remained uneven last …
3rd April 2023
Even though equity prices in the UK have fallen further than in the US and the euro-zone since the US bank SVB failed and the European bank Credit Swisse was taken over, the pound has strengthened from $1.20 to $1.23. That is probably partly because of …
30th March 2023
Canada’s banks do not face the same immediate risks as those elsewhere. The bank sector is far more concentrated than in the US, limiting the chance that problems at small lenders will trigger a broader crisis of confidence. But the latest area of …
Yields have stabilised since the start of the year, with the 8bps rise in equivalent yields over January and February much smaller than the 64bps increase over the final two months of 2022. (See Chart 1.) And with the UK not as exposed to the banking …
Note: Join our 6 th April online briefing all about the risks to EMs from banking turmoil. Register now . The turmoil in the global banking system over the past month has had a limited impact on Asia – currencies have held up well and outflows of capital …
