Overview – Although we expect GDP growth to slow to a below-potential pace over the next few quarters, we then anticipate a pick-up late this year, as monetary policy flips from a headwind to a tailwind. Our forecasts are based on the assumption of no …
21st March 2024
Note: We will be discussing the outlook for European commercial real estate markets in a 20-minute online briefing at 10am BST on Wednesday 10th of April. (Register here .) Overview – Further near-term yield rises will push property values lower in the …
Overview – The euro-zone will remain close to recession until the second half of this year and the subsequent recovery is likely to be weak. Household real incomes will pick up only slowly and consumers will be cautious amid a softening labour market. …
15th March 2024
Overview – A slight rise in mortgage rates since the start of the year is likely to mean house prices stall in the near term. But our forecast that Bank Rate will be cut faster than most expect, to 3.00% by the end of 2025, suggests that further …
Overview – India retained its title as the world’s fastest-growing major economy last year and we expect further strong growth over the coming years. That would put India on course to become the world’s third largest economy within the next couple of …
13th March 2024
Overview – The economy isn’t in recession but GDP growth will slow towards trend this year. With a virtuous cycle between wages and prices now in full swing, we expect the Bank of Japan to end negative rates at its April meeting. However, price …
6th March 2024
Overview – Even if mortgage rates fall to 6% as we expect, mortgage rate ‘lock-in’ will continue to curb home moves. As a result, we only anticipate a trickle of new resale supply coming onto the market over the next few years. That will keep a lid on …
5th March 2024
Note: We’ll be discussing the UK commercial property outlook at a Drop-In on Wednesday, 28th February. Register here Property Drop-In: UK commercial property’s muted recovery | Capital Economics for the 20-minute online briefing. Overview – With property …
23rd February 2024
The AI revolution should deliver substantial productivity gains in the coming decade, particularly in advanced economies. But with working age populations falling in key areas and China’s economy in structural decline, we expect global growth to slow …
20th February 2024
Our forecast that CPI inflation will fall below 1.0% later this year suggests that Bank Rate will be cut from 5.25% now to 3.00% rather than the low of 3.50-3.75% priced into the market, 10-year gilt yields will decline from 3.90% now to around 3.25% by …
30th January 2024
We expect apartment markets to perform poorly over the next two years, with all our 17 metros seeing capital values lower at the end of 2025 than they are now. However, there will be substantial differentiation. At the top end, we think Houston apartment …
2nd January 2024
The performance of the 17 office markets we forecast will continue to be driven by structural factors over the next couple of years. That points to further weakness in the six major markets, where traffic and long commutes are a major drag on office …
20th December 2023
Overview – We expect most commodity prices to rise in 2024 as major central banks loosen monetary policy and economic activity starts to pick up. Meanwhile, China’s policymakers have taken steps to support the ailing property sector, which should be less …
15th December 2023
Overview – Persistent weak growth and elevated (albeit soon-to-be falling) interest rates continue to spell trouble for real estate values. We see NOI growth softening further over the next year as the industrial rent boom gives way to more “normal” …
Table of Key Forecasts Global Overview – We think that global growth will undershoot consensus expectations in 2024 as the lagged effects of monetary policy tightening filter through. Among the advanced economies, the US will continue to outperform …
13th December 2023
Overview – Economic growth in the Middle East and North Africa will strengthen a little in 2024 but is likely to come in well below consensus expectations. OPEC+’s cautious approach to oil policy will keep a lid on economic growth in the Gulf over the …
The US dollar has reversed around half of the gains it made from mid-July to end-October amid a sharp fall in US Treasury yields and a general compression of risk premia across markets, leaving the greenback, in aggregate, roughly where it started the …
Overview – We suspect that both economies will narrowly avoid a recession but a prolonged period of below-trend growth will reduce price pressures and allow central banks to ease monetary policy again. We’ve pencilled in rate cuts in Australia in Q2 and …
Table of Key Forecasts Overview – Aggregate EM GDP growth will enter a slower phase over the coming quarters. But the headline figure masks an unusually large variation in prospects at a country level. Many of the EMs that fared surprisingly well in 2023, …
12th December 2023
Overview – The euro-zone will remain in or close to recession in the first half of 2024 as the effects of higher interest rates continue to weigh on household consumption and investment, and fiscal policy is tightened. Headline inflation has already …
“Safe” and “risky” assets are both on track for a strong final quarter of the year, and we think next year will deliver more of the same. After all, we think that the main tailwind this quarter – growing expectations that central banks will cut interest …
11th December 2023
We think the rally in developed market (DM) government bonds will continue for a while yet, as some major central banks, including the Fed, ultimately cut by more than investors seem to expect. But we anticipate that yields will generally settle at much …
Overview – A weak economic outlook underpins our view that prime rent growth will continue to slow in Europe next year. At the same time, valuations remain stretched and the pace of recent yield rises suggests it is too early to call the bottom in prices. …
8th December 2023
Overview – Further declines in GDP in the coming quarters mean that the economy is unlikely to grow at all next year. Weak growth and a return in inflation to the 2% target will leave scope for the Bank of Canada to cut interest rates sharply, with the …
7th December 2023
Overview – Inflation and interest rates will fall across Central and Eastern Europe (CEE) in 2024 and an economic recovery is likely to take hold across the region. But the task of bringing inflation back to central banks’ targets will take time and we …
Overview – Economic growth in Sub-Saharan Africa is set to strengthen over 2024-25 as the external backdrop turns more favourable and, in most places, the drag from high inflation eases. But growth will be constrained by tight fiscal and monetary policy …
Overview – The surprising strength this year of the region’s two largest economies, Brazil and Mexico, will fade in 2024 and growth over the next couple of years is likely to come in below consensus expectations. In contrast, the Andean economies are set …
Overview – Economic growth in most of Emerging Asia is likely to slow in the near term as weak global demand and high interest rates weigh on prospects. With growth set to struggle and inflation likely to ease, interest rate cuts are likely to come on to …
Overview – As core inflation is on track to return to the 2% target by the middle of next year, we expect the Fed to cut interest rates by 25bp at every meeting next year from March onwards, with rates eventually falling to between 3.00% and 3.25% in …
6th December 2023
Overview – China’s economy has regained some strength recently. We expect this to continue into 2024, on the back of support from fiscal policy and a further pick-up in household spending. But with property construction likely to continue to decline and …
Overview – India’s economy has grown at a healthy clip over recent quarters and, with the help of government spending, we think it will continue to hold up well ahead of next year’s general election. Given also that food inflation has picked up again, the …
5th December 2023
Overview – With higher interest rates taking longer to percolate through the economy, we now think the recession will be shallower and GDP growth will stay weak throughout all of 2024. It’s a softer landing for the economy, but the runway is longer. And …
Overview – Following a strong 2023, GDP growth is set to slow towards potential next year and the labour market will tread water for now. However, with the virtuous cycle between consumer prices and inflation set to gain momentum, we expect the Bank …
4th December 2023
Overview – Property yields rose further in Q3, but with risk-free rates now falling back, we think they will peak by the end of 2023. That will help stabilize capital values, but, given historically narrow yield spreads, we doubt we will see much yield …
24th November 2023
Overview – Housing market activity is likely to recover from here, driven by falling mortgage rates. That said, they are set to remain high relative to recent history. Our view is that mortgage rates won’t drop below 6.0% before the end of the forecast, …
21st November 2023
Overview – Surprisingly resilient demand, high inflation, and limited supply mean a severe drop in house prices will be avoided. With the peak in mortgage rates now behind us and the labour market in good shape, there is no clear trigger for another …
While we think sticky core inflation will mean that the Bank of England keeps interest rates at their peak of 5.25% until late in 2024, we think the markets have gone too far in concluding that rates will still be as high as 4.50% by the end of 2025. We …
30th October 2023
We expect demand to be weakest in the six major markets, but new supply is also set to be low in those markets. Elsewhere, we think southern metros will continue to see stronger absorption, though Austin and Miami have large completions pipelines over the …
18th October 2023
Overview – The outlook for offices is negative across all markets, but we expect substantial differences across the 17 metros we forecast. We now think Seattle, San Francisco and Austin will see vacancy rise by more than 5%-pts over 2023-25, taking the …
11th October 2023
Overview – With economic activity weakening, we expect rental growth to continue trending downwards over the next year. At the same time, valuations remain stretched despite property yields continuing to rise at a steady pace. As a result, we have …
4th October 2023
Note: We discussed the key takeaways from our Q4 Global Economic and Markets Outlooks in a Drop-In on Wednesday, 11 th October. To view the recording Click here . Table of Key Forecasts Global Overview – We think that the now popular assumption that …
3rd October 2023
Overview – We expect GDP growth to slow from 2.1% this year to only 0.8% in 2024, with the economy still likely to experience a near recession around the end of this year. Core inflation will continue to fall back to the 2% target by mid-2024, with much …
29th September 2023
The US dollar’s record run of 10 consecutive weekly gains has brought it to its strongest level since last December (see Chart 1), and prompted renewed talk of FX intervention in Asia. We think that market participants have now gone too far in discounting …
28th September 2023
Both “safe” and “risky” assets have struggled during Q3 so far, as “risk-free” yields have risen. We expect the fortunes of safe assets to improve over the rest of this year, largely informed by our view that investors are underestimating how quickly …
We think the “higher-for-longer” narrative that has taken hold in the market won’t last through 2024. We suspect that central banks will generally cut faster than investors seem to expect and that, as a result, the bond market sell-off will turn into a …
Click here to read the full report. Overview – Russia and Turkey have outperformed the rest of the region this year amid support from loose policy, but both economies look set for a slowdown in 2024 while recoveries take shape across Central and Eastern …
Table of Key Forecasts Overview – Aggregate EM GDP held up better than we had expected over the first half of the year, but we think that a phase of softer growth lies in store over the coming quarters. Our near-term GDP growth forecasts lie below the …
Overview – Economic growth across Sub-Saharan Africa is likely to pick up over the coming quarters, but a challenging external environment means that balance of payments positions will remain under strain and fiscal and monetary policy will need to stay …
27th September 2023
Overview – We expect the euro-zone economy to struggle over the next 18 months, and a mild recession in the coming quarters looks more likely than not. Lower energy prices and improved global supply chain conditions should keep headline inflation on a …
Overview – China’s economy is regaining some momentum after stalling for a brief period during the summer. A step up in policy support looks set to deliver a modest cyclical recovery but trend growth remains under pressure. Consumer Spending – …
