Growth to recover as policy is loosened We think that the slowdown in Peruvian GDP growth from 3.2% y/y in Q3 to 1.8% y/y in Q4 will be temporary and expect that the economy will recover more quickly than most expect this year. The headline Q4 GDP figure …
21st February 2020
Limited impact from coronavirus but growth still anaemic The unexpected rise in the euro-zone Composite PMI in February will have assuaged fears that the region’s economy has been adversely affected by supply-chain disruption as a result of the …
Sustained strength of PMIs confirms economy has turned a corner The continued strength of the PMIs in February proves that the surge in January wasn’t a flash in the pan and gives us confidence in our view that economic growth will pick up in the first …
Economy started 2020 in a low gear The batch of Polish activity data for January suggest that GDP growth was broadly steady at around 3.2% y/y at the start of the year. With headwinds to growth building, the risks to our 2020 GDP growth forecast of 3.0% …
Damage from coronavirus starting to show The renewed drop in the manufacturing PMI coupled with a slump in the services PMI suggests that the coronavirus has started to take a toll on Japan’s economy. The fall in the Jibun Bank flash manufacturing PMI …
Further signs that coronavirus is hitting industry Korean trade data for the first 20 days of February add to the evidence that factory closures in China are disrupting local industry. The timely nature of the Korean trade data makes them a good …
Core inflation to fall this year Headline inflation edged down in January and we expect it to moderate further this year as capacity shortages diminish. A contraction in GDP this year should lead to easing price pressures, offsetting a boost to prices …
Some signs of improvement in gasoline demand US crude stocks rose a touch last week despite a slump in net imports. Looking ahead, we expect strong growth in US exports together with a recovery in economic activity to push down crude stocks this year . …
20th February 2020
House price inflation to accelerate House prices rose by less than we expected in January but, with the sales-to-new listing ratio elevated and the mortgage stress tests set to become less stringent, the pace of gains will accelerate again soon. The 0.1% …
Economic growth looks to have held steady at start of 2020 January’s batch of Russian activity data suggest that GDP growth was broadly steady at around 1.8% y/y. While some of the recent props to growth have started to fade, policy support is likely to …
Inflation edges down, policy to stay loose The modest fall in Brazilian inflation in the middle of the month, to 4.2% y/y, confirmed that it has passed its peak. The headline rate is likely to edge down further over the course of the year, allowing the …
A better start to the year, all things considered After falling for the first time in a decade in 2019, global aluminium production started 2020 on a better footing. In contrast to other metals, we don’t think coronavirus containment measures will hamper …
Industry ends 2019 on the back foot While pharmaceuticals output supported Swiss manufacturing again in Q4, conditions in the rest of the sector weakened at the end of last year. With the German industrial recession likely to drag on, and the coronavirus …
Households reopen their wallets January’s retail sales figures showed that December’s election result gave consumers the confidence to reopen their wallets. The more recent flooding and effects of the coronavirus may hinder sales in February and March. …
Fiscal stimulus helps offset coronavirus hit to credit demand Strong government bond issuance left growth in outstanding broad credit unchanged last month, though weaker corporate borrowing suggests that the uncertainty caused by the coronavirus was …
Unemployment rate may rise to 5.5% The jump in the unemployment rate in January probably isn’t enough by itself to convince the RBA to cut rates. But we think the weakness in the underlying economy will keep pushing the unemployment rate higher in the …
Warm weather supports housing starts in January The fifth warmest January on record meant housing starts only reversed some of their December surge, with single-family starts remaining above 1 million annualised. That impact will unwind over the next …
19th February 2020
Inflation to tumble in next couple of months Following the rise to 2.4% in January, a sharp decline in energy inflation will pull headline inflation back down to around 1.5% by April. Core inflation is also likely to decline, but not by as much. The rise …
Reversing the recent fall The rise in CPI inflation for the first time in six months in January was in line with the Bank of England’s expectations, so this is unlikely to move the dial on the outlook for interest rates. The jump in CPI inflation from …
Weaker-than expected inflation to test the Riksbank’s resolve The sharper-than-expected fall in Swedish inflation in January may test the Riksbank’s resolve to keep policy unchanged. With subdued GDP growth likely to weigh on underlying inflation this …
Inflation picked up, only one more cut likely South African inflation jumped to the 4.5% y/y midpoint of policymakers’ target range in January, which strengthens our view that the current easing cycle will end after just one more cut. Figures released …
Wage growth set to slow further Wage growth remained subdued in the fourth quarter and we expect it to weaken further over the coming quarters. That should eventually convince the RBA to cut interest rates to 0.25%. The 0.5% quarterly rise in the wage …
Sizeable drag on GDP growth from net trade in Q1 Exports fell by less than expected last month but net trade is set to be a major drag on GDP growth this quarter. Coronavirus-related disruption should contribute to net trade knocking around 0.6%pts off …
Outlook remains challenging The low level of the manufacturing PMI in January and the renewed disruption to the rail network this month suggest the manufacturing sector will continue to struggle following December’s fall in sales. But with other areas of …
18th February 2020
Solid employment growth, but wage growth slowing The larger-than-expected rise in employment in December suggests that the labour market joined the rest of the economy in turning a corner at the end of last year. However, pay growth is softening, which …
Inflation continues to edge higher Saudi inflation rose for a twelfth consecutive month in January and, while we expect a fresh slowdown in the non-oil sector to keep a lid on underlying price pressures, further hikes to local fuel prices are likely to …
Inflation continues to tick up The further rise in Nigerian inflation in January, to 12.1% y/y, suggests that border closures have continued to drive up food prices. This will limit the central bank’s scope to lower interest rates to support the economy, …
Coronavirus to cause sharp slowdown in Thailand Figures published today reveal that Thailand’s economy was in a poor state, even before the coronavirus hit. With tourist arrivals collapsing and the disruption from factory closures in China likely to …
17th February 2020
Japan’s economy to contract in 2020 The sharp drop in output after October’s sales tax hike supports our view that Japan’s economy will shrink this year. But with capacity shortages still tight and underlying inflation holding up, we still expect the Bank …
Growth to slow further from here Colombian GDP growth ticked down to 3.4% y/y in Q4 from 3.5% y/y in Q3 and we think that growth will slow further this year. The consensus expectations for growth look too optimistic. The Q4 outturn was stronger than our …
14th February 2020
Consumption soft patch unlikely to continue for long The unexpected weakness in underlying retail sales in January suggests that consumer spending is still struggling for momentum but, with jobs growth solid and consumer confidence resilient, we doubt …
Germany to continue flirting with recession Given that the German economy stagnated in Q4 last year it will have come as a relief that GDP growth for the euro-zone as a whole was not revised down from +0.1% q/q. We think that Germany will continue to …
Central Europe catches Germany’s cold The weak batch of Q4 GDP data for Central & Eastern Europe show that the downturn in Germany took a bigger toll on growth across the region. Prolonged weakness in the euro-zone and softer domestic demand mean that …
Underlying price pressures are building The RBI doesn’t put much weight on the wholesale price measure of inflation, but the pick-up in core WPI inflation supports our view that the room for further monetary easing has diminished. Headline WPI inflation …
Core inflation going nowhere fast The continued stability of core CPI inflation in January supports our view that the Fed will not be raising interest rates again for the foreseeable future. The rise in headline inflation to a 15-month high of 2.5%, from …
13th February 2020
Economy posts strong performance in Q4 The stronger-than-expected Turkish activity data for December suggest that the economic recovery gathered steam in the final quarter of last year. Looser fiscal and monetary policy will keep the economy motoring …
Boris bounce extends into January Housing market activity rose again in January, driven by a post-election rise in sentiment. This bodes well for the near-term, but the upward momentum can’t be sustained indefinitely. Indeed, we expect any surge in …
Bearish report dampens optimism slightly US crude stocks increased again last week owing almost entirely to a surge in net imports. However, despite this bearish report, oil prices are still up 3% today in part on the back of optimism that the coronavirus …
12th February 2020
Rise in core inflation likely to continue Inflation rose faster than most expected in January due to a jump in core inflation. With an economic recovery around the corner, underlying price pressures should strengthen further over the coming quarters. That …
Few signs of a rebound after a dreadful Q4 The sharp fall in euro-zone industrial production in December came as no surprise after the very weak national data already published. The timelier surveys suggest that industry will continue to struggle, even if …
Worse to come GDP growth in Malaysia slowed again in Q4 and the disruption to trade and tourism flows from the coronavirus outbreak is likely to cause a much sharper downturn this quarter. The Prime Minister’s recent pronouncement that the economy will …
Grim end to a weak year Mexico’s industrial sectors weakened again in December, capping a poor year and creating a weak starting point for 2020. The available surveys suggest that conditions remained difficult more recently. Figures released today showed …
11th February 2020
Power cuts batter manufacturing sector The South African manufacturing sector’s terrible performance in December has set up a weak start to 2020. And, given that power cuts lasted into January, problems in the sector probably continued. Widespread power …
Stagnation in Q4, but Q1 will be better While the first estimate of Q4 GDP showed that the economy stagnated at the end of last year, this is old news and less important than the timelier data that suggests the economy has since turned a corner. The GDP …
Some signs that coronavirus is hitting industry Korean trade data serve as a good bellwether for the rest of the region and figures for the first 10 days of February suggest that factory closures in China are disrupting regional industry. The timely …
Pick-up in Norwegian inflation points to tightening bias at the Norges Bank The unexpected jump in underlying inflation in Norway lends support to our view that the Norges Bank is more likely to hike than to cut interest rates next. Meanwhile, the …
10th February 2020
Inflation rises, but central bank to restart easing cycle The modest rise in Egyptian inflation in January leaves it below the mid-point of the central bank’s target range and, after pausing for breath at the last MPC meeting, we think that policymakers …
Economy defied coronavirus in January The marked improvement in the Economy Watchers Survey (EWS) in January suggests household spending bounced back strongly last month with no sign of a drag on sentiment from the coronavirus. Both household-related …
Inflation hits eight-year high Seasonal volatility and coronavirus disruptions pushed up consumer prices in January. But the PBOC is likely to look through this temporary rise in inflation when setting policy. Consumer price inflation increased from 4.5% …
Labour market continues to recover The further rise in employment, the decline in the unemployment rate, and the sharp rebound in wage growth in January all reinforce our view that the Bank of Canada is unlikely to cut interest rates this year. The 35,000 …
7th February 2020
