The economic slump and the government’s fiscal response are driving a sharp rise in public debt in India. There is no immediate threat given low-interest rates and the likelihood that nominal GDP growth will rebound from next year. But in coming years …
13th August 2020
Sweden’s contrary policy response to the pandemic reduced the depth of its economic slump at the expense of worse public health outcomes. But the data so far suggest that its experience stands out less than one might have expected, both in terms of …
12th August 2020
We think that the enforced remote-working experiment of recent months will cause a dramatic demand shift in the office sector, with as many as 50% of office-based employees working from home at least once a week. Even with a heroic supply response through …
6th August 2020
We do not expect the coronavirus crisis to undermine Japan’s long-term prospects. Capital accumulation will slow but there shouldn’t be a big impact on the supply of labour. And given that the response to the pandemic may end up lifting productivity, we …
23rd July 2020
Russia’s central bank has lowered its policy rate to a post-Soviet low during the current crisis and, with the economy likely to recover slowly and inflation set to remain subdued, further monetary easing lies in store. We expect the policy rate to be …
16th July 2020
The housing market outlook is improving. Government support and lender forbearance have dulled the impact of the virus on housing. Indeed, housing demand has bounced back more strongly than expected. Meanwhile, falling interest rates will support housing …
15th July 2020
Euro-zone unemployment now seems likely to peak at a lower rate and about a year later than we had previously forecast, mainly due to the widespread use of short-time working schemes. But the partial economic recovery means unemployment will fall back …
9th July 2020
It is by no means inevitable that the coronavirus crisis puts a big permanent hole in the supply capacity of economies (i.e. their ability to produce goods and services). With the right government policies, many economies should be able more or less to …
29th June 2020
As long as social distancing isn’t practised for many years, then those behavioural changes triggered specifically by the coronavirus crisis will probably prove temporary. But those changes that were already underway and which have been supercharged by …
23rd June 2020
Premature fiscal policy tightening is part of the reason why inflation did not gain much momentum after the BoJ launched large-scale quantitative easing in 2013. But the main reason why inflation has remained stubbornly low is that the huge expansion in …
The odds that Joe Biden wins this year’s US presidential election, and that the Democrats also win full control of Congress, have risen recently. While we expect US equities to fare reasonably well over the next few years regardless of the result of the …
22nd June 2020
The EU’s moves towards an unprecedented joint fiscal stimulus and the ECB’s commitment to buy unlimited amounts of government debt have greatly reduced the risk of a euro-zone debt crisis in the coming year or two. However, these measures are intended to …
15th June 2020
TARGET2 imbalances are set to rise to record levels over the year ahead on the back of the ECB’s planned wave of asset purchases. While this may be dismissed by some as a benign and technical side-effect of the ECB’s policies, it would indicate that, …
11th June 2020
The high-frequency data that we track suggest that while economic activity is picking up across most of the region, the pace of recovery varies significantly by country. We expect China, Singapore, Vietnam and Taiwan to bounce back quickest from the …
8th June 2020
Record low mortgage rates, plenty of spare time, the need for more space, increased savings and the anticipation of picking up a cut-price home all help explain the surprise recovery in mortgage applications for home purchase. But tighter credit …
4th June 2020
We expect the palladium market to remain in a deficit this year as both demand and supply plummet. Palladium supply should bounce back reasonably quickly, but the medium-term outlook for palladium demand from the auto sector is much harder to call. On …
The swift and significant response of the Bank of England to the coronavirus crisis has prevented a financial crisis, but we think the Bank will need to do much more than the markets currently expect to get the economy back on track. By this time next …
Australia’s gross government debt/GDP ratio will hit the highest level since WWII by 2022/23. While the budget deficit will narrow again over the coming years as tax revenues rebound and stimulus measures expire, it will remain consistent with rising debt …
1st June 2020
The fiscal plans unveiled by China’s leadership today are as expansive as those in 2009 but credit growth will remain far more constrained. The focus again is overwhelmingly on measures to boost investment, primarily infrastructure. We expect stimulus to …
22nd May 2020
Inflation is the not the easy fix for the coronavirus-related rise in public sector debt that it might seem. Not only might it not actually do much to reduce public sector debt ratios, but higher inflation would impose other serious costs on economies. …
20th May 2020
Public debt ratios are set to rise sharply in all euro-zone countries this year but in most cases they should then start to fall again. The exceptions are Greece and, more importantly, Italy where we expect the debt burden to keep rising and potentially …
Before the virus outbreak, falls in prime retail rents were expected to be concentrated in Northern European markets. Now rental falls are likely to spread throughout Southern and Central Eastern Europe as well. The impact of the virus outbreak is highly …
14th May 2020
The huge hit to Turkey’s balance of payments position from the coronavirus crisis and the evaporation of investors’ confidence in policymakers makes the risk of a currency crisis like that seen in 2018 increasingly likely. Worryingly, the banking system …
11th May 2020
India’s economy is all but certain to contract this year for the first time since 1979. And the government’s reluctance to respond to the coronavirus crisis as aggressively as those elsewhere means that the recovery will be slow too, as household and …
6th May 2020
The coronavirus will leave in its wake a sharp rise in public sector debt. Low interest rates suggest that many governments will be able to live with this, rather than having to resort to austerity, default or inflating the debt away. But they would still …
5th May 2020
Efforts to contain the coronavirus will cause Dubai’s economy to contract sharply, exacerbating overcapacity in key sectors and making it more difficult for the Emirate’s government-related entities (GREs) to service their large debts. Our own database …
20th April 2020
It is now crystal clear that virus containment measures will deal an unrivalled blow to metals demand. But the extent to which these same measures may also hit supply is up for debate. Despite all the headlines, there is currently little evidence of a …
16th April 2020
The effects of the coronavirus will push Argentina's economy into an even deeper recession and make the government more tempted to unilaterally halt payments on its international bonds. While we think that an amicably negotiated solution to Argentina's …
7th April 2020
This Focus examines the implications of deflation for asset returns. It is motivated by the recent collapse in market-based measures of US inflation compensation amid the spread of coronavirus, to their lowest levels since the Global Financial Crisis …
25th March 2020
Central banks are already facilitating fiscal packages in various ways. But with the fiscal costs of the coronavirus likely to rise much further, policymakers might consider explicitly financing them with a permanent expansion of central bank money – the …
24th March 2020
This Focus is a reference guide for clients of our new US Commercial Property service. It outlines the key pillars of our forecasting approach, updating previous methodological work from our established European and UK Property Services. Our five-year …
17th March 2020
The coordinated fiscal and monetary stimulus announced by the Chancellor and the Bank of England today shows that policymakers are pulling out all the stops to ensure that the coronavirus results in the economy following a path over the coming quarters …
11th March 2020
There is a huge amount of uncertainty over how things will play out over the coming weeks as the coronavirus crisis continues to unfold, and any forecasts should be taken with more than the usual pinch of salt. We are pulling down our forecasts again for …
10th March 2020
Our current assumption is that the virus-related disruption is not severe enough to prompt a widespread business debt crisis. But if the virus triggers a sharper drop in profits or a bigger rise in borrowing costs than we envisage, then these pockets of …
6th March 2020
The new Chancellor Rishi Sunak’s first priority in the Budget on Wednesday 11 th March will be to deliver a package of measures to help those areas of the economy likely to be hit hardest by the coronavirus outbreak. He will presumably also get things …
4th March 2020
The structural economic slowdown which we expect in China over the coming decade will weigh heavily on consumption of industrial commodities and their prices. Steel will be by far the most affected commodity, but copper and aluminium will also suffer. In …
3rd March 2020
Fears about the coronavirus have weighed on oil prices and clouded the near-term outlook for Colombia’s economy. But even if – as we expect - the virus is brought under control soon and oil prices recover, growth will probably be a lot weaker than most …
24th February 2020
The profitability of Japan’s regional banks is likely to deteriorate further over the next few years. However, there’s little evidence of asset price bubbles and corporate balance sheets have continued to strengthen. In our view, even a shock akin to the …
19th February 2020
We side with the optimists regarding the chances of another major technological step forward, although we can only guess at the timing. We expect the US to remain at the forefront of these advances for now, but it will not lead in all areas of new …
18th February 2020
13th February 2020
Rising housing wealth may encourage households to spend a larger share of their incomes. But we expect income growth to weaken again as jobs growth slows and rising unemployment keeps a lid on wage growth. The upshot is that consumption growth may remain …
The impact of the coronavirus means aggregate EM GDP is likely to have contracted in q/q terms for the first time since the global financial crisis in Q1. If the outbreak is contained quickly, most lost output should be recovered later in the year. But if …
12th February 2020
China’s economy is likely to contract sharply in the first quarter, as a result of the measures that have been taken to limit the spread of the new coronavirus. The apparent slowdown in new infections in the last few days should raise hopes that output …
Hopes for a substantial boost to economic growth in the euro-zone from fiscal policy in the next year or two are likely to be disappointed. It seems likely that any fiscal stimulus will be very small. And even if governments agreed on a larger tax and …
6th February 2020
We think that the coming fiscal stimulus will raise annual GDP growth by about 0.6ppts this year and 0.25ppts in 2021. This is part of the reason why we expect GDP growth to beat the consensus forecast by rising to 1.8% in 2021 and helps to explain our …
3rd February 2020
The downward trend in interest rates that began in the 1980s contributed to large falls in household saving rates in most advanced economies. But with larger proportions of people now nearing retirement, some consumers are being forced to respond to low …
30th January 2020
President Putin’s plans to amend Russia’s constitution so that he can wield power beyond 2024 have fired up the Moscow rumour mill. But from an economic perspective, the much more important development has been the accompanying shift in the government’s …
29th January 2020
We are launching our new subscription service on US commercial real estate by outlining six key calls that we believe will shape the sector’s story in the coming years. The macroeconomic environment of low, but steady economic growth, alongside a …
28th January 2020
