We think that the spreads of “peripheral” government bonds in the euro-zone are likely to fall next year to levels not seen since before the region’s sovereign debt crisis and that they will stay low over the next decade. This reflects our view of the …
4th December 2020
This Focus sets out a framework for thinking about how the distribution of COVID-19 vaccines will affect the outlook for EMs. For much of Emerging Europe and Chile, these developments may allow economies to return to normal more quickly than we had …
30th November 2020
Despite renewed concern from policymakers in Thailand over the appreciation of the Thai baht, we find little evidence that the rising currency is having a negative effect on the economy, and we don’t think it will be a major drag on the recovery. At its …
The negative economic impacts of COVID-19 have bypassed the housing market so far due to the extraordinary support measures put in place by the government, regulators, and banks. But while policy has probably reduced and delayed the impact of COVID-19 on …
27th November 2020
Climate change will be more costly to EMs than developed countries, with parts of Africa, as well as South and South East Asia most vulnerable to rising global temperatures. That said, some EMs could benefit as investments to mitigate climate change …
19th November 2020
Virus-driven behaviour changes that support a faster online transition will boost industrial demand over the coming years. But we don’t believe the view that higher online spending will cause rents to detach permanently from the underlying strength of the …
There has been much less progress towards debt relief for African economies than many had hoped. And governments’ diverse array of creditors means that the “Common Framework” recently unveiled by the G20 to help debt distressed EMs will struggle to gain …
16th November 2020
The pandemic has increased the odds that the US will eventually experience a period of high inflation, principally because we expect the Fed to be less committed to ensuring price stability in the future. The higher public debt burden, slower global …
We think that inflation in Japan will remain subdued while the pandemic will result in a rise in US inflation to above the pre-virus pace. With both the Bank of Japan and Fed likely to remain inactive for some time, the resulting real interest rate …
13th November 2020
Financial repression – defined in the current context as measures that artificially lower the cost of government borrowing – will become an increasingly used tool to cope with higher public sector debt burdens post COVID-19. After all, it is more …
10th November 2020
A victory for the Democratic party in November’s presidential election has several potential implications for commodity markets . Very broadly, Joe Biden’s pledge to actively promote decarbonisation of the economy should accelerate the move away from …
30th October 2020
As the election campaign draws to a close, this Focus looks at how it has affected equity, bond, and currency markets so far and assesses how different outcomes could shift them after Election Day. This election campaign has already had greater impact on …
29th October 2020
We forecast that the returns from equities will beat those from government bonds in the world after COVID-19. However, we expect the outperformance of large-cap equities in the US to end. We have written extensively on our macroeconomic services about the …
20th October 2020
The state has taken on a much greater role in G7 countries during the pandemic and there is no guarantee that it will relinquish all its new powers when the coronavirus threat fades. The pandemic could accelerate the backlash against capitalism that had …
13th October 2020
Large output gaps look set to keep inflation low in most emerging markets over the next few years. But further out, we think that worrying public debt trajectories in some places (Brazil and South Africa), and greater emphasis on growth over inflation by …
Retail has been hit hard by the COVID-19 crisis and lasting changes to online spending will bring further pain. While our estimates suggest that the impact is likely to be less severe than structural change in offices, the rental outlook is expected to …
8th October 2020
In this Focus , we argue that the medium-term impact of the COVID-19 pandemic on both global economic growth and consumer behaviour has brought forward “peak oil demand” to around 2030 . As a result, we expect that real oil prices will be falling for much …
Pressure for loose fiscal policy in Brazil is likely to persist and we think that the spending cap will be cast aside in the coming years. The government is already testing the water with creative accounting to get around spending limits and this is …
6th October 2020
We expect the aluminium market in the decade ahead to be characterised by stubbornly low prices, as economic growth in top consumer China eventually slows and begins to drag on demand. But as consumption in other emerging markets increases and the …
30th September 2020
The immediate costs of the COVID crisis will be shouldered more by governments than the private sector. However, as fiscal support recedes in the coming years, a greater share of the costs will be borne by households and firms, and ultimately by their …
Global supply chains have functioned well this year despite the disruption of social distancing and lockdowns, and people in many places appear more appreciative of migrants. But the pandemic is widening the rift between China and the rest of the world. …
22nd September 2020
The improvement in the labour market, lower borrowing costs and a turnaround in leading indicators all suggest that the housing downturn will soon come to an end. We now expect house prices across the eight capital cities to fall by just 3% from their …
If it is sustained for long enough, the policy stimulus being implemented in the euro-zone could eventually cause inflation to take off. However, we think it is more likely that policy is normalised as the crisis passes. The risk of an institutional slide …
17th September 2020
The macroeconomic consequences of the Covid-19 pandemic are likely to be very different from those of previous pandemics, largely because of the unprecedented response by governments and central banks. The most important lesson from history is that …
16th September 2020
Japan’s incoming Prime Minister Suga Yoshihide has said he will “inherit Abenomics” and has been keen to emphasise that not much will change. As such, a major shift in economic policy is not on the cards. However, there are some apparent differences in …
15th September 2020
As we have argued in our Global Property Focus , we think that some of the increase in remote working seen this year will become a permanent feature of working practices in office-based sectors in the coming years. In Europe, we estimate that this will …
14th September 2020
For over a decade, we have tracked the performance of China’s economy independently from the official GDP figures using our China Activity Proxy (CAP). We are now introducing a revamped version of this popular indicator. In this Focus , we discuss why an …
10th September 2020
Although low inflation is likely to be the story over the next couple of years, the huge amount of policy stimulus could push up inflation further ahead. Central banks, in theory, have the tools to nip any rise in the bud. So the bigger risk is if there …
Even after the immediate threat of COVID has receded, we expect as many as 50% of office-based employees will work from home at least once a week. But the move away from cities and toward the suburbs should prove short-lived. Most of those leaving cities …
9th September 2020
The neutral interest rate has become one of the hot topics in Russian monetary policy over the past year and the downward revision to the central bank’s estimate of the neutral rate in July marks the first step in the shift towards a new normal of lower …
26th August 2020
In our view, the scale of energy demand destruction caused by the coronavirus pandemic has made the liberalisation of the global LNG market start to look inevitable . While pressure has been mounting on suppliers to offer more flexibility for some time, …
21st August 2020
A Joe Biden victory in November together with Democrats winning back control of the Senate could see a big increase in taxation and federal spending, together with a shakeup of healthcare, regulatory and trade policy. All of that could have a bearing on …
13th August 2020
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 …
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
