Note: We previewed Poland’s election and the economic and financial market issues surrounding it in a Drop-In on Thursday, 12 th October . Watch the 20-minute recording here . The outcome of Poland’s parliamentary election this Sunday will likely have a …
11th October 2023
The government bond sell-off over the past three months raises uncomfortable questions around the risks of financial instability and the outlook for fiscal policy. This note takes stock of what has driven the rise in long-term sovereign bond yields and …
6th October 2023
Saudi Arabia’s labour market has strengthened markedly in its post-pandemic recovery and the headline figures mask a dramatic shift in the size and composition of the labour force. In particular, social reforms have helped the female participation rate to …
4th October 2023
Brazil’s monetary easing cycle will probably lead to higher spending in interest rate sensitive areas, such as furniture and appliances, autos and construction materials. But that won’t be enough to prevent overall GDP growth from slowing sharply – and by …
3rd October 2023
Capital Economics clients can download a complete pdf version of this report by clicking the download button top right. If you can't see a download option, please speak to your account manager. You can also explore the individual Spotlight chapters below: …
26th September 2023
Chapter 6: Blowing bubbles? AI's financial market implications …
Chapter 5: AI and the global economic order …
Chapter 4: The policy dilemmas from AI …
Chapter 3: AI, jobs and prices …
Chapter 2: AI's economic revolution …
Chapter 1: AI – What’s all the fuss about? …
AI, Economies and Markets: Executive summary …
We think emerging market (EM) equities in Asia will outperform those in EMEA and Latin America over the next couple of years, although we doubt they’ll do better than developed market (DM) equities. EM equities have struggled this year, at least judging …
15th September 2023
When the ECB Governing Council announces the results of its operational review later this year, it is likely to say it will continue to use the deposit rate as its key policy tool . We also expect the ECB to establish a new framework for lending reserves …
12th September 2023
A “soft landing” for the economy in the US seems increasingly possible, so we look back at previous similar episodes to get an idea of what might be ahead for equities there. Despite the Fed’s aggressive tightening cycle over the past year and a half, it …
7th September 2023
South Africa’s economy has one of the weakest growth records of any EM over the past decade and its post-pandemic recovery has been particularly disappointing. At the heart of the problem are major structural impediments to growth that stretch far beyond …
6th September 2023
Sharp falls in inflation mean that the economies of Central and Eastern Europe (CEE) are on the cusp of a broad-based monetary loosening cycle. That said, we think that the legacy of the inflation shock over the past two years will be more persistent …
5th September 2023
History suggests that dollarisation, which is at the heart of Argentine presidential candidate Javier Milei’s policy platform, is a surefire way to get inflation under control. But whether this translates into broader macro stability would hinge on …
30th August 2023
Absent major fiscal stimulus in China, global steel demand growth will be weak in the next few months. Accordingly, we forecast price declines in major steel markets towards year-end. Only when economic growth recovers and interest rates fall do we see …
29th August 2023
The government’s ambition of developing a globally-competitive manufacturing sector, combined with relatively slow progress on shifting away from using coal for electricity production, means India will become the world’s biggest polluter in the …
23rd August 2023
The outlook for global agricultural supply has deteriorated since the start of the year as a result of extreme weather, the end of the Black Sea Grain Initiative, the prospect of an El Niño weather event and rising agricultural protectionism. We have …
4th August 2023
One key lesson from the bouts of inflation in the 1970s and 1980s is that core inflation faded only once a loosening in the labour market drove down the job vacancy rate to more normal levels. We estimate that a fall in the job vacancy rate from 3.0% in …
2nd August 2023
The latest Pemex capital injection underscores that Mexico’s President López Obrador is more likely to lean towards providing a sovereign debt guarantee (either implicit or explicit) to deal with the company’s financial problems. But with a less …
1st August 2023
The message from electric vehicle sales data is now clear: the EV revolution is alive and kicking and poses important implications for oil demand. We are slightly more optimistic on the pace of EV adoption than other forecasters and suspect the drag on …
31st July 2023
Tighter monetary policy has had a big impact on financial conditions in the euro-zone, but we think its effect on activity is still in its early stages . Even if the region falls into a mild recession, it will be some time before policymakers are …
26th July 2023
Japan bulls have proposed a range of explanations to justify the outperformance of the TOPIX relative to other equity indices over recent months. While there are some signs that firms are enjoying stronger pricing power, we aren’t convinced that a …
24th July 2023
While the wholesale European natural gas price is now close to pre-energy crisis levels again, we don’t expect EU gas consumption to rise in response. Rather, we think that EU gas consumption has structurally fallen. This is the main reason why we think …
20th July 2023
Egyptian policymakers’ commitment (or lack of) to economic orthodoxy continues to provide cause for concern and, while we don’t share the view that sovereign default is a serious risk, the near-term economic outlook is challenging. Over a longer …
The large macroeconomic imbalances that built up during Chile’s post-pandemic recovery have eased substantially, which is likely to prompt the central bank to deliver more rate cuts than almost any other EM central bank over the next couple of years. We …
17th July 2023
Russia’s economy has adapted to Western sanctions better than had been expected so far, but maintaining macroeconomic stability is now becoming more challenging and depends in large part on the outlook for energy exports and the extent to which additional …
13th July 2023
House prices in the euro-zone have fallen sharply and further declines seem quite likely. This will weigh on construction activity and household consumption, both of which are already weak, and contribute to the euro-zone remaining in recession over the …
5th July 2023
Note: We discussed the economic and policy risks around the ‘greedflation’ debate in a 20-minute online briefing on Thursday, 6 th July. Watch the recording here . The surge in inflation in advanced economies has not been driven by a widening of firms’ …
29th June 2023
The removal of fuel subsidies and the devaluation of the naira are likely to push inflation in Nigeria towards 35% y/y, which will prompt further interest rate hikes by the central bank and weigh on GDP growth over the coming quarters. Our growth …
27th June 2023
If you aren't already receiving our Climate Economics coverage and would like us to arrange access, click here . Getting serious about decarbonisation would be more costly for governments than many fiscal scenarios would have you believe. Of course, the …
26th June 2023
We expect euro-zone food inflation to fall sharply over the coming year due to the large declines in agricultural and energy commodity prices. But history suggests that the level of food prices rarely falls very far or for very long. With labour costs …
Note: We’ll be discussing the UK’s economic, housing market and policy outlook in light of the BoE’s June rate decision in an online briefing on 22nd June at 10:00 EDT/15:00 BST . Register now . A return to mortgage rates of around 6% for the first time …
20th June 2023
Japan’s carmakers face an existential threat from the emergence of cheap EV exports from China. Even in a benign scenario where carmakers eventually jump on the EV bandwagon, we suspect that they would have to rely on battery technology from China and …
8th June 2023
We think that lower commodity prices and improved global supply conditions will bring euro-zone services inflation down from 5% in May to about 3.5% by the middle of next year. Further falls seem likely after that, but the tight labour market means that …
6th June 2023
India’s economy is one of the most vulnerable in the world to the physical effects of climate change. Climate change alone won’t stop relatively rapid rates of growth over the coming decades. But it is likely to mean that income convergence with other, …
31st May 2023
As in other advanced economies, Australia’s neutral rate of interest rate will probably edge up a bit over the coming decades. That will result in higher borrowing costs, but Australia’s low public debt levels mean that the government will be able to …
23rd May 2023
Many academic studies underplay the extent to which higher temperatures could affect economic activity over the long run. Nonetheless, even in a scenario in which the global average temperature rose by more than 3 ° C from its pre-industrial average, …
16th May 2023
The resilience of PCE core services ex-housing inflation is only partly due to the strength of labour market conditions, and other factors are likely to play an important role in driving it lower over the rest of this year. That should reinforce the …
15th May 2023
Note: We’ll be discussing the upcoming Thai general election and the country’s near to long-term economic risks in a 20-minute online briefing at 09:00 BST/16:00 SGT on 11th May. Register now. Provided Thailand’s general election on 14 th May does not set …
8th May 2023
Japan’s large corporate sector surpluses are a key source of deflationary pressure. Corporate savings surged in the 1990s, primarily because net interest payments slumped, and have since remained stubbornly high. Unfortunately, workers have benefited …
2nd May 2023
The global energy market is in the early days of a radical redesign due to the need to cut greenhouse gas emissions. In this Focus , we introduce our long-term energy market forecasts, which are characterised by continued growth in energy consumption and …
27th April 2023
Note: We discussed our revamped FCIs and took your questions on global financial conditions in a 20-minute online briefing on Thursday, 20 th April . Watch the recording here . We have revamped our financial conditions indices (FCIs) for advanced …
18th April 2023
House prices rebounded in March but we aren’t convinced that this marks the beginning of a sustained rebound. Affordability is set to become the most stretched since the early 90s and if the unemployment rate rises as rapidly as we anticipate, house …
11th April 2023
Underlying inflation pressures are still well above the 2% mid-point of the Bank of Canada’s target range, but there are several reasons to expect disinflationary forces to build. We forecast that CPI inflation excluding food and energy will fall to 2% at …
5th April 2023
While we expect a more-than 20% peak-to-trough price correction for US commercial real estate, offices face a much tougher outlook, with large falls in net operating incomes compounding the broader re-pricing facing the sector and driving a …
4th April 2023
Inflation is now being driven by wage growth rather than just the temporary influence of energy effects and goods shortages, raising fears that central banks will be forced to engineer sharp increases in unemployment to tame it. But we argue that …
30th March 2023
