Not a lot appears to link electricity, hot drinks, furniture and eggs, but this week all four made it into Statistics Sweden’s CPI categories with the highest annual inflation rates in August. The message from this week’s inflation release for August …
16th September 2022
Goods trade deficit set to narrow further… Data released this week confirmed that India’s merchandise trade deficit retreated from a record high (in dollar terms) of US$30bn in July to US$28bn in August. This was driven in large part by a drop in oil …
Hawkish signals from Lowe tilt the balance The release of stronger-than-expected US inflation figures on Tuesday prompted a small repricing of market expectations for the upcoming RBA meeting in October Markets now price in around a 50% chance of …
GPIF could shift back to domestic assets The release of stronger-than-expected US inflation figures on Tuesday contributed to a further rise in US long-term interest rates. They are now the highest they’ve been since mid-June. With the Bank of Japan …
Rate hikes on the way across MENA A raft of central banks across the region look set to raise interest rates next week as those with dollar pegs follow the US Fed and we also hold a non-consensus view that the Central Bank of Egypt will resume its …
15th September 2022
The Bank of Canada’s hawkish communications this week, alongside its 75bp policy rate hike, suggest that it remains unfazed about the downside risks to activity and that it initially favours a 50bp hike at the next meeting in October. That said, the …
9th September 2022
Chile and its constitution: back to square one While the surprisingly strong rejection of Chile’s proposed new constitution in Sunday’s referendum has eased some concerns about a radical shake up of the country’s economic model, the outcome doesn’t put an …
Frozen in the headlights Early indicators suggest that China’s economy was even weaker in August than it was in July, when the rebound from the Shanghai lockdown prematurely fizzled out. And constraints faced by policymakers – some they have little …
The passing of HM Queen Elizabeth II has brought a sadness to the UK. The official 10-day mourning period will bring a halt to some government business. The Bank of England has postponed the Monetary Policy Committee meeting scheduled for Thursday 15 th …
Zambia: pending debt relief may not be enough Analysis from the IMF this week suggests that, even with debt relief in the pipeline, putting Zambia’s public debt on a sustainable footing will be difficult. We will look in detail at the IMF’s projections …
Fed still in hawkish mood In the run-up to the Fed’s next policy announcement on 21 st September, the release of August’s consumer price data next Tuesday could still be pivotal in determining whether the Fed will follow the ECB and Bank of Canada with …
CEE and the Nord Stream 1 gas shut-off The indefinite closure of the Nord Stream 1 gas pipeline by Russia late last Friday has added to the risks around energy supply in Central and Eastern Europe (CEE) and presents downside risks to our GDP growth …
Other central banks to follow ECB’s lead The ECB isn’t the only European central bank in hawkish mood. We expect further rate hikes in Switzerland and the Nordics this year. Unsurprisingly, the Danish central bank matched the ECB’s 75bp hike on Thursday, …
The ECB went big this week, delivering on Thursday a 75bp rate rise, which President Lagarde described in the post-meeting press conference as a “frontloading step in [the Bank’s] journey of normalisation”. While she wouldn’t be drawn explicitly on how …
Inflation to reach 7% later this year We are adjusting our inflation and policy rate forecasts for Indonesia in response to the recent fuel price hikes. The 30% increase in the price of gasoline and diesel that was announced earlier in the week is aimed …
Intervention unlikely but inflation would rise Despite warnings from the government that it would intervene against “rapid and one-sided moves” in the yen, the exchange rate fell this week to a 24-year low of 144 against the dollar and, so far, there …
Index inclusion won’t transform outlook for bonds If media reports this week are to be believed, Indian local-currency bonds are on the cusp of being included in JPMorgan’s GBI-EM Global Diversified Index. Some are suggesting that this could happen this …
Reopening boom will soon run its course The 0.9% q/q rise in Australia’s Q2 GDP was weaker than our forecast of 1.5% q/q. To be sure, that was partly due to a huge drag from inventories. In fact, the 2.2% q/q jump in consumption was even stronger than …
OPEC+ oil output cut affirms cautious approach The decision by OPEC+ to follow through with suggestions of a 100,000bpd cut to its oil production quotas on Monday shows the group has grown wary of the weakening global economic backdrop. This is likely …
8th September 2022
Zambia: IMF deal done, debt sustainability next This week’s rubber-stamping of Zambia’s IMF deal is certainly a welcome step but, with crucial sovereign debt restructuring details unknown, it remains unclear if it will prove to be sufficient to place …
2nd September 2022
Inflation concerns easing Inflation and activity data published over the past few days have surprised to the downside, supporting our view that Korea’s tightening cycle will finish by the end of the year. Headline inflation in Korea fell back from 6.3% …
Brazil: will the consumer surge last? One of the most striking features in Brazil’s Q2 GDP release this week was the stellar performance of household consumption, which rose by 2.6% q/q – a figure bettered only six times in the GDP series’ …
Our tracker models suggest the odds of a recession are rising although, on balance, we still expect a period of weak growth rather than an outright contraction. If we are wrong and a recession drives the unemployment rate up more significantly, then that …
Q2 GDP figures show a mixed performance across the region, with economies most exposed to the war in Ukraine hit hard while the largest economies in the region generally held up well. But given the mounting economic headwinds, there are plenty of reasons …
SNB with more work to do In the week when Joel Wicki was crowned “Schwingen King” in the national Swiss wrestling championships, SNB Chairman Thomas Jordan used his speech at Jackson Hole to reiterate his intention to grapple inflation into submission. Of …
Two quarters of strong outperformance have not been enough for the recovery in GDP to catch up with that in the US and, with growth now grinding to a halt, the divergence is set to widen again. GDP still well below pre-pandemic trend The 3.3% annualised …
Sentiment towards the euro-zone has fallen to new lows. The Eurostoxx equity index lost 4% of its value this week, the spread between Italian and German bonds widened, and euro-zone sovereign bonds reported their biggest monthly price fall on record. …
Adult population shrinking more quickly While Japan’s population peaked in 2010, it only edged down over the subsequent decade as positive net migration cushioned the decline in the “natural” population that was caused by deaths outstripping births. …
This week’s warnings from industry leaders about the adverse impact of rising energy bills on their operations should serve as a reminder to the incoming Prime Minister that the recent surge in wholesale gas prices will affect more than just the …
COVID-19 rears its head again Virus cases have fallen back over the past few weeks as the large outbreak on Hainan island has come under control. But that masks a rapidly deteriorating situation nationwide, with 44 cities now undergoing outbreaks, …
New GDP forecasts GDP data released this week showed that growth surged from 4.1% y/y in Q1 to 13.5% y/y in Q2 (Q1 of FY22/23). But on our own seasonal-adjustment, that implied a gain of only 0.1% q/q. That seems improbably small given the strength of …
Jobs summit tweaks migration goalposts The headlines were dominated by the Jobs Summit this week, where the Labor government announced that it will lift the 2022/23 cap on the annual number of permanent migrants from the current 160,000 to 195,000. …
Egypt to let the pound fall more quickly Comments from officials suggest that the Central Bank of Egypt (CBE) is pressing forward with its shift to a more orthodox exchange rate policy that, coupled with the increased likelihood of an IMF deal , should …
1st September 2022
With this week’s flash PMIs from major economies signalling that demand is tailing off rapidly, the upcoming August trade data from Korea, due Thursday, will give a timely signal of how Asian exporters are faring. We had expected evidence of fading …
26th August 2022
In a hawkish Jackson Hole speech, Fed Chair Jerome Powell argued that “restoring price stability will likely require maintaining a restrictive policy stance for some time. The historical record cautions strongly against prematurely loosening …
Current account deficits and the pesos’ divergence Current account figures released this week go a long way to explaining the starkly different performance between the Mexican and the Chilean pesos. Data from Mexico showed that, while the current account …
There was some better news from the CFIB Business Barometer and new home sales data this week, although both still point to weak economic growth. Meanwhile, the fall in firms’ selling price expectations to a 10-month low in August suggests that core …
Another win for Angola’s ruling party President João Lourenço is on course to secure another term following this week’s elections in Angola. With the political backdrop little changed, we think that the economy will revert to its low growth path following …
What’s even more scary than today’s announcement that the Ofgem price cap will increase by 80% on 1 st October, from £1,971 to £3,549, is that the cap will leap even further early next year. Our wholesale gas price forecasts point to an increase to over …
Governments step up support as gas prices soar Europe’s gas crisis deepened this week, with gas and electricity prices surging further into the stratosphere and governments stepping up policy support and shoring up energy supplies ahead of winter. The …
Foreigners’ net purchases of Indian equities have surged to near record levels in recent weeks. On a one-month rolling basis, inflows have only been higher in US dollar terms on one occasion, in December 2020. (See Chart 1.) Chart 1: Foreigners’ Net …
Martin Flodén sets his stall out in advance Martin Flodén struck a hawkish note in a presentation in Stockholm on Wednesday, noting that inflation has been “quite a lot higher” over the summer than the Riksbank had expected and that it is clear the …
This week brought yet more doom and gloom for the euro-zone economy and from a now all-too-familiar source: wholesale energy prices. The announcement of additional maintenance for Nordstream 1 at the end of this month aggravated concerns about energy …
Lots of talk, not much action There has been a raft of policy announcements during the past week. Last Friday, officials unveiled a scheme to channel financing to developers. On Monday, the Loan Prime Rates were lowered. And on Wednesday, the State …
Nuclear restarts still in the balance The timely Tokyo CPI showed that inflation jumped from 2.5% to 2.9% in August. That was partly due to the fading drag from last year’s mobile phone tariff cuts, but another key driver was the 29% y/y surge in …
GDP growth is holding up The August S&P Global flash PMIs are consistent with our view that the euro-zone is entering recession. And with inflation set to hit 14.5% early next year, the UK economy will shrink before long, too. The composite PMI for the …
What does Egypt need to do to get an IMF deal? Egypt’s Prime Minister Mostafa Madbouly said earlier this week that talks with the IMF over a new deal were in their “final stages” and the hurdles to securing a deal are not particularly high. We have …
25th August 2022
Ruto wins, but political risks remain elevated Deputy President William Ruto was this week declared winner in Kenya's presidential election, but the result is being challenged and the threat of violence lingers. Even if that is avoided, Mr. Ruto will …
19th August 2022
The further rise in core inflation in July was largely due to a surge in travel services prices, much of which should be reversed after the summer. Nevertheless, that rise in core inflation, the continued strength of broader housing-related activity, …
Lula & the state banks: déjà vu Brazil’s presidential election campaign officially kicked off this week with heated barbs between the leading candidates. On the economic front, one thing that has stood out is front-runner Lula’s focus on the role of …
