Rupee-ruble exchange would still lift oil import bill Indian authorities are in advanced discussions with their Russian counterparts over a rupee-ruble exchange system that would enable the two countries to continue trading even as Russia gets blocked …
25th March 2022
Current wave yet to be brought under control Daily new domestic virus cases have rebounded over the past week and are now back near the peak of 5,154 hit on 14 th March. This is largely due to mass testing finding hidden infections. 10 days ago, 32% of …
Inflation picking up even further NAB’s February business survey had already highlighted that purchase costs were rising at a rate consistent with a further pick-up in underlying inflation. And the flash PMIs for March, released this week, provide further …
Kishida considering fresh support measures After a brief fall, the price of Brent crude oil has jumped again over the past week and we expect to remain around current levels of US$120 per barrel across the second quarter. Meanwhile, Japan’s biggest …
Egypt buttering up the IMF? Policy announcements in Egypt this week have been pinned on the spill-overs from the war in Ukraine, but they actually have been some time in the making and may be paving the way for a fresh IMF deal. At a surprise meeting on …
24th March 2022
Nigerian economy feeling the pain from FX policies Evidence is building that Nigeria’s unorthodox exchange rate regime is fuelling inflation and increasingly damaging economic activity. Policymakers at the central bank have been reluctant to let the naira …
18th March 2022
While the start of a US Fed tightening cycle has historically sent alarm bells ringing in Latin America, the region generally looks well placed to weather any potential storm this time. Chile may be an outlier, though, given its worrying external …
The Fed delivered on expectations of a 25bp rate hike this week but went further than we anticipated in pencilling in a further six 25bp hikes this year and four next. With their forecasts for core inflation in future years close to our own, we have …
Russia dodges default The saga over whether Russia’s government would make coupon payments on two Eurobonds this week seems to have been settled for the time being. At least some creditors are reported to have received payments (albeit a little late). …
Liu He’s promise on Wednesday of more market-friendly policies triggered a surge in domestic and offshore Chinese equities along with talk of capitulation on key elements of policy. The market bounce makes sense from a short-term perspective. Liu is the …
If the prior record gain in house prices of 3.1% m/m in January wasn’t enough to concern policymakers, then the increase of 3.8% in February, as revealed by the MLS house price data this week, must have caught their attention. To put those moves in …
What’s Swedish for “fundamental change of view”? In a week when the US Fed and the Bank of England both raised interest rates, Riksbank Governor Ingves finally appears to have woken up to the need for tighter policy in Sweden. Mr Ingves reportedly said …
The messages sent by the US Federal Reserve and the Bank of England at their policy meetings this week were very different. While the Fed said it intends to raise interest rates from 0.25-0.50% to 2.75-3.00% by the end of 2023 (see here ), after having …
Things can only get better worse? Our economic forecasts are based on a working assumption that there is no diplomatic solution to the war in the next few months, that Russia remains economically isolated and that sanctions are not rolled back. This is …
Wheat exports impact will be limited The disruption to the global wheat market caused by the war in Ukraine presents an opportunity to Indian exporters. India is the world’s second largest producer of wheat, but until recently virtually all of that …
More rate hikes despite Omicron surge New daily cases of COVID-19 in Korea hit a high of over 600,000 on Thursday, and over the past week an average of just under 1% of the population has been testing positive for the virus every day. This is one of the …
Soaring petrol prices worrying politicians With petrol prices hitting a record high above 3 NZ$ per litre, the New Zealand government this week slashed the excise tax on fuel by 25 cents per litre for 3 months. That’s roughly one-third of the excise that …
The final round? With most of the recent news flow in Japan focusing on external threats such as the war in Ukraine and lockdowns in China, it’s easy to forget that the virus situation at home remains the most important factor determining the shape of …
On the verge of Iran nuclear deal 2.0 Media reports seem to suggest a revived Iran nuclear deal could be signed off imminently, which will boost global oil supplies and could put downwards pressure on prices. It may also help to ease geopolitical tensions …
17th March 2022
The surprisingly strong rise in employment in February reduces the downside risks to near-term economic activity from higher energy prices and reinforces our view that the Bank of Canada will now hike more aggressively than we previously assumed. A …
11th March 2022
High oil prices dashing upside risks to SA activity… The latest economic data suggest that South Africa’s recovery has gained ground, and some sectors will benefit from elevated metals prices caused by the war in Ukraine. But at a macro level, a mounting …
Venezuela: in from the cold? A meeting this week between officials from the US and Venezuelan governments could be the first step towards sanctions being lifted on the country. That would be necessary for Venezuela to rebuild its shattered economy over …
Fed to hike by 25bp and “proceed cautiously” We expect the Fed to hike interest rates by 25bp at next week’s FOMC meeting and, despite the war in Ukraine, to unveil new projections showing at least five interest rate hikes this year in total. We also …
Russia’s economy is in the early stages of a deep recession and we’ve revised our forecast for GDP to collapse by 12% this year. We’ve also revised our forecasts for Central and Eastern Europe as a result of the war in Ukraine with inflation set to be …
Higher energy prices will hurt consumption We are cutting our GDP growth forecasts for many parts of emerging Asia in response to the surge in global energy prices and the war in Ukraine. Movements in energy prices have no direct impact on real GDP. But …
Franc(ie) goes to Hollywood parity The Swiss franc rose through parity with the euro in the early hours of Monday for the first time on record. However, its foray into uncharted territory was brief, and it has since given up the gains it made in March. It …
The pressure on the Chancellor, Rishi Sunak, to go beyond the £9bn (0.4% of GDP) fiscal package announced in February and shelter households from even higher energy costs in his Spring Statement on 23 rd March has intensified this week. That’s because the …
Yesterday’s ECB announcement was more hawkish than expected, but so far the Bank’s Chief Economist Philip Lane hasn’t published a new blog post to correct the message as he has done a number of times in the past. You can read our response to the decision …
A big test for China’s “dynamic clearing” approach Local COVID-19 infections have surged, with over 1000 new cases reported today, the most since March 2020. There are flare-ups across the country, making containment harder and raising the risk of …
Hit to GDP will come via net trade and investment We continue to write extensively across our services about the financial and economic implications of the war in Ukraine. All of our research on the topic can be found here . As a major net oil importer, …
Governor becoming worried about inflation RBA Governor Philip Lowe reiterated in a speech this week that the Bank can afford to be patient as Australian inflation is not as high as in other countries. However, the Governor highlighted that the surge in …
High savings rate to cushion the blow The Ukraine war is dominating the headlines, but the virus is still the main threat to Japan’s economy. Revised data show that Q4 GDP didn’t rebound as sharply as initially reported, leaving output still 1.1% below …
Russian energy embargo to provide fillip to Gulf The news this week that the West will reduce its energy imports from Russia could open the door for some of the Gulf countries to raise oil production output more quickly. This would provide a significant …
10th March 2022
Flies in the ointment for African oil producers’ gains Oil prices have surged this week, but Africa’s main oil exporters – Nigeria and Angola – are unlikely to reap the full benefits due to persistent oil output problems and the mounting costs of fuel …
4th March 2022
Rally in commodity prices not all good news The recent surge in commodity prices has given a boost to most Latin American currencies and it is generally seen as good news for the region. But we would caution that not all economies will benefit. Prices, …
Energy prices soaring Based on shifts in wholesale prices, the surge in the WTI crude oil price to more than $110 per barrel this week will drive the national retail gasoline price up to almost $4.50 a gallon within the next couple of weeks. (See Chart …
Governor Tiff Macklem’s speech on Thursday seemed much more hawkish than the policy statement that accompanied the Bank of Canada’s decision to raise interest rates by 25 bp this week. (See here .) Macklem said the evidence of broadening inflationary …
Events in Russia this week have clearly upturned the outlook completely and the growing possibilities of default, a banking crisis and restrictions on energy exports could cause the downturn to spiral. Russia’s financial markets have been in chaos this …
Bank of Thailand in a tricky spot Inflation has become a major policy headache for the Bank of Thailand (BoT) after figures released today showed that the headline rate surged from 3.2% y/y in January to 5.3% in February, the highest rate since 2008. (See …
As the war in Ukraine has escalated, the upside risks to inflation and the downside risks to activity have increased. The oil price has now risen by around 16% since last Wednesday, leaving it about 25% higher than at the start of February. The UK natural …
Finland most exposed to Russian sanctions We have yet to revise down our GDP growth forecasts for Switzerland and the Nordics in response to the sanctions on Russia, but the negative impact of the conflict will be smaller than for the euro-zone. (Note …
The war in Ukraine has intensified this week, and we have continued to write extensively across all our services about the financial and economic implications, all of which can be found here . In last week’s Weekly , we argued the war in Ukraine would …
“Experimental opening” will be limited in scope Media reports over the past few days suggest that officials have begun discussing ways to pivot away from a zero-COVID strategy. We’ve argued for some time that China will transition toward living with the …
Supply disruptions easing, but risks are high There are signs that supply disruptions in India have eased a touch. The PMIs for February released this week show that the backlog of works components have stabilised after rising sharply since the middle of …
Governor Kuroda’s successor to be more hawkish PM Kishida’s decision to replace arch-dove Kataoka Goushi with centrist Takata Hajime from Okasan Securities at the Bank of Japan could create a slightly less dovish policy board. But it probably won’t make …
GDP will return to pre-virus trend by mid-year The 3.4% q/q rise in Q4 GDP left output just 1.4% below its pre-virus trend, but the recovery remains very lopsided. GDP outside the heaviest-hit sectors has risen by 4.5% since Q4 2019 even as output in …
Could war in Ukraine spell the end of OPEC+? Wednesday’s OPEC+ meeting was a straightforward affair, but the group will be keeping a close eye on possible sanctions on Russia’s energy exports that could pose a risk to the future of the OPEC+ deal. In a …
3rd March 2022
The fallout from the Russia-Ukraine conflict for SSA Direct economic and financial ties between Sub-Saharan Africa and the economies of Russia and Ukraine are limited, but African policymakers will have to contend with the indirect repercussions of the …
25th February 2022
Russia’s invasion of Ukraine on 24 th February will have significant and far-reaching implications for some time to come. The situation on the ground is still in flux and the endgame is simply unknown at this stage. But as we explained in our reaction to …
The good and the bad from high commodity prices The main economic fallout of the Russia-Ukraine crisis on Latin America will come via higher commodity prices, with oil and grains producers set to benefit. But it will also cause inflation to trend higher …
