Whether the Liberals or Conservatives triumph on Monday, it seems likely that they will hold fewer seats than the current minority Liberal government. With the balance of power shifting toward the smaller parties, this could result in even looser fiscal …
17th September 2021
Not just Evergrande Evergrande has been in deep trouble for a long time. But it is fitting that the systemic risks posed by its collapse raised it to the top of global market concerns this week, exactly 13 years after Lehman Brothers’ demise. In the past …
Solid GDP consistent with October rate hike The 2.8% rise in New Zealand’s production GDP in Q2 nearly returned output to its pre-virus trend. That’s an incredible achievement given the slump in net migration and that foreign tourists were just 14% of …
Struggling telecoms get a financial lifeline Parliament this week approved several relief measures for India’s embattled telecoms sector. The most significant is a four-year moratorium on dues owed to the government. To operate in India, telecoms firms …
Japan will remain the inflation outlier We launched our CE Spotlight series on inflation this week and one of the key messages is that the inflation outlook is more nuanced than the current polarised debate suggests. For example, while inflation is now …
Lebanon: finally turning a corner? The news that Lebanon finally formed a new government this week came as welcome relief amid the country’s economic, political and humanitarian crises . But there are still plenty of big hurdles to clear before the …
16th September 2021
Bolsonaro takes centre stage It’s been a rollercoaster week in Brazilian politics and financial markets and, while investors have breathed a small sigh of relief in the past day or so, we think that they will be put under further pressure as the 2022 …
10th September 2021
The speech by Governor Tiff Macklem this week suggests that, when the Bank of Canada next tapers its asset purchases, it may do so by less than is commonly assumed. Macklem starts talking about the end of QE The Bank kept policy unchanged at its meeting …
Rule of law dispute escalates in Poland The Poland-EU dispute over the rule of law reached a breaking point this week and raises the threat of potential fines and a significant delay to receiving EU recovery funds in the coming months. This week brought …
The stalling in the economic recovery in July doesn’t mean the recovery is over. But the 0.1% m/m rise in GDP in July revealed on Friday (see here ) does illustrate that the recovery has entered a slower and more challenging phase. To some extent this was …
Tapering is off the table this month and whether the Fed will make an announcement before year-end depends on the strength of employment, which is being held back by increasingly acute labour shortages and the spread of the Delta variant. Fed hawks back …
South Africa: a mixed week of economic news Data this week showed that South Africa recorded robust GDP growth in Q2, but there was little time to celebrate as a slump in manufacturing output in July has raised the risk of a contraction over Q3. Data on …
Norway is a riddle, in a mystery, inside an enigma Norwegians will go the polls in parliamentary elections on Monday in what has been dubbed the “climate election”. The run-up to the vote has been dominated by a debate over the appropriate speed at which …
The future of ECB QE On Thursday, the ECB announced a slight reduction in the pace of its PEPP purchases but delayed more important decisions to December. (See here .) So October’s meeting looks set to be dull, and Christine Lagarde might need to channel …
Virus outbreaks starting to ease Virus outbreaks across South East Asia are in retreat. The biggest improvement has been in Indonesia, where daily cases of COVID-19 are now just over 10% of the level they reached in July. Numbers are also coming down in …
Gauging the scale of Evergrande credit risks If Evergrande collapses we think that policymakers will seek to protect homebuyers but allow other creditors to take losses. How large might the hit be? The good news is that Evergrande has cut its debt since …
New South Wales poised to reopen in October This week New South Wales (NSW) Premier Gladys Berejiklian laid out her plan for the state to begin to ease Covid-19 restrictions. We already knew that reopening would hinge on 70% of the adult population …
Delta wave breaking The Bank of Japan’s consumption activity index edged up by 0.5% m/m in July, driven by a 3.3% m/m rise in services consumption. However, services spending was still 5% below the peak in November, let alone the much higher levels that …
Rollout picks up speed but vaccination rates low India’s vaccine rollout has shifted into a higher gear over the past couple of weeks. Daily vaccinations have risen from about 5mn in mid-August to 8mn in September. Importantly, this pace of vaccination …
Saudi bankruptcy law paying off One of Saudi Arabia’s largest conglomerates is finally on the cusp of securing a debt restructuring agreement with creditors, a sign that recent reforms are helping to speed up bankruptcies. Reports this week suggest the …
9th September 2021
With employment increasing by less than 250,000 last month and other incoming data disappointing, the recovery appears to be losing momentum even faster than our already-below consensus forecasts imply. The slowdown initially reflected the fading of the …
3rd September 2021
Taking stock after the summer It’s increasingly hard to keep up. In rough chronological order, during the last three months restrictions have been placed on foreign IPOs; tech firms have been hit with anti-monopoly investigations and legislation, as well …
The unexpected contraction in second-quarter GDP comes at a bad time for Prime Minister Justin Trudeau, with support for the ruling Liberal Party falling further this week and projections now pointing to a Conservative victory in the election this month. …
Clouds gather over Brazil’s recovery The disappointing economic data out of Brazil this week has cast some clouds over the economy’s recovery prospects. As it happens, we think that GDP growth will pick up quite strongly in Q3, but we’re increasingly …
First impressions from Zambia’s new government Zambia’s newly elected president has wasted no time to push to restore macroeconomic stability, and reassure investors. Less than two weeks into the new administration’s term, Zambian government officials are …
Korea keeping fiscal policy supportive Korea’s proposed budget for 2022 indicates that fiscal policy will remain supportive. In nominal terms, expenditure in 2022 is set to be roughly in line with this year’s (which has been boosted by two stimulus …
For most of the pandemic period, policymakers have been worrying that there will be too much unemployment. But now the fear is that there aren’t enough workers to fill all the jobs! Admittedly, there are still some lingering concerns that when the …
The 3.0% inflation rate recorded in the euro-zone in August is the highest for a decade but it will not be the peak for this year. We expect the headline rate to reach over 3.5% in the coming months. And in Germany, the national CPI inflation rate could …
Mamma Mia! ABBA are back! Of course, it could just be a coincidence that ABBA announced that they are re-forming the day after we released a Focus with a shameless ABBA pun in the title, but we’d like to think otherwise. We will resist the temptation to …
Poland’s inflation surge splits opinion at the NBP The surge in Polish inflation to a fresh two-decade high in August has shown no sign of prompting a more hawkish shift at the central bank. But with inflation likely to remain stuck above target for some …
By announcing that he will not run in the LDP leadership election on 29 th September, PM Suga has effectively resigned after just one year in office. That means he will not lead his party into the general election, which is due by end-November. While the …
Delta undefeatable in Australia Victoria joined New South Wales (NSW) in abandoning the zero-Covid strategy this week, declaring the Delta Variant ‘undefeatable’. Even so, the state government opted not to meaningfully ease restrictions. Instead, the …
Activity data indicate sharp recovery in Q3 Much of the coverage of this week’s Q2 GDP release highlighted the record y/y growth rate, but that was due to the slump last year rather than recent economic strength. We estimate that GDP dropped by 12% q/q in …
Oil price rebound precedes easy OPEC+ decision This month’s OPEC+ meeting passed without much fanfare as the recent rebound in oil prices prompted the group to push ahead with raising oil output, which will help to lift the Gulf economies further. OPEC+ …
2nd September 2021
Brazil’s institutions take a beating The newsflow out of Brazil this week has made for grim reading, with open disputes between the presidency and supreme court putting the country’s democratic institutions under strain. In such circumstances, it’s hard …
27th August 2021
Politics pushing Ethiopia closer to economic brink An internal political conflict in Ethiopia is escalating with an all-out civil war no longer a remote prospect. Strains in the country’s already fragile balance sheet are growing. In recent weeks tensions …
Delta wave spreads The Delta-variant linked surge in coronavirus cases continues and has now spread well beyond just one or two southern states. (See Chart 1.) Moreover, even in those southern states, particularly Florida, new case numbers remain close to …
Housing has emerged as one of the key issues in the federal election campaign but, even if some of the latest proposals are implemented, we doubt that they would have much impact on house prices. Ahead of next month’s election, the Liberal Party has …
Russia dips into the pre-election playbook Russia’s government this week unveiled new lump-sum payments to pensioners and military personnel ahead of September’s election, strengthening our above-consensus views on inflation and rates. The government will …
Do you want the good news or the bad news? Business surveys took centre stage on Wednesday morning, with strong parallels between the August readings of the Swiss Investor Sentiment Index and the German Ifo . Encouragingly, businesses in both countries …
This week saw the release of the first euro-zone business surveys for August, which provided reassurance that the region’s economy continued to grow strongly this month despite concerns about the Delta variant. Although the euro-zone Composite PMI and the …
The list of anecdotal reports of labour and product shortages has grown ever longer in the past week and now includes McDonald’s milkshakes and various items at Greggs. These add to the broadening range of sectors, such as hospitality, wholesale and …
Pandemic boom in home sales unwinding Embattled developer Evergrande this week reported a loss in its core property business during H1, the first time the unit hasn’t turned a profit since the company’s 2009 listing in Hong Kong. The firm said lower …
NSW easing a damb squib Yesterday’s announcement by New South Wales (NSW) that it will ease restrictions for fully vaccinated people was disappointing. Sydney residents in areas under a curfew will be allowed to have a picnic from mid-September, but that …
South East Asia turning a corner? There are some signs that the Delta outbreak battering South East Asia is at least past its worst. But a rapid turnaround in the region’s economic fortunes looks unlikely. New cases have come down sharply in Indonesia and …
Virus positivity rate in Kerala still rising Earlier this month, we flagged the sharp rise in new virus cases in Kerala as a key risk to economic recovery. On the face of it, there are encouraging signs that the outbreak is being brought under control. …
Fifth wave breaks in Tokyo With the government this week expanding its full- or quasi-emergency measures to over 90% of the economy, consumption looks set to fall in Q3. Timely data on convenience store sales and restaurant activity suggest that consumer …
Egypt: Delta arrives as vaccinations set to speed up Fears are growing that Egypt is on the cusp of a fresh wave of COVID-19 driven by the Delta variant, but past experience suggests that restrictions will remain light touch and there is growing hope that …
26th August 2021
The Fed now looks likely to begin tapering its asset purchases later this year, but the precise timing could depend on the extent of any economic drag from the continued rapid spread of the Delta coronavirus variant. The minutes from the July FOMC meeting …
20th August 2021
Even if Prime Minister Justin Trudeau’s decision to trigger an election during the emerging fourth wave of the pandemic does not backfire, we doubt a majority win for the Liberals on September 20 th would materially affect the outlook for fiscal policy. …
