Brazil: electoral splurge concerns grow Worries about a worsening of Brazil’s fiscal position in the run-up to next year’s general elections have continued to build, which appears to have pushed up the credit spread on sovereign debt and adds to reasons …
20th August 2021
July’s fall in CPI inflation from 2.5% in June to 2.0% was the first time since March that inflation has surprised the consensus on the downside. But it probably won’t have provided the Monetary Policy Committee (MPC) with much relief, for two reasons. …
Fiscal risks bubbling under the surface in Romania Romania’s new finance minister, Dan Vilceanu, has a tough job ahead to keep the public finances on a sustainable path and this will be made all the harder by suggestions from PM Citu to spend the windfall …
Norges Bank gets its nose in front The Norges Bank’s “interim” August policy announcement on Thursday did not upset the form book, and the Bank left interest rates on hold at a record low of zero once again. (See here .) The Bank said that economic …
Activity continuing to increase The latest national accounts data confirmed this week that GDP grew by 2% q/q in the second quarter (see here ), but that’s old news now. Timelier data suggest that the economy has continued to grow, with only limited …
South Africa’s “BIG” plans won’t get very far The South African authorities appear to be devoting increased attention to the idea of a permanent basic income grant (“BIG”) but, in practice, such proposals are probably dead on arrival. The government …
August shaping up to be even weaker than July The July activity and spending data published on Monday came in much softer than expected, adding to mounting concerns about China’s growth outlook. The August data look set to be even weaker given that the …
Hike still on the cards With new cases of COVID-19 rising, most analysts expect the Bank of Korea (BoK) to leave rates unchanged on Thursday. While it is likely to be a close call, we are sticking with our view that the central bank will raise its main …
Lockdown upends RBNZ’s plans In contrast to what most had expected, the RBNZ didn’t become the first central bank in an advanced economy to hike interest rates after the pandemic at Wednesday’s meeting. The statement made it clear that the Bank was keen …
Normalisation still some way off… We’ve argued for some time that the RBI is in no rush to join several of its emerging market peers in tightening monetary policy. That view was reinforced by the MPC’s relatively dovish communications at this month’s …
Not all doom and gloom While output only edged higher in Q2 , the 0.8% q/q rise in private consumption was stronger than expected and is an encouraging sign that states of emergency are no longer a major drag on consumer spending. Most surprising was the …
Gulf officials to shrug off recent dip in oil prices The latest drop back in oil prices is unlikely to be of much concern to policymakers in the Gulf and we still think that there is a window of opportunity for fiscal policy to be loosened over the next …
19th August 2021
BCRP: same Governor, fresh tightening Peru’s central bank (BCRP), under the renewed stewardship of Governor Julio Velarde, fired the starting gun on its tightening cycle yesterday and we think it has much further to run over the next year. There were two …
13th August 2021
Wrapping up a week of instability in Poland Poland's political scene was thrust into uncertainty this week after President Duda dismissed Jaroslaw Gowin, the leader of one of the coalition partners, from his duties and his Agreement party pulled out of …
Elections key to Zambia’s economic direction This week Zambians voted in tightly contested elections, and while the results have not yet been announced, we think that one way or another, the fiscal leash will probably be tightened. General elections were …
The GDP figures for June, which showed that the economy grew by 1.0% m/m after the 0.6% m/m rise in May, was an impressive result given the surge in COVID-19 cases in that month. (See here .) But we warned a couple of weeks ago that the “pingdemic”, which …
A new paper from the Bank of Canada outlines some additional economic benefits of a new monetary policy framework, which could be a sign that there is a greater chance of the Bank adopting average inflation targeting this year than we have assumed. Every …
There are tentative signs that China’s Delta wave has broken. New symptomatic cases have dropped back below 100. And only 52 domestically-transmitted cases were identified yesterday (including non-symptomatic cases found during mass testing). If the …
While the July inflation data this week added to signs that we’re past the peak of “transitory” gains in prices for used autos and reopening services, the pick-up in some of the more cyclically driven components showed underlying inflationary pressures …
With six weeks left until Germany’s federal elections, on 26 th September, opinion polls suggest that things have got more complicated. In brief, and with apologies for the alphabet soup, they show that support for the CDU/CSU has declined compared to …
All eyes on the north Atlantic The world tends to only take notice of Iceland after spectacular events, be it the implosion of its banking sector or the explosion of a volcano . The country has been thrust into the spotlight once again recently following …
Delta puts PM on shaky ground The seven-day-average of cases in Tokyo has stabilised somewhat this week – a tentative early sign that the fifth wave may be peaking. (See Chart 1.) But even if a clear downward trend emerges, severe cases are likely to …
Lockdowns multiply The outbreak of the delta variant in Australia continues to worsen. Daily cases reached a new high in New South Wales (NSW) this week. And the re-emergence of cases in Victoria, Queensland and ACT has forced each state to re-enter …
Vaccine drives still moving too slowly With daily cases of COVID-19 reaching record levels in many countries, the region’s economic recovery has slipped in reverse, and vaccines look unlikely to steer a turnaround just yet. Widespread vaccination offers a …
Efforts to boost supply won’t have big impact Concerns continue to build over a new virus wave in India. While daily infections at the national level remain low, they are still elevated in Kerala and are now also rising in a handful of other states. These …
Egypt: the Russians are coming (slowly) Egypt welcomed back Russian tourists for the first time in six years this week, which will be a relief to the ailing tourism sector, but any economic boost will be limited. Russia suspended flights to Egypt in …
12th August 2021
Chile’s barnstorming recovery continues This week’s strong activity data from Chile reaffirms our long-held optimism over its economic recovery. Having faced a setback from a severe virus wave in early Q2, the official economic activity index (Imacec) …
6th August 2021
Housing market continues to cool There was more evidence that the housing market is cooling this week, with home sales slipping to 12-month lows in seasonally adjusted terms in both Toronto and Vancouver. (See Chart 1.) In Toronto, sales fell by a further …
While many Republicans will balk at the cost of the bipartisan infrastructure package, which the CBO said would add $256bn (1.1% of GDP) to the deficit over the next decade, that is unlikely to derail the entire package, which faces a crucial Senate vote …
The impact of China’s Delta outbreak is starting to show up in the high frequency activity data. (See Chart 1.) The jolt is still smaller than January’s but it will get bigger since restrictions on movement are still being tightened. Chart 1: Passenger …
NBP’s doves losing their nerve… A slew of comments from policymakers at the National Bank of Poland (NBP) this week suggest that the probability of the central bank delivering a rate hike before the end of this year has increased. Flash July CPI data …
We learnt three things from this Thursday’s Bank of England policy decision and were left in the dark on two key issues. As a result, some of our forecasts for money market rates and gilt yields have changed. What we learnt First, the Bank of England …
It was a week of more generally good news for the euro-zone economy. The risk that the Delta variant would halt the recovery in its tracks is receding rapidly. Daily infection numbers are now falling consistently in Spain and the Netherlands, which were …
A macroeconomist’s take on the Olympics Rather than just enjoying the spectacle of Norway’s Karsten Warholm storming to victory in the 400m hurdles this week, we found ourselves frustrated by the emphasis that sports reporters put on nominal rather than …
South Africa: new cabinet, old problems It may take some time for the dust to settle after this week’s cabinet re-shuffle in South Africa, but one key point is that the new finance minister will face a growing challenge of stabilising public debt. …
Thailand and Philippines to cut rates soon Whereas several EM central banks are in the middle of aggressive tightening cycles, Thailand and the Philippines are likely to resume rate cutting soon. The Bank of Thailand left its policy rate unchanged at its …
New Zealand economy running hot New Zealand’s unemployment rate plunged from 4.6% to 4.0% in Q2, matching its pre-virus low. By contrast, the RBNZ had expected the unemployment rate to remain at 4.7% for more than a year. And unlike in Q1, other …
Rising infections in Kerala a big cause for concern Economic activity has been staging a very strong recovery since the second virus wave receded. But we’ve argued for some time that the rapid reopening would increase the risk of new outbreaks, …
Medical situation deteriorating again With the more contagious Delta variant now accounting for 90% of cases in Tokyo and 60% in the region around Osaka, the number of new infections hit record highs of over 10,000 this week. And as the number of …
Egypt: price of bread set to rise The announcement that the price for state-subsidised bread in Egypt is set to be raised adds to our view that inflation will drift higher and that policymakers will hold off from cutting interest rates for now. President …
5th August 2021
The slightly disappointing second-quarter GDP data released this week and another dovish press conference from Chair Jerome Powell strengthen our belief that the Fed is unlikely to begin tapering its asset purchases until early next year. The 6.5% …
30th July 2021
Although inflation remained above the Bank of Canada’s 1% to 3% target range in June, the details of the release seem to support the Bank’s view that the high rate of inflation is due to transitory factors. The consumer price index rose by just 0.1% m/m …
Peru’s President Castillo off to a concerning start The first steps from Peru’s newly-inaugurated President, Pedro Castillo, provide plenty of worrying signs for investors. The president officially took office on Wednesday and his inauguration speech …
China’s impressive record of staunching COVID-19 outbreaks is being tested by the Delta variant . The flare-up that was first identified in Nanjing last week has now spread to 15 other cities, making it the most geographically dispersed since the initial …
CBRT conceding the fight against inflation? Turkey’s central bank raised its inflation forecasts in its latest Inflation Report and Governor Kavcioglu’s comments suggest that policymakers are unlikely to step up to the plate in the fight against …
Walking the line: public finances in South Africa Post-unrest relief measures announced by the South African authorities will probably go some way to offset the blow to the economy. The government expects to be able to stick to its fiscal consolidation …
This week brought further signs that the “pingdemic” weighed on economic activity in July. (See here .) The number of people having been asked by the NHS App or Test & Trace system to self-isolate has almost doubled in the past three weeks, reaching 1.3 …
Data published today revealed that the euro-zone economy grew more rapidly than anticipated in Q2, with GDP rising 2.0% q/q whereas the consensus and our forecast were both for 1.5%. As we pointed out earlier , the upside surprise was due to very strong …
Global factors driving Swiss industry and the franc We would not overplay the importance of the second consecutive fall in the Swiss KOF Economic Barometer (July data were released this morning). After all, the indicator is still well above its long-run …
Fifth wave the biggest yet While Japan is keeping pace with China and the US at top of the gold medal table at the Tokyo Olympics, it is losing ground to its rivals in the economic recovery rankings. Japan’s economy started this year closer to its …
