It’s understandable that the start of the winding up of the furlough scheme on 1 st July (when firms had to start paying 10% of the wages of their furloughed workers) has caused some concern. After all, even after taking into account the cumulative cost …
2nd July 2021
Nigeria’s oil reforms won’t be a gamechanger Nigeria’s long-awaited Petroleum Industry Bill (PIB) is on the verge of making into law, but it probably comes too late to propel a marked turnaround in the country’s oil sector and will not resolve many other …
This week has seen another set of stellar business surveys, underlining that the recovery is still going strong. The final headline euro-zone Manufacturing PMI for June was revised up from the flash estimate to a new record high. And the EC’s economic …
“Stockholm Street” or “Stockholm-enders”? This week saw the latest instalment of the political soap opera in Sweden. Having lost a “no confidence” vote on the 21 st June (see here ), the resignation of Prime Minister Stefan Löfven on Monday means the …
Thailand’s reopening Thailand’s tourism sector will remain heavily depressed despite this week’s reopening of Phuket to foreign tourists. Since Thursday, fully-vaccinated foreigners have been allowed to visit the island without needing to quarantine …
Fiscal package won’t significantly raise the deficit Finance Minister Nirmala Sitharaman unveiled an array of new fiscal measures this week. (See Table 1.) The bulk of them are aimed at softening the economic blow from the second virus wave. They should …
Xi sounding antagonistic China’s Communist Party, much like Britain’s monarch, has an official birthday (1 st July) that is different from its actual date of birth (23 rd July 1921). The centrepiece of yesterday’s official centenary was a forthright …
Vacancies off the chart The Australian Bureau of Statistics’ measure of job vacancies surged 23.4% in Q2 which means they are now more than 50% above their pre-virus level. Job vacancies are now equivalent to 2.62% of the labour force, far higher than the …
The economic data released this week were broadly consistent with our view that activity didn’t recover much in Q2. For a start, we estimate that retail sales volumes fell by another 1% m/m in May following the plunge in April, leaving them 5.3% below …
Saudi’s Transport & Logistics Strategy to fall short The National Transport and Logistics Strategy launched this week by Saudi Crown Prince Mohammed bin Salman is the latest effort to boost the non-oil sector, but it raises more concerns over whether …
1st July 2021
Central bank hawkishness sweeping the region Latin American central banks are becoming increasingly hawkish, not just in Mexico but also in Brazil and Chile. Colombia may soon join this club. The biggest hawkish shift this week was in Mexico. After a …
25th June 2021
The dramatic fall in lumber prices over the past month has captured a lot of attention, but it is the more gradual rally in oil prices that is likely to have the greatest bearing on the economic outlook. That said, we are not convinced it will be …
Ghana: bumper harvest to support recovery Media reports suggest that Ghana may be heading for its biggest cocoa harvest in at least a decade. High rainfall and better farming practices have, according to the same reports, helped push output to its highest …
Virus clouds lift over Turkey’s outlook The sharp improvement in Turkey’s virus situation has brightened the near-term outlook and presents a risk to our view that the central bank will start an aggressive easing cycle in the coming months. The number of …
Fed officials all over the map Fed Chair Jerome Powell stuck to the script in his congressional appearance earlier this week, arguing it was “very, very, unlikely” that the US would experience a return to the high inflation of the 1970s. He acknowledged …
Global developments driving the Nordic majors After last week’s seemingly counterintuitive drop in the NOK following the hawkish message from the Norges Bank (see here ), it was the turn of the Swedish Krona to apparently defy the laws of the market: the …
Another week, another set of euro-zone survey data highlighting the strength of the region’s economic bounce back as virus restrictions are lifted on the services sector. The flash Composite PMI for the euro-zone rose to its highest level in 15 years and, …
The evolving outlook for monetary policy on the other side of the Atlantic has once again been partly to blame for recent movements in UK markets. Like in the US, the yield curve flattened after the Fed became more hawkish at its May meeting, although …
China’s export boom may have peaked A surge in demand for Chinese goods has stretched global shipping capacity, leading to bottlenecks at Chinese ports and a jump in container freight rates. A flare-up in COVID-19 cases in southern China earlier this …
Korea to hike rates in August We were already more hawkish that the consensus in expecting a rate hike in Korea this year, but recent comments by the central bank and strong economic data mean we are shifting forward our forecast for the first hike to the …
Will vaccine supply hit a snag? The worsening outbreak of the delta variant in Sydney underlines that with just 4% of its population fully vaccinated, Australia isn’t out of the woods just yet. The vaccine campaign has accelerated in recent months, but …
Not all it was cracked up to be Media reports claiming that only around half of the funds raised in last year’s coronavirus stimulus packages have actually been spent support our view that government spending hasn’t been as big a prop to Japan’s economy …
Rollout gathers pace but doubts remain India’s COVID-19 vaccine rollout appears to have shifted into a higher gear. Daily vaccinations have more than doubled over the past couple of weeks, and on Monday India reported administering a whopping 8.7mn doses. …
Kuwaiti budget could be a sign of things to come Kuwait’s FY2021/22 budget that was approved this week added to signs from the Gulf that high oil prices are prompting a shift to looser fiscal policy. In a feisty parliamentary session on Tuesday, the …
24th June 2021
Surge in virus cases casts a dark cloud over Russia A surge in virus infections in Moscow and tightening of restrictions at a time when vaccine coverage is so low threatens to derail Russia’s economic recovery. New daily virus infections in Russia had …
18th June 2021
Colombia: new fiscal plan but same old problems Colombia’s government recently outlined plans for more moderate fiscal austerity, but this still looks implausible given the current political backdrop. The Medium-Term Fiscal Plan published this week shows …
Bank of Korea closer to pulling the trigger Minutes from the Bank of Korea’s (BoK’s) May meeting, released on Tuesday, support our view that the central bank will tighten policy this year. The minutes were decidedly hawkish, with one of the seven members …
South Africa: a bumpy second quarter The South African retail sales figures out this week add to the evidence that the economic recovery has been weak and bumpy during the second quarter. Retail sales dropped by 0.8% m/m in April, adding to a weak set of …
The introduction of new weights for the June CPI means that some of the item-specific price increases that we expect will not push up headline inflation by as much as we thought. Nevertheless, there still seems scope for inflation to rise to 4% over the …
The upward revisions to the “dot plot” at this week’s FOMC meeting were hard to square with Fed officials’ continued belief that higher inflation will prove mostly transitory. Nevertheless, we also now expect two 25bp rate hikes in 2023, one more than we …
Football enthusiasts will not need to be told that life is still not back to normal in Europe. Only 13,000 fans watched Germany lose to France in the 75,000-capacity Allianz Arena, for example. Health restrictions also limit the number of people allowed …
Norges Bank trumped by the US Fed The Norges Bank laid its cards on the table this Thursday, all but confirming that it will start to raise its key interest rate from September. (See here .) In the event, it was overshadowed by the less anticipated news …
We covered the growing upside risks to our inflation forecast in last week’s UK Economics Weekly . (See here .) But after the jump in CPI inflation from 1.5% in April to 2.1% in May, we now think CPI inflation will rise to a peak of 2.9% later this year …
Producer prices may have peaked Factory-gate inflation hit a 12-year high of 9% y/y last month but there are signs that price pressures are now easing again. Weekly figures suggest that producer prices have dropped back from a late-May peak by the most …
Hawkish moves When RBA Governor Lowe stood up to give a speech on Thursday, markets were still digesting the hawkish shift from the US Fed that had come just a few hours before. The Fed’s move to add two rate hikes in 2023 to its projection took it ahead …
Recovery might be faster than we are expecting The continued drop in new COVID-19 infections – to their lowest now since April – has coincided with a rebound in the real-time activity data. One striking example is the pick-up in railway passenger …
Round three coming to an end With almost all state of emergency declarations set to be lifted on Sunday, our forecast that GDP will only rise by 1.0% q/q next quarter is looking too pessimistic. The declarations will be lifted in nine of the ten …
Hajj restrictions to delay the Saudi recovery The Saudi government confirmed this week that the Hajj pilgrimage will be at very limited capacity, which will weigh on the Kingdom’s economic recovery. Saudi has barred all foreign pilgrims from attending …
17th June 2021
The communications from the Bank of Canada this week confirmed that it is not worried about inflation surpassing its forecasts for this year, and that it remains committed to keeping the policy rate unchanged until economic slack is fully absorbed. …
11th June 2021
Peru at a crossroads The victory for left-wing candidate Pedro Castillo in Peru’s presidential election last Sunday caused local markets to tumble. However, if his more moderate post-election comments are borne out by policymaking, history provides …
Russian ruble gains as Biden-Putin summit nears The Russian ruble has appreciated markedly recently and the balance of forces now increasingly favours further gains. But a lot also depends on geopolitics; a positive outcome from the Biden-Putin summit …
Vaccinating the world: tides turning? G7 leaders meeting this week are ramping up efforts to provide more vaccines to the developing world, which could give a lift to struggling inoculation campaigns and economic recoveries in Africa. Reports suggest …
The continued surge in prices last month was again mostly concentrated in sectors reopening or facing intense supply constraints, which allows the Fed to stick with its “largely transitory” story for now. But with signs of cyclical price pressures …
Data published by Eurostat this week revealed that the euro-zone economy had a less bad start to the year than previously thought. The third estimate of Q1 GDP showed that the contraction in the first quarter was half as big as previously reported, with …
Falling vegetable prices In a week when we learnt that core inflation in the US reached a 28-year high of 3.8% in May it is difficult to know what to make of the detailed discussion of vegetable prices in Statistics Sweden’s CPI press release . The good …
Signs of hope in Thailand The past week in Thailand has seen a number of encouraging developments, but it is too early to start raising our GDP growth forecasts. First, the bad news. The virus situation remains worrying. New daily cases of COVID-19 are …
Our big non-consensus call that the Bank of England won’t tighten policy until 2024 rather than in 2022 as the markets have assumed is based on our forecast that CPI inflation won’t stick above the 2% target until late in 2023. That view is being …
US takes a leaf out of China’s policy playbook The big news this week was that the passage of the US Innovation and Competition Act (USICA) by the Senate. The bill earmarks $190bn in federal funding over the coming five years (albeit not all of it new) …
October-November vaccine target The revised Q1 GDP figures and April wage data released this week suggest the economy was a little more resilient than first appeared in the early part of this year. And the economy is looking increasingly well set for a …
Victorian lockdown lifted The two-week lockdown in Victoria has now been lifted, two weeks earlier than we had expected. While social distancing restrictions will remain in place, consumers can now shop again, which will provide a meaningful boost to …
