Rains still have a significant economic impact… The annual monsoon rains reached India’s west coast this week. The Indian Meteorological Department (IMD) is forecasting that the rains – which typically continue until late September – will be around …
11th June 2021
Egypt’s vaccine rollout still has a long way to go Egypt’s vaccine production has got underway which, the authorities hope, will allow the vaccination programme to speed up. But there is still a long way to go to achieve anything close to herd immunity …
10th June 2021
Democrats get bad news on spending plans The Senate Parliamentarian delivered some bad news to the Democrats this week – ruling that they could introduce another reconciliation to the current budget, which would allow them to pass more of President Joe …
4th June 2021
The latest data suggest residential investment, which rose to more than 10% of GDP in the first quarter, has already peaked. With the Bank of Canada meeting next week, the key issue for policymakers is to what extent future declines could weigh on the …
Peru election: fraught with political risks A victory for left-wing populist Pedro Castillo in Peru’s presidential election on Sunday would probably send local financial markets into a tailspin, but we doubt that investors would have much to cheer about …
SA lockdown level up, recovery outlook (still) down The recent tightening of containment measures to curb South Africa’s third virus wave is unlikely to be as damaging for the economy as earlier rounds of restrictions. Even so, the prospect of further …
Erdogan wants rate cuts, but may have to wait Talk this week of rate cuts in Turkey has led to further falls in the lira and, ironically, means that the central bank (CBRT) will stand pat at this month’s meeting. But aggressive easing is still on the …
Inflation likely to surprise on the upside this year May’s inflation data were a little stronger than we or the consensus had expected (see here ), and inflation looks set to keep rising in the second half of the year. There is a laundry list of factors …
New Riksbank Act proving to be Ingves’ kryptonite If somebody was to devise a superhero franchise featuring Riksbank Governor Stefan Ingves, they could do a lot worse than casting the proposed new Riksbank Act as his arch-enemy. Like a legislative version …
It is not just the weather that has hotted up in recent days, so too have the signs of a rapid economic rebound in Q2. The rise in May’s composite PMI to a record high was the latest bit of good news. And while the PMI might overstate the rebound, it is …
Financial support unlikely to trigger baby boom The big news this week was that couples in China will soon be allowed to have three children, up from two currently. We covered the initial announcement here , noting that since the shift from a one-child …
Remarkable GDP bounce back The 1.8% rise in GDP in Q1 was much stronger than most had anticipated and more than enough to lift output to an all-time high. Indeed, with GDP now 0.8% above its pre-virus peak, Australia has been the best performing OECD …
Consumption weak, but industry recovering The economic data released this week were mostly disappointing. For a start, retail sales volumes plunged by 4.8% m/m in April. That marked the largest drop since last year’s nationwide state of emergency and left …
Korea: vaccines to supercharge the recovery Thanks to a fresh batch of supply, Korea has administered nearly three million jabs in the past seven days, covering over 5% of its population. (See Chart 1.) And there are hopeful signs that this pace will be …
Lockdowns extended despite falling cases The drop in new virus cases in India is now broad based across almost all states, including large ones such as Karnataka, Maharashtra and West Bengal. (See Chart 1.) Even so, lockdowns were this week extended in …
Rising oil prices to open door for fiscal loosening? Oil prices hit their highest level in more than two years this week and, combined with higher oil output over the rest of this year, will help to rein in large twin budget and current account deficits …
3rd June 2021
Lira falls as mafia boss reveals all It’s been a rocky week for the Turkish lira amid more changes at the central bank and political upheaval; coming alongside high inflation, this has reduced the chances of a rate cut at June’s MPC meeting. At the time …
28th May 2021
Infrastructure negotiations going nowhere Negotiations over a bipartisan compromise on infrastructure spending continued this week, but the Republicans and Democrats are still so far apart in their offers that it is only a matter of time before these …
The re-opening plans set out in the last couple of weeks point to strong gains in GDP over the summer. Given supply constraints, we expect the increase in activity to result in higher inflation than most expect. Ontario, Quebec, British Columbia (BC) and …
What do high oil prices mean for inflation? The price of Brent crude has risen to almost US$70pb over the past week as prospects for an imminent easing of US sanctions on Iran have fallen. A decline in US crude stocks also helped to push prices higher. …
Banxico minutes: cautious but not too concerned The minutes to Banxico’s latest meeting revealed that Board members are becoming more wary about the outlook for inflation. Even so, we think that there is a high bar for a tightening cycle to begin. The …
Making it official: Nigeria’s devaluation Policymakers at the Central Bank of Nigeria (CBN) appear to have bowed to pressure to devalue the official exchange rate, and finally acknowledged the move. But a unified and fairly valued naira that many are …
After rising steadily since the end of March, sovereign bond yields have dropped back quite sharply over the past week or so. For example, the Italian 10-year yield fell from 1.16% on 19 th May to 0.93% at the time of writing, and the Italy-Germany spread …
Swiss government calls time on EU talks It has been an eventful week in the news in Switzerland, with a placing in the Eurovision Song Contest for the first time in 33 years, a fighter jet crash (pilot uninjured, plane less so), and the announcement that, …
As anyone who has tried to find a builder recently or even do a DIY project will know, the construction industry is booming. In March output in the sector as a whole was 2.3% above its pre-crisis level. But this masks some large divergences within the …
Renminbi turning point deferred Regulators pledged to squeeze speculation out of domestic commodity markets last week. This week it was the turn of the foreign exchange market. A number of local analysts and researchers in recent weeks have called for …
Investment rebound offset by lockdown The whopping 9.1% rise in machinery and equipment investment in the private capital expenditure survey was more than enough to offset the small decline in non-residential construction in the building works done data. …
Could waning fourth wave give way to a fifth? Japan’s fourth wave of coronavirus has broken as cases have fallen sharply over the past couple of weeks. However, hospitalisations and deaths continue to touch record highs. (See Chart 1.) Indeed, PM Suga …
Recovery might be more gradual than last year New virus cases in India continue to drop sharply and have almost halved from their peak just a couple of weeks ago. The drop has coincided with an apparent bottoming out in some of the real-time activity …
Bahrain and COVID-19: a canary in the coalmine? The surge in COVID-19 cases in Bahrain has forced the government to tighten restrictions to curb the spread of the virus, which will delay its recovery and highlights that vaccination programmes elsewhere …
27th May 2021
Nigeria’s plans external borrowing as naira falls(?) External borrowing plans put forward by Nigeria’s president this week would leave the debt position even more vulnerable to falls in the naira. This week, President Buhari submitted a request to the …
21st May 2021
Chile’s economic model set for a shake up? The surprise results of the vote at the weekend to elect members to Chile’s Constitutional Convention points to a much greater likelihood of rises in public spending on welfare and larger budget deficits. In the …
MNB’s bombshell: a new era of monetary policy? Guidance from Hungary’s central bank (MNB) this week suggests that it is taking the fight against inflation much more seriously and that a monetary tightening cycle will start over the coming months. On …
The latest Financial System Review (FSR) suggests that the Bank of Canada’s concerns about high house price inflation are a key risk to our view that it will wait until early 2023 before raising interest rates. The FSR highlighted that, despite the fall …
External trade to continue boosting GDP A common theme across the Q1 GDP data released over the past month has been the boost still being provided by exports. Data released on Monday showed that despite a tightening of restrictions and a jump in COVID-19 …
In a relatively quiet week, the few data releases we did get added to signs that shortages are pushing up prices further and restraining the pace of economic recovery. The mid-month Manheim used vehicle auction price data showed used auto prices rose by a …
The covid numbers have continued to move in the right direction in the euro-zone, while the vaccine rollout has continued to gain pace, with around a third of the population receiving at least one dose. That has reassured governments that they can push …
In a week when we found out that employment rose in the three months to March (see here ), CPI inflation doubled to 1.5% in April (see here ), retail sales surged in the same month (see here ) and the flash composite PMI jumped to a record high in May …
Please entertain me, Statistics Denmark Statistics Denmark’s website is always a good place to start if you’re looking for some off-the-wall statistics to liven up an otherwise data-light week, and this week was no exception: we learned that the average …
Over half of global jabs now happening in China Of the 177 million COVID-19 vaccine doses injected globally during the past week, a staggering 95 million have been in China. That’s not just a function of China’s population size. As we predicted would …
Tighter labour market will eventually lift wages The end of the JobKeeper wage subsidy resulted in a modest fall in employment in April. But a renewed drop in the participation rate meant that the unemployment rate declined from an upward revised 5.7% to …
Green shoots for second half of the year Due to the economy faring worse than we had expected in Q1, we’ve revised down our 2021 GDP forecast to from +3.0% to +2.0% (see here ). Much of the 1.3% q/q drop in GDP in Q1 was down to a 1.4% q/q in private …
Employment damage could quickly reverse High-frequency data show that virus restrictions and voluntary social distancing continue to exert an economic toll, albeit less severe than last year. Labour market indicators are a case in point. Of course, there …
Iran nuclear deal edges closer If reports suggesting that the Iran nuclear deal will be revived (perhaps as soon as next week) prove right, the lifting of sanctions would probably weigh on oil prices as Iran ramps up production, but geopolitical tensions …
20th May 2021
The unexpected jump in US inflation data pushed the greenback higher against most currencies this week and may a harbinger of things to come – we continue to expect the dollar to appreciate this year. That said, recent US activity data, notably last …
14th May 2021
Chile’s constitutional re-write process starts The vote by Chileans this weekend to elect members to a convention tasked with re-writing the constitution will set in motion a process that is likely to have far-reaching consequences for the economy and …
The extent of the surge in CPI inflation in April specifically caught us a little off guard, although we had been expecting a pick-up in response to the reopening and the shortages of raw materials, intermediate inputs, and labour too. (See here , here …
Israel’s economy likely to weather Gaza conflict The experience of the conflict between Israel and Hamas in 2014 suggests that the economic impact of the current conflict may be limited and temporary. So long as it ends soon, we still expect a strong …
After being constrained for months by a lack of supply, vaccinations in Canada are now outpacing those in every other G20 nation. Nevertheless, the cautious approach by policymakers suggest that restrictions will still be in place for a while longer. …
Aside from coal and natural gas, the prices of most commodities fell this week in tandem with the declines in global equity markets . Investors are concerned about rising inflation, particularly in the US, and have seemingly reduced their exposure to …
