The 2.1% m/m gain in GDP in March added to other evidence that the economy is recovering more rapidly from the COVID-19 crisis than even our above consensus view had suggested. (See here .) As a result, we have revised up our 2021 GDP forecasts. The 6.5% …
14th May 2021
Rising yields present a challenge to policymakers The account of April’s ECB meeting, published on Friday, gave little away. It reiterated that the Governing Council was not concerned by the increase in bond yields, and that the pace of asset purchases …
South Africa: rand fortunes to reverse The South African rand has been a star performer amongst major EM currencies so far this year, but we think that it will suffer one of the biggest losses against the US dollar by year-end. So far this year, the rand …
In its Q1 Monetary Policy Report published on Tuesday, the People’s Bank (PBOC) argued that inflationary pressures are likely to remain modest within China. The authors acknowledged that strong demand as well as supply shortages are driving rapid gains in …
Singapore circuit breaker 2.0 Singapore has announced several tough new measures to contain a sudden jump in COVID-19 infections. The restrictions will cause economic activity to drop in the near term, but the falls should be relatively small and GDP …
Economic analysis at the cutting edge Given that the Riksbank left its policy settings on hold in April, the minutes from the meeting (which were released this week) were never going to be a rip snorter. That said, we were keen to pore over them for clues …
Supply issues are holding back vaccinations New virus cases in India remain extremely high, though the slower pace of increase and lower share of tests returning positive offers some hope that the current wave is close to peaking. However, lacklustre …
The release of the federal Budget on Tuesday took centre stage this week. (See our Update .) But the more striking development was the surge in the price of iron ore to a record high of nearly US$240 per tonne. (See Chart 1.) Chart 1: Iron Ore & LNG …
Logistics still holding back vaccine rollout While the vaccine campaign has picked up pace, the number of daily jabs administered averaged just 0.15 per 100 people in the week to Thursday – far short of the 0.75 required to meet the government’ target of …
UAE property sector turnaround? The downturn in the UAE’s real estate sector appears to have bottomed out. But we still hold concerns that increasing supply will exacerbate overcapacity and put further strain on banks’ balance sheets. This week, property …
13th May 2021
Colombian peso to stay weak as fiscal risks linger The mass protests against austerity have increased the risks around Colombia’s fiscal position and we think that local financial markets and the currency will remain on the backfoot in the coming …
7th May 2021
Home sales appear to have declined in April and further falls could act as a headwind to the recovery over the rest of the year. Sales plunged by a seasonally-adjusted 20% m/m in Toronto last month and by 7% in Vancouver, while they were unchanged in …
Commodity prices pushed higher yet again this week . Most notably, the seemingly unassailable climb in industrial metals prices saw the price of copper push above $10,000 per tonne for the first time since 2011. However, it is still difficult to square …
Treasury Secretary Janet Yellen set the cat among the pigeons this week when she remarked in an interview “it may be that interest rates will have to rise somewhat to make sure that our economy doesn't overheat.” That faux pas threatened to undo the …
South African politics: intra-ANC balance tilting The suspension of Ace Magashule, the Secretary General of South Africa’s ruling ANC party is likely to go some way in strengthening the hand of President Cyril Ramaphosa in an intra-party fight. But the …
Poland’s ambitious national recovery plan Poland submitted its recovery and resilience plan to the European Commission this week and, while the plan to boost long-term growth looks ambitious, it should make a major contribution towards further income …
Upgrades to the Bank of England’s economic forecasts were widely anticipated. But the Monetary Policy Committee (MPC) still managed to surprise us at this week’s policy decision with the size of these upgrades and its hawkish tone. If anything, it sounded …
The latest news on the euro-zone economy has been encouraging. As we reported earlier today industrial production in Germany, France and Spain in March was nothing to write home about, as shortages of inputs including semiconductors left factories unable …
Trouble in Thailand The outlook for Thailand’s economy has gone from bad to worse, with a sudden jump in COVID-19 cases leading to the introduction of new virus restrictions . The high-frequency mobility data that we track from Google and Apple point to a …
What’s Swedish for “gangbusters”? Preliminary GDP data released last week indicated that Swedish output had already surpassed its pre-virus level in March – faster than it takes many to assemble IKEA furniture. In the meantime, the strong set of activity …
Cases stabilising in key states There are both glimmers of hope and causes for alarm in the latest infection numbers. On the one hand, there are early signs that the crisis in Maharashtra, Delhi and Uttar Pradesh might have peaked, with virus cases …
RBA signals more support is required The Reserve Bank of Australia noted at this week’s policy meeting that it will decide whether to extend its bond purchases at its July meeting. And Deputy Governor Debelle noted yesterday that the decision will take …
Restrictions will probably be tightened further With daily cases not coming down at the nationwide level, the government is set to expand countermeasures across more regions of the country. That will weigh on activity which has held up well in Q2 so far. …
More travel but consumers still holding back Domestic tourists made 230 million trips over the five-day Labour Day holiday which concluded on Wednesday, beating the pre-pandemic record of 195 million trips in 2019. One caveat, however, is that the holiday …
Tunisia: still a long way to go in IMF negotiations Tunisia’s government has jump started talks with the IMF over a fresh financing package but it may prove difficult to secure. If the talks fall apart, Tunisia would be pushed towards a messy balance of …
6th May 2021
During his appearance before the Standing Committee on Finance this week, Governor Tiff Macklem faced questions about why the Bank of Canada is still adding further stimulus through its QE purchases, even though inflation is set to spike to more than 3% …
30th April 2021
Colombia: tax reforms not so easy after all It was always going to be a tough ask for Colombia’s government to push through tax hikes during the current crisis, and the mass protests this week have made the challenge even harder. To recap, the government …
Ripple effects from India’s virus wave India’s unabating second virus wave risks further delays to vaccine exports through the Covax initiative to much of Sub-Saharan Africa, which would set back economic recoveries further. South Africa seems somewhat …
Turkey enters lockdown The imposition of a three-week national lockdown in Turkey adds to the headwinds facing the recovery and means that the risks to our GDP growth forecast for this year are skewed to the downside. President Erdogan announced this week …
It was another good week for commodity prices, with the exception of precious metals . Somewhat better-than-expected Q1 GDP and survey data, particularly in the euro-zone, was one factor fuelling expectations of stronger demand. The pick-up in vaccination …
President Joe Biden’s Families Plan wouldn’t provide much of an additional boost, but the stimulus already in place should ensure that the economic recovery goes from strength to strength, with the Fed clearly in no mood to stand in the way. Major fiscal …
Private consumption is Korea’s weak spot Korea’s Q1 GDP data showed that while output surpassed its pre-pandemic level last quarter, private consumption remained depressed. Consumer spending was still almost 6% lower than in the final quarter of 2019, …
GDP data published this morning confirmed that the euro-zone economy contracted slightly in Q1, even though the business and consumer surveys painted an improving picture. Those same surveys suggest that sentiment and activity improved again in April. The …
Focus on levels, not growth rates People are coming round to the view we have held since November that activity will rebound rapidly as the economy reopens. If anything, the latest evidence, such as the jump in spending on debit and credit cards in the …
Riksbank and Fed singing off similar hymn sheets As expected, the Riksbank left its repo rate and other policy settings unchanged on Tuesday. (See here .) However, the chunky upward revisions to its near-term GDP forecast were swiftly vindicated by the …
Not falling, as far as we know The statistics bureau issued a terse statement on Thursday that “According to our understanding, China’s population continued to grow in 2020.” This rather diffident rebuttal of Tuesday’s FT story only increases anticipation …
Surge in headline inflation won’t last Consumer prices rose 0.6% q/q in Australia in Q1, well below the Bloomberg median forecast of a 0.9% q/q rise. And half of that rise was due to stronger fuel prices which meant that underlying inflation was subdued. …
Q1 holding up well, but Q2 could yet be weaker At first glance, the 2.2% m/m rebound in industrial production in March suggests that the chip shortages that have been plaguing Japan’s manufacturing sector in recent months are easing. With industrial …
With the surge in COVID-19 infections showing no signs of abating and containment measures being reimposed, concerns about spill-overs to the real economy are growing. So far, activity is holding up well . But policymakers are likely to be concerned by …
Saudi Arabia’s Crown Prince Mohammed bin Salman (MbS) gave a rare TV interview this week to mark five years since the launch of the Vision 2030 reform plans. There were four points to take away. The first is that recent fiscal tightening may be reversed. …
29th April 2021
Third time isn’t a charm in Chile The third pension withdrawal bill currently in the pipeline in Chile would support its recovery in the near term. But it is another concerning sign of a gradual shift towards populist policymaking. To recap, the two …
23rd April 2021
Most commodity prices increased this week, with the prices of agricultural commodities rising particularly strongly . The prices of corn, soybeans and wheat surged, reaching new multi-year highs on the back of adverse weather in the US and Brazil. In …
Tussle over wages in South Africa Trade unions are ramping up the pressure on South Africa’s government and state-owned enterprises to increase salaries yet austerity plans hinge on a public sector wage freeze. The credibility of the government’s …
Putin’s fiscal giveaways, but no hurrah President Putin’s state of the nation address this week outlined more social welfare measures to help households ahead of elections in September, but the implications for growth and inflation will be limited. …
Reflecting the additional fiscal support confirmed in the 2021 Budget this week, the Bank of Canada has raised its GDP growth forecasts to be closer to our own. Nevertheless, we do not expect the Bank to raise its policy rate as soon as its new guidance …
This week brought further signs that the surge in demand is triggering much stronger price pressures. That is showing up most clearly in the auto sector, where inventories were already exceptionally lean even before the supply of new vehicles was …
By far the biggest news story this week was the establishment and swift collapse of the European football Super League. If there were an economics version where success depended on where GDP is at the end of 2022, then the UK may win. The UK started at …
Below, but close to, a significant PEPP increase There were no real surprises at this week’s ECB meeting (see here ), but the Governing Council will have some decisions to make at the meeting in June. The first will be what to do with its economic …
A window onto the service sector The detailed sectoral GDP data for Q1 were published over the weekend. The breakdown of services activity is particularly useful as it provides a view over parts of the economy that aren’t captured by high-frequency macro …
HK-Singapore travel bubble postponed again The decision to postpone the announcement of the Hong Kong-Singapore travel bubble will have no direct implications for either economy, but the delays in getting the scheme off the ground demonstrate how …
