EC offering carrots, following failure of the stick The long-running saga over a new bilateral “framework agreement” between Switzerland and the EU is back in the news, with the current Swiss President, Guy Parmelin, set to meet his European Commission …
23rd April 2021
Restrictions may need further tightening The surge in new COVID-19 cases in India and subsequent tightening of state-level restrictions has started to weigh on activity . (See Chart 1.) Chart 1: CE India Mobility Tracker (% Diff. from Jan.-6 th Feb. 2020, …
Round Three With the government set to this evening declare a state of emergency for the prefectures of Tokyo, Osaka, Hyogo and Kyoto, Japan’s economic recovery is likely to have stalled across the first half of 2021 (see here ). The emergency measures …
Consumption probably kept rising across Q1 The 1.4% m/m rise in retail sales values in March largely reflected the unwinding of lockdowns in Victoria and Western Australia. The bigger picture is that sales remained below their peak in November. Car …
Saudi privatisation drive picking up pace The Saudi government is speeding up its privatisation drive, which will help to finance the budget deficit. But the authorities’ continued reliance on the Public Investment Fund (PIF) to drive investment risks …
22nd April 2021
Most commodity prices rose this week following a batch of positive economic data releases . Oil prices were up particularly strongly on the back of a larger-than-expected weekly decline in US crude stocks and an upward revision to the International Energy …
16th April 2021
Virus peaking in CEE, but Turkey getting hit hard Third virus waves across much of Central and Eastern Europe (CEE) seem to have peaked and authorities have started to ease restrictions on activity. But the situation in Turkey has gone from bad to worse, …
South Africa: A series of unfortunate vaccine events The announcement this week that South Africa is suspending the roll-out of Johnson&Johnson vaccines, on which it heavily relies, risks further delaying an already slow vaccine campaign. The news follows …
We expect the government to unveil further stimulus measures worth a little more than 4% of GDP next week, and anticipate a slightly more dovish message from the Bank of Canada than markets are pricing in. Budget 2021 The government told us in its Fall …
Bolsonaro’s budget problems coming to a head Brazil’s 2021 budget crisis – in which the president faces a trade off between potentially falling foul of the country’s fiscal laws and losing support in congress – is likely to come to a head next week. To …
The economic data released this week reinforce our view that the recent fiscal stimulus and continued lifting of virus restrictions will drive a marked acceleration in GDP growth this year, while also putting sustained upward pressure on inflation. The …
Amid the reopening of shops and pubs this week, it was the subtler news that the Monetary Policy Committee’s (MPC) arch-optimist Andy Haldane is leaving the MPC at the end of June that caused a reaction in the markets. Many have assumed that this will …
News that distribution of the Johnson and Johnson (J&J) vaccine is being paused due to evidence that it causes extremely rare but serious blood clots came as another blow to the region’s vaccination efforts this week. As we noted here , the EU was …
Public health officials calling the shots This week’s decision by Denmark to discontinue usage of the AstraZeneca vaccine understandably took the headlines. (Incidentally, note that the jab is now officially known as ‘Vaxzevria’, which could be a …
What’s good for TSMC, is good for Taiwan Booming demand for semiconductors is prompting us to raise our Taiwan growth forecast for this year from 4.5% to 5.0%. This is well above the consensus of just 4.2%. Exports hit a record high level in March, with …
Households in a good position The RBA’s latest Financial Stability Review painted a rosy picture of financial stability risks. Household debt as a share of disposable income remained at a four-year low in Q4 despite the fall in incomes as stimulus was …
More state of emergency declarations looming The continued surge in daily infections means it’s now increasingly likely that some businesses will be asked to temporary close to curb the virus spread. We expect a state of emergency to soon be declared for …
Headwinds to investment mounting Industrial production data released this week showed that output growth dropped further into negative territory in February. Looking at the breakdown, tepid capital goods production suggests that investment growth will …
Default risk spreads to financial bonds Bonds issued by Huarong Asset Management, China’s largest distressed debt manager, have seen their price plunge recently after the firm delayed the publication of its 2020 results, reportedly due to significant …
Iran nuclear deal talks off to a bumpy start Hopes of a positive start to talks on reviving the Iran nuclear deal were dampened after Iran announced plans to increase uranium enrichment, highlighting that negotiations have a long way to go. If the deal is …
15th April 2021
Russia-Ukraine tensions flare up An escalation of military tensions along the Russia-Ukraine border poses a major threat to political stability in the region and could exacerbate some existing macro vulnerabilities in both countries. For context, …
9th April 2021
The proposal by the financial regulator OSFI, to raise the qualifying rate for uninsured mortgages, is unlikely to weigh on house prices. But by reducing the share of highly-leveraged borrowers, it should soothe the Bank of Canada’s growing concerns about …
SDRs & DSSI: a bit more breathing space A flurry of global action this week to help improve low-income countries’ balance sheets is likely to provide only short-term relief and, in the meantime, efforts to provide longer-lasting help to debt distressed …
Populist shifts in Peru & Ecuador? Voters head to the polls in Peru and Ecuador on Sunday which could lead to a populist shift in both. The first round of Peru’s general election is a big unknown. The latest opinion polls suggest that no presidential …
The news that a new interpretation of Senate rules would allow Democrats to pass a second reconciliation bill this fiscal year has the potential to be a gamechanger, but we expect moderate Senate Democrats to shoot down any attempt to effectively …
It was a relatively quiet week in commodities markets, with weakness in the US dollar giving agricultural commodities, in particular, a bit of a lift. We think markets could struggle to find a clear direction in the coming weeks given the mixed messages …
The IMF gives Switzerland tops marks for effort The IMF completed its latest Article IV consultation with Switzerland this week. The concluding statements of such missions are typically rather anodyne but this one included some linguistic flourishes. For …
Despite the chill in the air and the risk of a setback to the vaccination rollout due to this week’s recommendation by the MHRA that under 30s should be given a COVID-19 vaccine other than the AstraZeneca one, the economy appears to have begun April with …
The final release of the euro-zone PMIs for March this week showed that the Composite index for the region was even stronger than previously estimated and that the increase was broad-based. This rounded off a strong run of business and consumer surveys …
Korean ruling party days look numbered Wednesday’s landslide defeat for President Moon’s Democratic Party (DP) in key mayoral elections in Korea suggest that it faces an uphill battle to retain the presidency in next year’s vote. Defeat next year would …
PBOC moves to slow credit growth The readout from the latest PBOC Monetary Policy Committee meeting struck a dovish tone. In particular, a pledge to lower real lending rates means readers could be forgiven for thinking that the central bank is still in …
Fourth wave could force draconian measures The Bank of Japan’s broad measure of consumption released this week suggests that the hit to consumer spending from the third wave was harder than first appeared. While the measure rose 1.2% m/m in February, …
Talk of QE misses the bigger picture Much of the commentary following the RBI’s policy meeting this week – in which policy rates were kept on hold – has been on the announcement of a new programme (the so-called G-SAP) through which the central bank will …
Travel bubble launch New Zealand’s government this week confirmed that a travel bubble with Australia will begin on 19 th April. As we previously discussed, the impact on GDP is likely to be small for both countries as the boost from increased spending in …
Royal intrigue in Jordan The royal turmoil in Jordan this week couldn’t come at a worse time for the economy and, if allegations of corruption spur unrest, this would raise serious fears over the country’s poor external and budget positions. But the IMF …
8th April 2021
The decision earlier today by OPEC+ to ease its oil production cuts from May means that production from the group will be slightly higher than we had previously anticipated in Q2 . However, the rise in OPEC+ production will only be gradual, and with the …
1st April 2021
With the next phase of President Joe Biden’s Recovery plan spending likely to take a considerable time to pass Congress and be largely financed by higher taxes, it looks set to have a far smaller bearing on the near-term economic outlook than the $1.9trn …
Polish zloty re-touches its post-GFC lows The Polish zloty touched its weakest level against the euro this week since 2009 but we don’t expect the currency to lose further ground from here. The zloty has been one of the worst performing EM currencies over …
The data this week showed that the economy made a stronger start to the year than we previously thought, but the restrictions now being imposed to fight the third wave of the coronavirus suggest that growth will be slower than we anticipated in the second …
BCCh signals tightening is coming Chile’s central bank (BCCh) was notably less dovish at its meeting this week, as it appeared to lay the groundwork for a rise in interest rates later this year. The decision to leave its policy rate at 0.50% came as no …
Swiss manufacturers are too busy for pranks The spaghetti-tree hoax of 1957, which purportedly showed a Swiss family harvesting spaghetti from a tree, is widely regarded as one of the most successful April Fools’ pranks and (perhaps unfairly) exposed the …
Consumer boycotts of foreign brands in China are nothing new but they have become more frequent . A dataset produced last year by the Australian Strategic Policy Institute (ASPI) identified 57 acts of what it calls “coercive diplomacy” in 2019, more than …
Pulling back the curtain on debt risks in Africa Leaders of several multilateral organizations have warned about debt risks in developing countries. Such vulnerabilities are high in much of Sub-Saharan Africa, but immediate debt risks are probably …
Shareek program aims to boost Saudi investment Saudi Arabia launched a new investment drive this week that aims to boost the role of the private sector in the economy over the next decade. But, while this may drive diversification efforts, there is a risk …
Lockdowns blues Anyone glancing at the latest business surveys would get the impression that the euro-zone economy is booming. The EC Economic Sentiment Indicator, published earlier this week, echoed the message from the PMIs, and shows activity …
The upward revision to GDP in the second half of 2020 means the economy does not have quite as far to recover from the COVID-19 crisis. But it doesn’t change the big picture that GDP will probably get back to its pre-crisis level by early 2022. (See here …
Korean activity data point to pick-up in growth The recent activity data point to an acceleration in Korean GDP growth in the first quarter. March trade data, released this morning, suggest that exporters had their strongest quarter since 2018. In …
Passing the buck House prices are surging in Australia. Prices rose 2.8% in March which translates to an incredible annualised pace of more than 30%. Housing finance commitments in February also point to annual price growth reaching 30% before long. (See …
Strong start to Q2 The 2.8% m/m rise in retail sales volumes in February to their highest level since September 2019 supports our view that the economic damage from the second round of emergency declarations was far more limited than that from the …
RBI will continue to target 4% headline inflation Economic Affairs Secretary Tarun Bajaj yesterday confirmed that the RBI’s current inflation target of 4% headline CPI inflation, with a “tolerance band” of 2-6%, will be maintained for the next five years. …
