Light-touch restrictions beginning to relax We flagged last week that the state of emergency currently covering 10 prefectures was likely to be lifted before its scheduled end on 7 th March. Indeed, the government is considering lifting the declaration …
11th February 2021
RBNZ cracks down on the housing market In April 2020, the RBNZ removed its existing LVR restrictions for housing loans which stipulated that banks could not lend more than 80% of loans to owner-occupiers with loan-to-value (LTV) ratios above 80% and no …
RBI commits to low rates and ramps up OMOs… Indian yields rose significantly in the aftermath of the unexpectedly-accommodative Union Budget announcement but developments since have helped to reduce some of the upward pressure. Admittedly, the RBI kept …
China has again shown its prowess in extinguishing COVID-19 flare-ups: infections were reported in 24 of China’s 31 provinces in January; no new cases of domestic transmission were found anywhere in China this week. The vaccination programme is looking …
Growing headwinds facing Thailand Thailand’s economy has been staging a gradual recovery from the crisis, with GDP figures due on Monday likely to show the economy contracted by around 5.5% y/y last quarter, compared with a decline of 6.6% in Q3. (See …
10th February 2021
The larger-than-expected 213,000 fall in employment in January was disappointing, but we can take some comfort from the details of the Labour Force Survey, which showed that total hours worked continued to recover. The 0.9% m/m rise suggests there are …
5th February 2021
Ecuador’s new president must talk a good game Sovereign debt risks in Ecuador will remain high regardless of Sunday’s election result and we think that another debt restructuring is likely in the medium term. But for those with strong stomachs, there …
This week the Democrats took the first step toward forcing a large-scale stimulus through the Senate using reconciliation, which only requires a simple majority. But even though it required an all-night session to pass the budget motion that unlocks …
In an otherwise fairly quiet week, some wild gyrations in the silver market were the focus of investor attention . Starting late last week, the price of silver surged by 20% to reach a multi-year high on Monday. Reportedly, the retail investors that had …
Debt restructuring “wave” more of a ripple Zambia has become the latest country – after Chad and Ethiopia – to seek debt restructuring under the G20’s Common Framework, but tough negotiations lie ahead and few other countries are likely to go down a …
Sputnik V late-stage trial results offer optimism Russia’s vaccination programme has got off to a slow start and there are a greater number of hurdles holding back rollout than we thought. But the good news this week regarding the high efficacy of the …
A fortnight ago we highlighted two downside risks to our forecasts that the economy would enjoy a quick and complete recovery from the COVID-19 crisis. (See here .) But the past week has highlighted two upsides, which also caught the attention of the …
Malaysia’s recovery in reverse Malaysian GDP figures, due to be released on Thursday, are likely to show a sharp slowdown in the recovery in the final quarter of last year. (See our data preview below for details.) The recovery is likely to go into …
Sequels all too often end up disappointing, so Mario Draghi will be hoping that his return to the euro-zone’s centre stage little more than a year after he stepped down as ECB President proves the exception to the rule. But if “saving the euro-zone” was a …
Swedish economy proving resilient Data released this week have provided welcome signs that the Swedish economy is holding up better than we feared. The manufacturing sector remains in rude health, helped by a pick-up in global trade flows. While the …
Ant’s days as a freewheeling tech firm are over After years of presenting itself as a tech firm and benefitting from limited oversight, fintech giant Ant Group has reportedly agreed to restructure as a financial holding company (FHC). As a result, it will …
SoE extension not a major worry The government this week extended the state of emergency by a month for ten of Japan’s eleven prefectures. Tochigi was the only prefecture that was excluded as it met all six of the metrics required to lower the status of …
RBNZ tightening looking more likely Just three weeks ago we unveiled our non-consensus forecast that the Reserve Bank of New Zealand would begin raising rates in 2022. Since then a string of positive data releases has confirmed our view that the economy …
Banking reforms back on the agenda The dust is settling on the Finance Ministry’s unexpectedly accommodative Union Budget for FY21/22 delivered on Monday. We looked at various aspects of the announcement here and here . One topic mentioned by FM Nirmala …
Kuwait budget fears: a storm in a teacup? Kuwait’s budget laws have created problems financing the deficit that are now reaching a crunch point, but it seems most likely that the government will be able to get around these. Low oil prices have forced …
4th February 2021
The government found itself battling on two fronts this week, as the EU moved to restrict vaccine exports and US President Joe Biden sought to strengthen ‘Buy American’ provisions at the expense of Canadian exporters. We do not think these moves seriously …
29th January 2021
Brazil’s hawks looking at the labour market One takeaway from the minutes to this month’s Brazilian central bank meeting is that the hawkish contingent on Copom is larger and more vocal than had been anticipated. But there are reasons to think their views …
Vaccine hold-up threatens to delay recovery The growing tensions between the EU and AstraZeneca over COVID-19 vaccines threaten to delay the economic recovery we had pencilled in for Emerging Europe during the first half of this year. AstraZeneca …
It was another largely uneventful week in commodity markets . For all the talk of an impending ‘super cycle’, the prices of most commodities have generally continued to struggle to extend the large gains made towards the end of last year. In fact, as we …
Kenya: more room for fiscal manoeuvre? Policymakers in Kenya appear to be exploring options to open up fiscal space to boost the recovery, seemingly with the IMF’s blessing. It is not entirely clear what central bank governor Patrick Njoroge was referring …
No sooner had we put the final touches to our quarterly Outlook than some of the downside risks to our forecasts have begun to materialise. Our prediction of a brisk recovery in GDP beginning in the second quarter was based on two assumptions: (i) that …
The rapidly accelerating vaccine rollout means that the economic outlook continues to brighten. But Fed Chair Jerome Powell’s dovish tone in his post-FOMC press conference this week reinforces our view that the Fed will maintain its current ultra-loose …
The labour market has been remarkably strong since the onset of the pandemic. The unemployment rate has only risen from 4.0% in February to 5.0% in November and the 3.6% 3myy rise in earnings in November means that wages were rising at their fastest …
Lunar New Year travel kicks off with a whimper Yesterday was the first day of what the government calls the “Spring Festival travel season”, which lasts 40 days. During this period, the Ministry of Transport (MoT) publishes daily data on long-distance …
Swiss recovery shifts into reverse The plunge in the Swiss KOF Economic Barometer in January, from 104.1 in December to 96.5 (well below even our below-consensus forecast), suggests that the reintroduction of a nationwide lockdown is starting to bite, and …
More evidence of resilience from Korea The latest batch of activity data from Korea indicate the economy held up well in December and suggest that companies are learning to cope better with new COVID-19 restrictions. This week’s Q4 GDP figures revealed …
Inflation set to rise further The 0.9% q/q rise in consumer prices in Q4 was much stronger than the RBA’s forecast of 0.5% q/q. That said, the pick-up in annual inflation was entirely driven by administered goods as child-care subsidies and a freeze in …
Higher consumption forecasts The modest 0.3% m/m fall in retail sales volumes in December suggests that consumer spending had built up some immunity to surging coronavirus infections. While we assume that overall household spending performed a little …
Finance Ministry faces a tough balancing act For India watchers, next week will be one of the most important of the year. On Monday, Finance Minister Nirmala Sitharman will unveil the Union Budget for FY21/22. We published a full preview of the Budget …
Saudi: squeezing SAMA to fund PIF The change at the helm of the Saudi Central Bank (SAMA) adds to signs that the government will lean more heavily on SAMA to support its efforts to diversify investments and the Saudi economy. SAMA Governor Ahmed …
28th January 2021
Ecuador: another default on the cards? Comments from left-wing Ecuadorian presidential candidate, Andrés Arauz, caused ructions in the bond market this week and reinforce our view that another debt restructuring may be on the cards. It’s still unclear who …
22nd January 2021
Despite some parts of China re-introducing lockdown measures and reported virus cases around the world continuing to spiral upwards, the prices of most commodities held up well this week as investor enthusiasm for risky assets remains high. We suspect …
The executive order signed by US President Joe Biden this week, to revoke the permit allowing the Keystone XL pipeline to cross the US border, means the project is as good as dead. This does not alter our forecasts for the next few years, but it …
South Africa pulling the plug from SOEs? The South African government’s decision this week to provide no further debt guarantees to state-owned lender Land Bank underscores the mounting pressure on the public purse. Since defaulting on some of its debt …
Russian inward FDI hits post-Soviet low The slump in FDI inflows to Russia last year underline how bleak the country’s medium-term growth prospects are. Figures released by the central bank this week show that Russia attracted just $1.4bn in FDI last …
Incoming President Job Biden signed a flurry of executive orders during his first couple of days in office, but it remains to be seen whether the divided Senate will support his broader agenda, particularly his call for more large-scale fiscal stimulus. …
It is not surprising that investors interpreted the ECB press conference this week as being slightly hawkish. After all, policymakers seem content with preserving the current level of financial conditions, despite their forecasts suggesting that this will …
Two developments this week threaten the view we laid out in our recent UK Economic Outlook that the economy will enjoy a quick and complete recovery from the COVID-19 crisis. (See here .) The first are the rumours that the Chancellor is planning to raise …
Indonesia opening for business The near-term outlook for Indonesia’s economy is poor. A failure to contain the coronavirus means that the economic recovery is likely to be slow and fitful. But long-term economic prospects received a boost this week with …
Sweden extends (but doesn’t tighten) restrictions Although the number of new daily infections in Sweden has come down over the past week, it remains high by Nordic standards. It is therefore no surprise that the Swedish government announced a two-week …
Anti-trust guidelines target Ant and Tencent The PBOC issued draft guidelines on Wednesday that set explicit market share ceilings for non-bank payment providers, offering greater clarity about what the government’s anti-trust push against China’s tech …
Rupee to only appreciate slightly against dollar The RBI’s foreign exchange reserves climbed to a record high of $586bn in the first week of January, from $581bn at the end of 2020 and $461bn a year ago. (See Chart 1.) Recall that the recent sharp …
Slower virus spread not enough? Some commentators have suggested that winter surges in infections in “light-touch” countries such as Japan and Sweden are the final nail in the coffin for voluntary containment measures. Draconian restrictions on economic …
Risks from JobKeeper phase out keep diminishing Even though the participation rate hit a fresh record-high, Australia’s unemployment rate fell to 6.6% in December. Across the fourth quarter, the unemployment rate has averaged 6.8%, far below the RBA’s …
Tunisia: protests will make reforms harder to pass Protests that have swept across Tunisia over the past week bring back memories of the revolution a decade ago. While there’s a lot of uncertainty about how these will develop, one point we can make at …
21st January 2021
