The cavalry are coming, but not for a few months We are increasingly optimistic that vaccines against COVID-19 will be distributed at least to priority groups in the first half of next year . There are logistical challenges but they look manageable. (See …
20th November 2020
Minkgate rumbles on in Denmark The political wrangling in Denmark following the outbreak of COVID-19 in the country’s mink farms shifted up a gear this week. The main point of contention remains that the government did not have the legal basis to order …
In the webinar we hosted this week titled “The UK’s Triple Threat – COVID, Brexit and Debt”, we concluded that the outlook for the economy is brightening. That is unless politicians darken it again with an “uncooperative” no deal Brexit or by tightening …
Poland, Hungary & the EU: what’s at stake The decisions by Poland and Hungary this week to veto the EU budget and recovery fund brought to a head a conflict about the rule of law that has been brewing for some time. The EU’s concerns regarding Hungary and …
More encouraging vaccine news The past week has brought more positive developments on the vaccine front, with the latest news from AstraZeneca and Pfizer providing a further boost to regional stock markets. It now seems likely that at least one vaccine …
Restaurant discounts boosted recovery… Output recovered just over half of its H1 plunge last quarter and the economy has got off to a strong start in Q4. The onus is on services consumption to recover most of the remaining half. Despite a 6.6% q/q rise in …
Economic strength opens the door to more defaults China’s credit market had been quiet for much of this year. Following a couple of large bond defaults in the early days of the COVID-19 outbreak, the authorities quickly stepped up support for struggling …
RCEP won’t cool trade tensions Australia was one of 15 countries, including China, to sign the Regional Comprehensive Economic Partnership (RCEP) this week. Some analysts have expressed optimism that the signing of the deal would help cool the rising …
Lakshmi Vilas failure underlines banking woes Newsflow around the world continues to be dominated by the breakthroughs in the development of effective COVID-19 vaccines. There is still plenty of uncertainty but, as we assessed here and here , an effective …
Aramco’s bond issuance: a cause for concern? This week’s dollar bond sale by Saudi Aramco is a further sign that the government is squeezing every last drop out of the company in order to contain the size of this year’s budget deficit, but adds to …
19th November 2020
Warnings against vaccine euphoria The announcement this week of a successful trial of a COVID-19 vaccine is without doubt good news, even as potential access and distribution issues could test policymakers in the region. But the economic gains may not be …
13th November 2020
The increased likelihood that an effective vaccine will be rolled out next year could eventually lead to a situation in which Canada’s economy outperforms, but the swift U-turn this week on the easing of restrictions in Ontario, as well as the new …
Vaccine hopes, but Lat Am will suffer scarring The news of the successful trial of Pfizer’s COVID-19 vaccine has raised hopes that effective vaccines could soon start to be distributed. At this stage, there is a lot of uncertainty. Much will depend on the …
Commodity prices benefitted from news of a potential vaccine for COVID-19 this week . The resulting boost to risk appetite pushed equities and most commodity prices higher, with the exception of precious metals. That said, while a vaccine points to …
Vaccine presents a shot in the arm to the recovery With most of Emerging Europe struggling to contain virus outbreaks and with the number of deaths still on the rise, news of a potential vaccine breakthrough this week is hugely encouraging. While …
It’s always darkest before the dawn The prospect of a vaccine offers hope of faster growth next year than we have factored into our current forecasts. That said, there is less scope for a “vaccine bounce” in Switzerland and the Nordic economies in 2021 …
This week’s release of the Q3 GDP data showed that despite a record-breaking 15.5% q/q surge in GDP, the economy was still 9.7% smaller than at the end of 2019. In contrast, the French, Italian and German economies were all about 4% smaller and the US …
President Donald Trump’s failure to concede defeat more than a week after the election is unlikely to trigger a constitutional crisis. What matters more over the final months of his administration is the policy actions Trump might take. That could include …
The announcement on Monday of Pfizer & BioNTech’s successful trial of their COVID-19 vaccine was unambiguously good news that sent European stock markets earlier this week to their highest levels since early March. The widespread distribution of a highly …
Would a vaccine help China’s economy? China is a rare example of an economy that would be worse off initially if effective COVID-19 vaccines were rolled out globally. The diversion of household spending in major economies from services to goods has served …
What does a vaccine mean for MENA? The distribution of an effective COVID-19 vaccine would clearly improve the near-term outlook but scarring effects from the crisis mean that we still expect the region to recover more slowly than most other parts of the …
12th November 2020
BSP under pressure to cut The weakness of the recovery in the Philippines means that the central bank (BSP) is likely to lower interest rates at next Thursday’s scheduled meeting. Third quarter GDP figures published earlier this week confirm that the …
Effective vaccine wouldn’t restore economic health We looked at the implications of Pfizer’s COVID-19 vaccine trial for the global economy here . Plenty of uncertainty remains: the trial is not yet over, and it is possible that safety concerns could …
Vaccine could be available in first half of 2021 The Nikkei 225 hit a 29-year high this week. This was primarily a spillover from the surge in US stocks as it became clear that the election had returned a divided Congress. That will prevent US …
Output won’t return to pre-virus trend The US elections sent the ASX 200 to fresh highs last week as the prospect of a divided US government means that several measures proposed by president-elect Joe Biden are off the table . And it has risen further …
Sanctions risk not gone away for Russia and Turkey Joe Biden’s chances of securing the US presidency are rising and it looks like there will be a divided government in the Senate. The ruble has appreciated since the election, but the risk of tighter …
6th November 2020
US election: Goldilocks scenario for Lat Am? Joe Biden looks set to win the US election and will probably face a divided government in the Senate. That may be the best outcome for Latin American economies. For Mexico, Biden will probably take a less …
The easing of restrictions in Ontario and the stimulus announced in the province’s delayed 2020 budget bode well for activity, but the recovery could yet be upended by the further spread of the coronavirus. The announcement from Ontario Premier Doug Ford …
Commodity markets shrugged off the uncertainty surrounding the US election and took direction from equity markets and the US dollar this week . Most commodity prices rose as equities jumped and the dollar weakened. However, the likelihood of a President …
With Joe Biden taking the lead in both Georgia and Pennsylvania, it seems all but certain he will be the next President, while the Senate is likely to remain under Republican control. That means we are set for continued gridlock in Congress over the next …
Political tensions raise economic stakes Frictions between Ethiopia’s federal government and the Tigray region turned into military confrontation this week, which will inflict damage not only on the population but also on the economy. The relationship …
With a newly imposed lockdown, policymakers putting in place more support and economists rushing around changing their forecasts, you could be forgiven for thinking we had somehow been transported back to March! We are hoping that our new forecasts prove …
Recoveries are on borrowed time In case you missed it, we cut our near-term GDP forecasts this week following the imposition of new national lockdowns in parts of Europe. (See here .) The virus was spreading rapidly in Switzerland when we published our …
Malaysia 2021 Budget Malaysia’s 2021 budget, which was tabled before parliament today, reveals that the government is planning to keep fiscal policy much looser than we had originally expected. Government spending is projected to increase by a further …
Downside risks become central forecast This week, the downside risks to our forecasts continued to crystalise. First, the economic data added to the evidence that activity was slowing even before the new lockdowns in Germany and France were implemented. …
Ant IPO a reminder that Party control comes first The Ant IPO, which was set to be the world largest, was abruptly suspended on Tuesday, just two days before it was due to go ahead. The suspension was pinned on a change in the regulatory environment, …
China tensions continue to bubble Trade data this week suggest that trade was a big drag on Australia’s GDP growth in Q3, though that’s largely because the rebound in domestic demand lifted imports. And despite mounting trade tensions with China, exports …
October looking good Japan’s economy has been performing well over the autumn months. Indeed, the early evidence points to a further recovery in economic activity having taken place in October. New car registrations surged 22% m/m last month and were …
Biden presidency could strengthen US-India ties At the time of writing, Joe Biden is on course to secure the presidency of the United States. With Congress set to remain in gridlock, we doubt that the election will have a major bearing on the outlook for …
The US election and implications for MENA This week’s US election has yet to reach a conclusive result but it looks increasingly likely that Joe Biden will secure the presidency. Even so, some of the potential downside risks facing the Middle East and …
5th November 2020
A lack of any detail in China’s Five-Year Plan and concerns about virus lockdown measures weighed on the prices of industrial metals this week . It now looks as though we will have to wait until Match for more information on the five-year plan. Next week, …
30th October 2020
Brazil: inflation concerns look overdone Concerns about the recent rise in inflation in Brazil have grown this week, with some suggesting that the IPCA-15 figure published in the previous week showed signs of a rise in underlying price pressures. There …
Developments this week suggest it will take a much greater deterioration of the outlook for the Bank of Canada to deliver additional monetary support, leaving the onus on Finance Minister Chrystia Freeland to deliver further fiscal stimulus. The Bank was …
Smaller, but perhaps longer, hit to the economy This week has seen governments in France and Germany impose new national lockdowns in an effort to bring the virus under control. In both cases, all restaurants, bars, sports and entertainment venues will be …
Is Turkey set for an emergency rate hike? Last week’s interest rate decision by Turkey’s central bank has come back to bite hard, but talk of an emergency rate hike may be a little premature. Unsurprisingly, the decision to tweak the interest rate …
Time running out on Swiss recovery Data published on Friday showed a smaller-than-expected fall in the Swiss KOF Economic Barometer in October, from a downwardly-revised 110.1 in September to 106.6. This left it above its February level and suggests that …
We have been warning since early June that a weak economic recovery and the resulting soft outlook for inflation would prompt the Bank of England to loosen policy by more than was widely anticipated. (See here .) And that for the next 6-12 months, the …
