South Africa: debt hopes hang by a thread South Africa’s Medium Term Budget Statement this week outlined harsh austerity measures, but it wouldn’t take much to knock the plans off course and leave debt on an unsustainable trajectory. We looked in detail …
30th October 2020
Joe Biden and the Democrats still look on course to come out on top in Tuesday’s elections. But the surge in early voting means that election night could prove even more of a nail-biter than usual and, even once the results are known, there will still be …
Recent data add weight to upbeat forecasts Activity data released today suggest that Korea’s economy ended last quarter on a strong note and that the provisional estimate of Q3 GDP is likely to be revised up. The first estimate of Q3 GDP – which is …
Officials remain tight-lipped on policy specifics The Fifth Plenum, held in Beijing to discuss the government’s 14 th Five-Year Plan (FYP) and long-run goals, concluded yesterday. The post-meeting communique mostly just confirmed the broad outlines that …
Activity data support our optimistic view The latest activity data are consistent with our above-consensus GDP forecasts. For a start, the 4.0% m/m rise in industrial output in September was stronger than most had anticipated and marked the fourth …
Fin Min’s growth forecasts appear unfeasible Comments this week from Finance Minister Nirmala Sitharaman that GDP growth would be “near zero” this fiscal year paint an unrealistically optimistic picture of the economic outlook. For a start, India’s …
Inflation holding up better than expected The 1.6% q/q jump in consumer prices in Q3 was largely due to the reversal of the government’s free childcare policy and on its own tells us very little about the broader inflation picture. More importantly, …
Saudi budget data: austerity doing its job Data published this week showed that, even though it’s early days, fiscal austerity in Saudi Arabia is already having the desired effect of improving the underlying budget position. But this will come at the …
29th October 2020
Data showing that the Chinese economy continued to rebound last quarter and that growth was accelerating heading into Q4 gave a lift to most industrial metals prices this week . Given China’s share of global metals consumption is far greater than its …
23rd October 2020
Chile: The long road to a bigger state? Political uncertainty is now the main certainty in Chile. Indeed, Sunday’s landmark referendum on constitutional change could be the start of a long and complex process to alter its political landscape. The latest …
So much for the optimism about Russia’s recovery… Russia’s economy lost a lot of steam at the end of Q3 as the recovery in consumer spending over the summer reversed. (See here .) The rebound was supported by social transfers from the government and the …
There was plenty of data this week for the Bank of Canada to digest ahead of its meeting, yet none of this will have much bearing on the key question of how the second wave of COVID-19 will play out. The activity data for August showed only small rises in …
With the final debate now done and dusted, America enters the final two weeks of the presidential election campaign with Joe Biden still leading in the polls and betting markets suggesting the Democrats will win control of the Senate as well as the White …
South Africa: fears rise of second COVID wave The recent rise in newly recorded COVID-19 cases in South Africa appears to reflect higher testing more than anything else. But it’s a reminder that a renewed outbreak of the virus poses a major downside risk …
Risks to the outlook tilted to the downside This week has brought more gloomy news on COVID-19, with virus cases in the euro-zone continuing to rise at a rapid rate and, as we expected, governments responding by ramping up restrictions. In Ireland, for …
Nordics not immune, but comparatively resilient In case you missed it, we released our latest Nordic & Swiss Economics Outlook this week. Of course, virus developments are the key uncertainty. However, assuming that the Nordics continue to avoid the scale …
Usually employment is determined by the number of workers needed to satisfy demand, so it has a good relationship with GDP. (See Chart 1.) But due to the national furlough scheme, despite GDP (the black line) plunging, employment (the blue line) held up …
Inward shift is rational but will come at a cost China’s leadership will gather in Beijing next week to discuss the 14 th Five-Year Plan. The meeting will take place behind closed doors and the full plan won’t be made public until next March. But China’s …
Economies rebounding, but output remains weak National accounts data due to be published over the next few weeks will show that many economies experienced record-breaking rebounds in GDP in the third quarter as they reopened from strict lockdowns. (See …
Revising up our Q3 forecasts The Cabinet Office’s monthly measure of consumption released this week showed a substantial upward revision for July, indicating that the second wave of infections didn’t hit spending as much as first thought. The index also …
Minutes reiterate dovish message The minutes of the RBA’s meeting on 6 th October largely sent the same message as Governor Lowe’s speech a week alter. However, there are two points worth highlighting. First, the Board discussed lowering the targets for …
Election could have key long-term implications After an eight-month pause, India’s state election cycle kicks off again next week in Bihar. Voting will take place in phases between 28 th October and 7 th November, with results expected on the 10 th . …
Oman’s issuance to help unlock financing? Oman successfully returned to the international bond market this week, which will help finance the large twin deficits and support the rial’s dollar peg. Ultimately, though, we think Oman will have to rely on …
22nd October 2020
The main news this week was that home sales hit a record high in September. As inventory is at a record low, sales are set to moderate from here, but prices should keep rising. The smaller 2.0% m/m rise in sales in September may be a sign that the low …
16th October 2020
Mounting pressure for the ARS to fall This week Argentine President Fernández and Economy Minister Guzmán poured cold water on the idea that the peso would be devalued. But with the central bank (BCRA) struggling to manage the currency, policymakers may …
The renewed upturn in coronavirus infections poses a downside risk to the economy and could also have a late bearing on the Presidential election in a little over two weeks’ time. The rise in new cases in recent weeks – to the highest level since …
We published our new set of economic forecasts on Monday, in which we warned that the tightening in COVID-19 restrictions would mean that GDP might not rise at all in October, November and December. We also said that the unemployment rate would rise from …
Headwinds facing Czech economy growing The Czech government this week announced stricter containment measures for the next three weeks in an effort to control the surge in COVID-19 cases which, on a per capita basis, is now the worst globally. Last week, …
Zambia stares into the default abyss A stand-off between Zambia’s government, China and private creditors is pushing the continent’s second-largest copper producer towards default. Last month, the Zambian government requested a deferral of interest …
Growth to slow sharply in Q4 COVID-19 infections continue to rise and the authorities have tightened their restrictions further. (See here .) In a few countries (e.g. Ireland and the UK), public health officials have recently advocated so-called “circuit …
Switzerland in the grip of a second wave The share of virus tests returning positive results in Switzerland doubled in the first two weeks of October and mirrored similar rises seen in Italy and the UK over the same period. At about 7%, the positivity …
West’s virus woes need not deal a major blow China’s goods exports have been strong despite the weakness of the global economy. Data published on Tuesday showed they rose 9.9% y/y last month, with the strength concentrated in shipments of consumer goods …
Political wrangling compounding COVID risks Malaysia’s economy has rebounded rapidly from the crisis. Second quarter national accounts data show that by the end of June the economy was just 3.2% smaller than it was a year ago. (See here .) Recent upbeat …
Government mulling fresh fiscal support We explained last week that Japan is starting to lag behind other large advanced economies in terms of the fiscal support provided during the pandemic. The government duly responded. According to press reports, PM …
RBA doubles down on inflation commitment RBA Governor Phillip Lowe gave a speech this week outlining how the Bank can deliver more easing. One change he unveiled was to the RBA’s forward guidance. In recent meetings, the Bank has said that it won’t raise …
Fresh stimulus will have limited impact on demand After dragging its heels for several months, the Finance Ministry announced further stimulus this week with a package worth INR730bn (0.4% of GDP). Around half of this consists of cash vouchers and loan …
More Saudi bank mergers in the pipeline? The merger of two of Saudi Arabia’s largest banks may be a sign of things to come as firms in the sector look to boost profitability against the backdrop weak economic growth and low interest rates. National …
15th October 2020
The local real estate data suggest homeowners are increasingly trying to offload condo apartments in favour of single-family houses. As those types of home are in short supply, overall sales are set to moderate but we think that prices can still move …
9th October 2020
IMF wades in on fiscal policy... The IMF made headlines this week with the suggestion in its latest Fiscal Monitor that governments across the globe should continue to spend to support economic recoveries. It’s giving a similar message to Mexico. Indeed, …
This week’s 2021 budget presentation by Nigeria’s President Buhari points to challenges in financing the government’s ambitious spending plans, raising the risk that the authorities turn to financial repression policies, including outright deficit …
Spending recovered further during Golden Week Tourist activity and spending during the nine-day “Golden Week” holiday that ended yesterday was substantially stronger than during holidays earlier in the year, but still depressed. That might point to …
Activity data show recovery stalled in August… The latest batch of activity data for CEE disappointed in August. Growth in Czech retail sales failed to gain pace and sales slipped back into a year-on-year contraction in Hungary. The level of sales in …
The rise in longer-term Treasury yields this week appears to reflect growing expectations of a Democrat clean sweep in November that could result in a larger fiscal stimulus down the road. Stock markets are benefiting from the speculation, even though any …
The economic recovery from the COVID-19 recession was always going to slow at some point. But the 2.1% m/m rise in GDP in August was smaller than the 5.0% m/m gain we had anticipated and suggests that recovery is running out of steam sooner than we …
Strong retail sales the outlier, not the norm On the face of it, normality appears to have returned to at least one part of the euro-zone economy. Data this week showed a strong rise in retail sales volumes in August, to 3% above their pre-virus level. …
Who’s afraid of the Big, Bad US Treasury? Thomas Jordan banged a familiar drum in a speech this week, yet again justifying the SNB’s FX interventions that have seen its balance sheet balloon over the past decade. He also stressed that the Bank’s must have …
Surge in Vietnam’s exports puts it in danger Vietnam has so far emerged as the biggest winner of the US-China trade war, as tariffs on goods from China have led US importers to switch suppliers. Vietnam’s exports to the US have doubled since the start of …
Big budget spend up Josh Frydenberg unveiled the 2020/21 Budget on Tuesday announcing nearly $100bn of additional stimulus measures. Of particular note, the Budget brought forward stage 2 of the tax cuts to June 2020 (to be back-dated), introduced a 100% …
FY 2021 budget looks timid We published our Q4 Outlook this week, where we explain that Japan’s economy is on course to recover to its pre-crisis level at a similar pace to the US but much quicker than is likely in the euro-zone. This is largely because …
Reasons for caution despite improvement in data This week brought some much-needed good news for India’s beleaguered economy. Activity data for September have been promising. The manufacturing PMI jumped to an eight-year high, while export growth turned …
