We don’t know exactly how long the third English lockdown, which started on 5 th January, will last. Government ministers have talked about schools being closed until mid- or late-February, but the lockdown legislation MPs voted into law on Wednesday has …
8th January 2021
After a strong finish to 2020, most commodity prices built on their gains in the first week of January , as investor sentiment continued to prove supportive and Saudi Arabia announced that it would unilaterally cut oil production in February and March. In …
Vaccination programmes struggle to take-off COVID-19 vaccination programmes have started slowly in the region and, with virus restrictions likely to be extended, or tightened further, economies will remain weak for a few more months at least. Russia has …
Q4 not as bad as first feared… The manufacturing PMIs from December (released on Monday morning), suggest that the industrial sectors in Switzerland and Sweden ended 2020 on a high, helped by robust demand from Asia. (See here .) The Swiss PMI rose to a …
The number of new coronavirus cases came down in many countries before Christmas as a result of the tighter restrictions in place. But since then, things have taken a turn for the worse. New cases have been increasing at the beginning of the year in …
COVID-19 battle not over but vaccines offer hope Shijiazhuang, a city of 11 million and the capital of Hebei, was put into lockdown on Thursday, after recording 117 new coronavirus cases the previous day (67 of them asymptomatic). Mass testing is being …
Vietnam: outperformance continues GDP figures for Vietnam should always be treated with caution, but data released before New Year show that the economy grew by an impressive 4.5% y/y in the final quarter of 2020. This brought growth for the year to 2.9%, …
Several challenges to widespread vaccination India crossed an important milestone in its attempts to tackle the pandemic this week with the emergency approval of the COVID-19 vaccines developed by Oxford/AstraZeneca and Bharat Biotech (an Indian …
Vaccine rollout to begin slightly earlier This week Prime Minister Scott Morrison revealed that the vaccine rollout may be brought forward to mid to late February. Mr Morrison said he hoped the Pfizer/BioNTech vaccine would be approved by the end of …
Nationwide state of emergency looms With Japan recording a record 7,000 virus cases on Thursday, the government yesterday declared a state of emergency in Tokyo and the three surrounding prefectures of Kanagawa, Saitama and Chiba that will last until 7 th …
Saudi cuts, but OPEC+ tensions still simmering Saudi Arabia’s surprise voluntary oil output cut unveiled at this week’s OPEC+ meeting has lifted oil prices, but even so GDP growth will probably be weaker in Q1 than previously expected. After much acrimony …
7th January 2021
We think that the price of oil will outperform most other commodity prices next year . A lifting of virus restrictions, as vaccines are rolled out, should allow for a strong bounce-back in oil demand and prices in the second half of next year, whereas we …
18th December 2020
The provincial government in Quebec this week announced an 18-day “circuit breaker” lockdown, and the authorities in Ontario seem to be planning something similar. We assumed further measures were ahead, so this has not caused us to alter our forecasts, …
Vaccine rollout: the good, the bad and the ugly Policymakers in much of the region are stepping up efforts to launch vaccination campaigns, which could start within a few weeks. But there are early signs that this will be a difficult process, particularly …
Trials and tribulations of COVAX Reports this week pointed to the multilateral COVAX facility’s high risk of failure, which would delay many African countries’ access to vaccines and the ensuing economic benefits. South Africa, for its part, missed a …
The decline in retail sales in November confirmed the message from the slumping high-frequency activity data and the rising trend in jobless claims – namely that the restrictions imposed by many states to stem the surge in coronavirus infections are …
Russian government takes aim at food price surge Moves by the Russian government this week to try to curb the rise in food inflation are unlikely to have a major impact on monetary policy, but they underline that the shift towards providing more social …
The sentiment from this passage we published in the first UK Economics Weekly of this year still feels relevant for 2021: “With something like a no deal still possible in December, Brexit uncertainty will prevent 2020 being a good vintage for the …
US Treasury not on the SNB’s Christmas card list The SNB’s final policy meeting of the year (see here ) was overshadowed by the news on Wednesday that the US Treasury designated Switzerland, along with Vietnam, a “currency manipulator” in its latest …
With this being our final Weekly of 2020, it seems like a good opportunity to cast an eye back over this year, and draw some lessons for next year too. Lesson 1: acknowledge the uncertainty We aren’t going to be too harsh on ourselves for not seeing the …
Fiscal policy to stay supportive, except in Sri Lanka Most countries in Asia came into this year with a relatively low level of government debt. They are generally better placed than other emerging markets to cope with the sharp increases due to COVID-19. …
Looser target may not deliver looser policy Under current law, India’s government issues the RBI with an inflation target every five years. The current target of 4% CPI inflation, with a “tolerance band” of 2-6%, runs until the end of March 2021. Media …
Politburo tea leaves ahead of the CEWC We’re still awaiting news out of the Central Economic Work Conference (CEWC), which sets the economic targets and policy priorities for the coming year. (See here for what to expect.) We did, however, get some hints …
Recovery will lose steam Survey data released this week suggest that economic activity continues to recover in the face of the most severe wave of coronavirus in Japan yet. The recovery in the Q4 Tankan beat consensus expectations, with the “all industry” …
Coal the latest victim of trade war with China Chinese steel mills and power plants were told to stop importing Australian coal at the start of October. More recently, China has relaxed coal import quotas for major power plants due to domestic supply …
COVID-19: Light at the end of the tunnel COVID-19 outbreaks have started to come under control in recent weeks which, combined with the start of the roll-out of vaccines, should give a lift to the region’s economic recovery. However, there is likely to be …
17th December 2020
Banxico’s traditional hawkishness set to fade? The approval of Galia Borja Gómez as a deputy governor of Banxico is likely to mark a dovish shift at the central bank. Admittedly, not much is known about the monetary policy views of Ms. Borja. But she will …
11th December 2020
Zambia and the IMF: high hopes The confirmation this week that Zambia is seeking an IMF funding program is a positive step, which is likely to improve the chances of a wider debt restructuring deal with external creditors. An IMF deal would lend more …
The Canadian dollar jumped to a two-year high this week and, despite the pledge from the Bank of Canada that it will keep rates low across the yield curve, we think there is still scope for further gains. We have been more optimistic than most about the …
Despite the re-introduction of lockdown measures in some US states, industrial commodities prices continued to rise this week on the back of ongoing hopes of a vaccine-induced economic boom next year . Nevertheless, we think that the risks to most of our …
It’s been over four years since the EU referendum and the world is a clearly a very different place. However, when it comes to Brexit, it feels like Groundhog Day. The EU Summit on 10 th /11 th December, billed as the moment when a Brexit deal could be …
This week brought more evidence that the economic rebound has faded in the closing weeks of the year. The near-term risks are still skewed firmly to the downside, even as the vaccine rollout gets underway. Economy goes into reverse in December… Infection …
Sanctions threat a reminder of Turkey’s fragility Both the US and the EU look set to impose sanctions on Turkey, which could undermine the gains from the recent shift to orthodox economic policymaking. Any sanctions are likely to be towards the milder end …
Riksbank keeps all options on the table The minutes from the Riksbank’s policy meetings are never what one would call page-turners. However, the account from the November meeting (released on Monday) was a bit more interesting than usual given that two of …
This week has brought little festive cheer on the virus front, with France announcing that with daily new infections no longer falling rapidly, many of the restrictions will stay in place for three more weeks, with an 8pm curfew only lifted for Christmas …
On hold on Thursday, and beyond Taiwan’s central bank (CBC) looks all but certain to leave its main policy rate unchanged at its current all-time low of 1.125% at its meeting on Thursday. With the economy performing well, there is a plausible argument …
Credit rating downgrade unlikely to lift bond yields S&P Global Ratings downgraded the credit ratings of New South Wales and Victoria this week from AAA to AA+ and AA respectively. Both states have held the prestigious AAA rating since 2003 and entered …
CEWC to discuss withdrawal of COVID stimulus China’s leadership will gather in the coming days for the Central Economic Work Conference (CEWC), an annual meeting that sets the economic targets and policy priorities for the coming year. The discussions are …
Emergency approvals will fast-track the recovery… Further developments this week on COVID-19 vaccine availability in India reaffirm the recent upward revisions that we made to our GDP forecasts . Three manufacturers have submitted applications to …
The Nikkei 225 this week reached levels last seen in 1991, buoyed by a flurry of upbeat data releases. Revised figures show that GDP expanded by 5.3% q/q in Q3, a touch stronger than the preliminary estimate. The 17.1% m/m jump in machinery orders in …
Egypt: government keeps the belt tight Egypt’s budget deficit has narrowed this year despite the COVID-19 pandemic as the authorities maintained a tight grip on public spending. While this highlights the commitment to lowering the public debt ratio, it …
10th December 2020
Finance Minister Chrystia Freeland hinted this week that the government will continue to provide fiscal stimulus until the economy reaches full employment. This is a far cry from concerns elsewhere about public finances and reinforces our view that the …
4th December 2020
After much wrangling, this week OPEC+ agreed to a partial roll over of its current collective output cut into next year. But the obvious divisions between members of the group mean the question marks over the future direction of oil supply are as large as …
SA: tighter restrictions but one eye on the economy South African President Cyril Ramaphosa’s speech to the nation last night suggests that, for now at least, the government is continuing to prioritise the economy over battling a second wave of COVID-19. …
Brazil: benefitting from fiscal largesse… The activity data out of Brazil this week confirmed that its economy has suffered much less than others in Latin America. Q3 GDP figures showed that output was down 3.9% y/y (compared with 8-10% y/y elsewhere) and …
Markets received a boost this week from the more positive news on the possibility of a (smaller) fiscal relief package, but it still seems unlikely that a deal will be made that satisfies all sides. At the same time there’s a risk of a government shutdown …
Swedish services PMI defying gravity, for now The strong set of manufacturing PMIs from Switzerland and Sweden in November mirrored the survey from Germany and did not come as a huge shock. The pick-up in Sweden’s services PMI, released yesterday, was …
