An anniversary present for the PM? This morning’s retail sales and PMI releases, which appeared to suggest that the economy is quickly recouping the output lost during the coronavirus lockdown and is getting back to normal quicker than the euro-zone, were …
24th July 2020
More funding on the way? News that the IMF Executive Board has approved plans to increase its annual access limits for funding suggests that much of Africa could receive more multilateral support. We won’t go into the full details of the changes (the IMF …
Xi still see the state as the fix, not the impediment President Xi Jinping gave a speech this week in which he called for a “new development model” that emphasises a greater role for China’s domestic market in response to the global COVID-19 downturn and …
Time to worry about the rupiah? The Indonesian rupiah has been by far the most volatile currency in the region since the start of the year. It slumped by nearly 20% against the US dollar at the start of the crisis, before bouncing back strongly. However, …
Economy trumping virus containment in Osaka With cases now rising fast across most major Japanese cities and hitting a record high at the national level this week, many local governments are now facing a choice between containing the virus and keeping the …
Debt moratorium extension no panacea The RBI appears close to announcing an extension to the six-month debt moratorium that is currently due to elapse at the end of August. That seems sensible. After all, it is helping smooth near-term cash flow issues …
Consumption still needs support We learned this week that retail sales in June rose by 2.4%, leaving them up 6.8% on their pre-virus levels. That likely reflects some switching from services which were not available during the lockdown towards goods which …
Health fears bring leadership changes onto agenda The health of the leaders of Saudi Arabia and Kuwait has come into the spotlight this week and, while we think that a leadership transition wouldn’t alter the economic outlook for Kuwait, it would heighten …
23rd July 2020
A raft of positive Chinese economic data this week offered some support to commodity prices, but concerns about the rise in coronavirus infections in the US and in Latin America prevented any significant gains . Oil prices dipped on news that OPEC will …
17th July 2020
Underwhelming regional rebound underway The easing of lockdowns across Latin America generally allowed economic activity to improve in May. For instance, industrial production rose on the month in Brazil, Colombia and Argentina. But the overall picture is …
In his first press conference as Bank of Canada governor, Tiff Macklem said this week that “our message to Canadians is that interest rates are very low and they're going to be there for a long time”. That is an important and arguably necessary message to …
Russia’s national projects kicked into the long grass The postponement of President Putin’s flagship National Projects initiative seems to pave the way for the Prime Minister’s economic recovery plan to take centre stage over the coming years. But it also …
With the pace of infections rising across most of the country, and the economic recovery in danger of going into reverse, we suspect that Congress will, at least partially, extend the enhanced $600 per week pandemic unemployment benefit. That temporary …
Ethiopia’s dam dispute raises spectre of conflict Tensions over the Grand Ethiopian Renaissance Dam have ratcheted up over the past week, raising the risk of conflict with Egypt, which would do severe damage to both the country’s near- and long-term …
This week, governments in France and Italy suggested more stimulus was in the offing to support their economies’ recoveries, consistent with our view that the fiscal cost of the crisis would end up being much bigger than early estimates suggested. Italy …
“SNB 101” speech targeted at the US Treasury Thomas Jordan delivered the first-ever virtual IMF Central Banking Lecture on Tuesday, which is named in honour of Michel Camdessus, the longest- serving past IMF Managing Director. The video production had a …
Not so “V” After the temporary respite brought by May’s strong retail sales figures, this week marked a return to the generally gloomy news on the pace of the recovery. Activity struggled to recover meaningfully in most sectors of the economy in May, with …
What will the Q2 GDP figures show in Korea? Korea avoided the need for a full lockdown and the GDP figures due on Thursday should show that economic activity held up relatively well last quarter as a result. We have pencilled in a contraction of “only” …
Governor Koike sounds the alarm This week’s raising of the alert level in Tokyo to red – its highest level – has no major automatic consequences. But it brings the city government to the brink of once again asking some businesses to close. New infections …
High savings mean plenty of room to spend more The main event this week was the Q2 GDP release . It beat expectations with growth of 3.2% y/y, fully reversing the contraction in Q1 and taking the level of output above its pre-virus high. This strong …
Damage to banking sector will be long lasting Banking sector concerns have come back to the fore over the past week with state-owned bank Punjab National reporting yet another case of fraud, while warnings of an impending surge in non-performing loans …
Net debt to rise to 60% of GDP The government is set to release a Budget update next Thursday ahead of the regular Budget on 6 th October. That will incorporate the sharp deterioration seen in the monthly financial accounts. In May the government racked …
Policy paralysis returns to Tunisia Tunisian Prime Minister Elyes Fakhfakh resigned on Wednesday after a week of political turmoil, which will hold up efforts to secure a new IMF deal and increases the threat of a sovereign debt crisis. Mr. Fakhfakh’s …
16th July 2020
Debt restructurings may be required…again Sovereign debt restructurings in Argentina and Ecuador came into focus this week, and while there are reasons for optimism, we remain concerned about fiscal sustainability in both countries. In Argentina, …
10th July 2020
The prices of most commodities rose this week, with the exception of energy . In particular, industrial metal prices rose alongside Chinese equities. Elsewhere, the European economic recovery is starting to look remarkably V-shaped, despite localised …
In his “Fiscal and Economic Snapshot”, Finance Minister Bill Morneau announced that the government is now allocating $228bn to direct spending measures to help support the economy during the pandemic, a significant increase from the previously announced …
A growing range of indicators suggest the economic recovery stalled in late-June and early July, in part because of a resurgence in virus infections. There’s clearly a risk that the virus continues spreading unchecked over the coming weeks, pushing the …
The rebound in retail sales and industrial production across Central and Eastern Europe in May supports our view that the region will experience a relatively strong recovery in the second half of this year. Data released this week provided further …
Spend, spend, spend…and spend Not that long ago a £30bn (1.4% of 2019 GDP) package of tax cuts and extra government spending would have been lauded as fiscal largesse. But coming on top of the £160bn (7.2% of GDP) already spent since the start of the …
Nordic economies have weathered Covid well May’s 2.4% m/m rise in mainland GDP in Norway would normally be enough to make you fall of your chair, but it was actually a bit underwhelming given the rapid rebound in our Recovery Tracker since lockdown …
This week brought further evidence that the early stages of the euro-zone’s economic recovery looked remarkably V-shaped. Admittedly, industrial production data for Germany published on Monday showed a weaker-than-expected rebound in May. But industrial …
Nigerian naira: devaluation but no unified rate Nigeria appears to have devalued the official naira exchange rate this week but the move has, if anything, further dented hopes for a shift towards a market-driven and unified exchange rate regime. We say …
Renewed outbreak in Tokyo manageable for now New confirmed coronavirus cases in Tokyo hit a record high of 224 today, exceeding the peak of 206 during the state of the emergency in April. While authorities in Australia and the US are responding to renewed …
9th July 2020
The stock market is a blunt policy tool Chinese equites have surged this week, after state-media talked up the need for a stock market rally in order to offset economic headwinds. There is some logic to such thinking. The link between stock prices and …
Reasons to be cautious about Diriyah Gate Construction started on a new tourist development in Saudi Arabia in recent weeks but the plan risks repeating past mistakes with other megaprojects and diverting resources away from other key areas Diriyah Gate …
Supporting the economy through the crisis The main priority for Singapore’s ruling People’s Action Party (PAP), which is certain to win tomorrow’s general election, is ensuring a strong recovery from the crisis. There are good reasons to expect a rapid …
Cases per capita argument misses important points India this week overtook Russia to become the third-worst affected country by the COVID-19 pandemic. As of Wednesday, confirmed cases in India stood at over 750,000, behind only the US and Brazil. It has …
Melbourne back in lockdown Melbourne returned into lockdown on Wednesday night as the number of new coronavirus cases hit a record high. (See Chart 1.) Residents are only allowed to leave their house for essential shopping, work and exercise and face a …
Lockdowns battering Lat Am labour markets Data this week painted a clearer picture of the recent hit to Latin American labour markets. On a seasonally adjusted basis, unemployment rates jumped by 5-10%-pts in Colombia and Peru (data for the Lima …
3rd July 2020
South Africa’s net exports: changing of the winds Balance of payments figures released this week from South Africa may paint a misleadingly positive economic picture, but – as is often the case – the devil is in the details. In Q1, South Africa’s current …
NBU governor departure raises IMF deal fears This week’s resignation of Ukraine’s central bank (NBU) governor is, by itself, unlikely to upend the country’s IMF deal but failure to replace him with a credible candidate or backsliding on recent key pieces …
We think that GDP rose by a bit more in May than Statistics Canada indicated in its press release for the April GDP data, and a larger rise is likely in June. GDP slumped by a further 11.6% m/m in April. The sectoral performance was largely as expected, …
Thailand – tourism not the only worry Despite having successfully contained the virus, which has allowed daily life in Thailand to return to normal quicker than in many places, the country is still set to be one of the worst-hit in the region this year, …
Divisions on the MPC The evidence continued to pile up this week that the economy is rebounding more quickly than we had previously expected. Footfall on UK high streets has risen sharply. On 1st June it was 75% below pre-crisis, but by the end of the …
Nordics gathered momentum into H2 The June PMI surveys from the Nordics, released this week, add to the evidence that the region’s economies are further down the road to recovery than others in Europe. In Sweden, there was plenty to be encouraged by in …
Decoupling likely to weigh on productivity growth The passage of the Hong Kong National Security Law this week is putting further strain on China’s fraught relations with the rest of the world. China still has some friends: 53 UN members voiced support …
News that German consumers went on a spending spree in May has raised hopes that the recovery will be V-shaped after all and that things will soon be back to normal. We think that only the first part of this is true. The rebound will look like a V, at …
May activity data consistent with our views The May activity data were weaker than most had anticipated but broadly consistent with our below-consensus forecast of a 9% q/q drop in Q2 GDP. While consumption soared in the US and many European countries …
New virus outbreak in Melbourne The economy bounced back strongly after the end of the lockdown as retail sales surged nearly 17% m/m in May and sales in the majority of categories was above pre-virus levels. (See here .) Admittedly, imports of consumer …
More push back against Chinese influence Border tensions between India and China thankfully appear to have eased over the past couple of weeks but Indian authorities continue to push back against Chinese influence in the country. This week, 59 Chinese …
