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 …
12th November 2020
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 …
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 …
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