The labour market is in a far worse place than even the bleak headlines suggest. The two million slump in employment revealed by April’s Labour Force Survey (LFS) took the total fall since February to three million, while the unemployment rate rose to …
8th May 2020
The confirmation that non-farm payroll employment fell by 20.5 million in April, with job losses in every sector underlines just how deep and widespread the economic shock over the past six weeks has been. The official unemployment rate rose to 14.7%, but …
Tourism still in the doldrums China recorded 115 million domestic tourism trips during the Labour Day holiday that ended on Tuesday. This was more than double the 43 million trips during the Qing Ming holiday in early April, a jump that many interpreted …
Government expects return to normality by July PM Morrison outlined the government’s three-stage plan to restart the economy on Friday. In the first stage, schools will reopen and restaurants and cafes will be able to serve up to 10 people at a time. In …
Loosened restrictions having very small impact While the nationwide lockdown has again been extended (this time until 17 th May), the latest phase includes a significant relaxation of containment measures in so-called “green zones” where there have been …
Encouraging signs as infections slow The low level of testing in some parts of the region means we shouldn’t read too much into the latest daily infection figures, but there are nevertheless some encouraging signs that more countries have succeeded in …
Some regions moving to relax restrictions While the government confirmed this week that the nationwide state of emergency will be extended until 31 st May, there are signs that activity may pick up before that date in some regions. Moreover, PM Abe …
Window closing for Argentina & bondholders This week brought further evidence that the Argentina’s government and bondholders remain far apart on a restructuring deal and, unless both sides thrash out something quickly, talks could get bogged down and …
7th May 2020
Lifting lockdowns to lessen economic pain After relatively early action to impose containment measures, more and more African countries are relaxing restrictions. Given patchy data on cases of Covid-19, it’s hard to tell whether the infections curve has …
Limited solace from Sweden’s light-touch lockdown This week provided mixed messages on the health of the Swedish economy. On a positive note, there were welcome signs that the country has reaped some benefit from its light-touch lockdown – at least from a …
BoE scenario too optimistic There can be little doubt about how bad the recession will be now that the Bank of England has joined us and the Office for Budget Responsibility in forecasting that GDP will fall by 25-35%. Indeed, we will get the first glance …
Saudi: capital spending to bear brunt of austerity Comments from Saudi officials reinforce our view that a devaluation is unlikely and fiscal policy will make the adjustment to low oil prices. Capital spending is likely to shoulder the burden of the cuts. …
President Putin faces one of his sternest tests The failure of the Russian authorities to contain the virus outbreak and the lack of urgency with which policymakers have stepped up fiscal support has made us increasingly concerned about a prolonged …
German court won’t stop the ECB… yet Much ink has already been spilled this week on the German constitutional court, including by us. (See here .) So rather than go through it line by line, picking out the numerous unhelpful and at times bizarre claims …
Political troubles add to Brazil’s problems Despite the growing public health crisis and collapse in the global economy, Brazilian politics ended up dominating the news in the region. Local markets collapsed late last week after the resignation of Justice …
1st May 2020
The government confirmed this week that former Senior Deputy Governor Tiff Macklem will take the helm from Governor Stephen Poloz in June. (See here .) We doubt the change will materially affect the way the Bank approaches monetary policy, but it is clear …
Turkey’s lira defence far from over Figures released this week highlighted the hit to Turkey’s balance of payments from steps to contain the coronavirus and, while the lira broke through 7/$ today, efforts to defend the currency are not over yet. Trade …
Rumours of private sector debt relief There seem to be growing moves towards some form of relief on debts owed to private creditors for low-income African economies. Several paths have been outlined in recent days. One suggestion is that private creditors …
It’s increasingly clear that the economy took an unprecedented hit in March and April. Barring a renewed national upsurge in coronavirus cases, however, the gradual lifting of containment measures suggests that activity will now start to recover. The end …
Easing envy It’s possible that on the day before next Friday’s bank holiday to commemorate the 75 th anniversary of the end of the Second War World (VE Day), Boris Johnson will declare that the UK is winning the war against the coronavirus. But while the …
It has been a busy week in the euro-zone with lots of data releases and the scheduled ECB monetary policy meeting yesterday. Stepping back, we have learnt three main things from the data. First, the slump in the first quarter was in line with our …
KOF Barometer is feeling under the weather The unprecedented scale of the Covid-related economic carnage has seen previously reliable relationships between business surveys and output break down in many countries, and Switzerland is no exception. While …
Philippines: how bad will it get? Next Thursday’s Q1 GDP figures for the Philippines are likely to show that the economy grew at its slowest rate in over 10 years last quarter. But worse is still to come. The initial economic hit from the coronavirus was …
30th April 2020
Saudi can weather hit from low oil prices Figures released this week provided the first signs of the hit to Saudi Arabia’s balance sheet from lower oil prices. But we remain comfortable in our view that the dollar peg will stay intact. Data published by …
Labour market weakness, risk aversion heightened The immediate economic consequences of the virus and the measures to contain it are clear as day in the data, with most activity indicators having fallen off a cliff in March. However, there are now growing …
Recovery remains slow and uneven The official composite PMI was broadly unchanged in April, consistent with a further recovery but at a slow pace relative to the abrupt downturn in February. The breakdown suggests that weak exports led to a slowdown in …
Consumption plummeting as people stay at home Japan’s state of emergency is scheduled to end on Wednesday 6 th May but press reports suggest the government will extend it by one month tomorrow. The number of new coronavirus cases across Japan has fallen …
Many states starting to lift restrictions With the number of new coronavirus cases across Australia having fallen from nearly 400 per day in late-March to around 15 over the past week, several Australian states have started to ease their lockdowns. …
Oil price collapse another major headwind The dramatic drop in oil prices earlier this week will deal yet another blow to the region’s oil producers – none more so than Venezuela – where the humanitarian crisis will get even worse. President Maduro’s …
24th April 2020
S. Africa’s fiscal stimulus: better late than never The news in South Africa this week has been dominated by the government’s announcement of a fiscal package to support the economy as well as details of easing lockdown measures from 1 st May. The fiscal …
The plunge in activity in the second half of March, as coronavirus restrictions proliferated, means that the first-quarter GDP data – due next week – will show output contracting for the first time in six years and worse is to come in the second quarter. …
Turkey turns to import compression to protect lira Turkish policymakers’ efforts to prevent the lira from slipping through 7/$ will prove futile and, with the chances of an IMF deal slim, the government has turned to import compression to counter balance …
The mid-month update provided by the Toronto Real Estate Board (TREB) this week showed that home sales were down by 69% y/y in the Greater Toronto Area (GTA) in the first 17 days of April. As Easter was in the first half of the month, compared to the …
This week’s economic news has been in line with our expectations that economic output will fall by around 25% in the first half of this year. The 5.1% m/m fall in retail sales volumes in March suggests that household consumption declined by at least 4% …
That the euro-zone business and consumer surveys for April, published this week, would be catastrophically bad was never in doubt. Even so, they still managed to be even worse than predicted. The Composite PMI sank to a record low, below even the …
Norwegian economy sideswiped by Covid-19 Statistics Norway took the award for this week’s most irrelevant data release, with the unemployment rate from way back in February, but it more than made amends with the ahead-of-schedule publication of its Q1 GDP …
Singapore lockdown extended, growth forecast cut The decision by Singapore’s government to extend and toughen its lockdown will further reduce economic output this year. We are cutting our GDP forecast again. The lockdown was due to come to an end on 4 th …
In its meeting last week, the Politburo introduced a new slogan: the “Six Ensures” (六保). The first is an instruction to officials to “ensure employment”. On paper, they are doing pretty well. At the end of March only two million people were claiming …
Second package is already too late After an underwhelming first attempt, a second fiscal stimulus package in response to the coronavirus and containment measures appears close following reports of a meeting between PM Modi and Finance Minister Nirmala …
Panic buying drives record retail sales Preliminary figures for March show that the economy held up better than we had anticipated last quarter. First, merchandise trade exports values rose by a stellar 23% m/m. Admittedly, the massive rise in exports …
Corporate loan demand set to surge According to the Bank of Japan’s latest “Senior Loan Officer Survey”, which was conducted in the month to 10 th April, corporate loan demand was the strongest it has been since the global financial crisis and banks …
Saudi chooses austerity over devaluation Comments from Saudi Arabia’s finance minister late yesterday add further weight to our view that fiscal consolidation rather than a devaluation will be relied on to make the adjustment to low oil prices. The latest …
23rd April 2020
Containment dispute in Brazil… The coronavirus has thrust Brazilian politics into the spotlight this week after President Bolsonaro fired health minister Luiz Mandetta amid an ugly dispute about containment measures. President Bolsonaro has since called …
17th April 2020
Debt relief on the cards The agreement by the G20 to allow low-income economies to suspend debt payments on bilateral loans this week will take one piece off African policymakers’ plate of economic challenges. Even so, their figurative plates remain …
The massive declines in retail sales and industrial production last month make it clear that the slump in activity, which only began in mid-March, was unprecedented in terms of both its speed and its severity. We now calculate that first-quarter GDP fell …
Policymakers further increased the monetary and fiscal support this week but, with the earliest data suggesting that the coronavirus outbreak has hit the economy faster and deeper than we initially expected, we have nevertheless revised down our forecast …
Pressure builds on Turkish lira The Turkish lira was resilient in March’s market sell-off but it’s been the ugly duckling of EM currencies this month as fears grow over the country’s coronavirus outbreak and poor external position. Whereas most EM …
We fear that the forecasts for the economy published this week by the Office for Budget Responsibility (OBR) will prove to be far too optimistic. We’re not talking about its warning that the coronavirus lockdown will trigger a 35% drop in GDP. There’s no …
The ECB is now buying assets at a record pace, but it is still struggling to keep a lid on bond yields. Last week the Bank bought over €35bn of assets, far more than the previous high of just under €25bn. Nevertheless, peripheral bond yields have begun to …
Over the Moon in Korea With all the votes from Korea’s parliamentary election now counted, it has been confirmed that President Moon’s Democratic Party (DP) and its affiliate party won 180 of the 300 seats in the National Assembly Seats. That gives the DP …
