GDP likely to remain below 2019 levels in Q2 The main event this week was the release of the Q1 GDP figures, which showed a 6.8% y/y fall in output, the first contraction since quarterly GDP figures were first published in 1992. We covered the data in …
17th April 2020
Switzerland announces its exit plan In the week when Danish children under 11 returned to school, Switzerland announced yesterday that it too will start to ease its containment measures from 27 th April. Its three-phase plan foresees allowing small …
Labour market data has yet to show virus impact Australia’s labour market data showed that employment actually rose a touch in March. But the survey was conducted in the first half of the month, before the virus started to spread widely in Australia. It’s …
State of emergency extended nationwide At first glance, the number of new coronavirus cases has started to drop back again in recent days. But this follows a familiar pattern as new cases tend do spike on the weekend and then fall back again. The smoother …
March data show extreme weakness… A number of data releases this week confirm that economic activity took an enormous hit in March amid the nationwide lockdown. Trade data show that both export and imports slumped by over 30% y/y . That was far worse than …
Oil price war over, but a sign of things to come? Saudi officials may be dismissing the recent price war as blip in their oil policy but, if anything, we think that it might represent a dry run of what will become the norm in the coming decades. OPEC, and …
16th April 2020
The latest surveys confirm that consumer and business confidence have fallen off a cliff. Admittedly, the Bank of Canada’s Business Outlook Survey showed only a fall small in the Future Sales Indicator. (See here ). But the survey was carried out before …
9th April 2020
Coronavirus: latest on cases & containment This week the tally of coronavirus cases in Sub-Saharan Africa continued to increase, with some policymakers tightening restrictions further. But there are reasons to think that lockdown measures will be less …
Infections rising sharply in Brazil & Mexico The number of cases of the coronavirus has continued to rise across Latin America. On the plus side, there are some early signs that the infections curve may be flattening in Argentina, Peru and Chile (see …
Gulf governments tap bond markets for financing Qatar and Abu Dhabi’s dollar bond sales this week, raised $10bn and $7bn respectively, and several other Gulf countries are likely to follow suit as governments seek funds in the face of low oil prices. The …
Coronavirus developments: the good and the bad Governments in parts of the region have had some success in slowing the spread of the virus, but there is clear evidence that Russia and Turkey are struggling to contain outbreaks. In Turkey, cases topped …
With the number of people fighting COVID-19 in hospital rising day by day, the recent talk of an “exit strategy” from the lockdown appears premature. Even when the restrictions are lifted, consumer and business caution, high unemployment and many …
This week brought early signs that the restrictions put in place over recent weeks are flattening the epidemic curve in the US. But set against that good news, there are clearer signs that the hit to employment has been harder than we initially …
The Bank of France this week provided some more granular evidence of the extent of the slump in its economy. Based on a survey of 8,500 managers undertaken during the lockdown, it estimated the economy was running around 32% below normal levels. It also …
Norwegian economic activity falls off a fjord The release of February GDP data from Norway on Tuesday showed that the mainland economy was far from a picture of health even before the ramp-up in containment measures in mid-March. Measured in 3m/3m terms, …
Q1 GDP to contract barring massive falsification The government will publish Q1 GDP figures next week in what will be an unprecedented test of its willingness to acknowledge economic weakness. There have been doubts about the GDP data for years. Most …
Bank Indonesia gets space it needs to cut The value of the rupiah will be at the forefront of Bank Indonesia (BI) policymakers’ minds when they meet on Tuesday. Data published earlier this week show that foreign exchange reserves fell by almost 8% in …
Containment measures not yet slowing virus spread Over two weeks have passed since India’s nationwide lockdown began. With restrictions initially scheduled to end next Tuesday, policymakers face a dilemma. On the one hand, despite India having more …
Australian rating outlook lowered S&P has lowered the Australian credit rating outlook from ‘stable’ to ‘negative’ on the back of rising government debt. S&P has also noted it may officially lower Australia’s AAA within the next two years depending on the …
State of emergency opens door for lockdowns The number of new coronavirus infections in Japan has accelerated rapidly recently. (See Chart 1.) The government this week declared a state of emergency in prefectures that generate 47% of Japan’s GDP. This …
Mexico collapsing The early data for March supported our view that Mexico’s economy is suffering a dramatic fall in output. The production components of the IMEF surveys suggest that conditions were at least as bad as they were during the depths of the …
3rd April 2020
South Africa: Rand on the ropes The South African rand’s slide to record lows this week will probably continue over the coming weeks as risk-off sentiment persists. But the currency will probably rebound later this year as signs of a global recovery from …
The federal and provincial governments have now announced fiscal packages worth a total of 13% of GDP. The speed and magnitude of the response is encouraging, but there are signs the government is struggling to get the funds to firms and households. The …
In case it hadn’t fully hit home yet, the surge in jobless claims last week, the reported collapse in vehicle sales and employment in March, and the size of the Fed’s policy response all underlined that the pandemic has taken us into uncharted waters. …
Singapore shutdown Singapore today become the latest country in Asia to announce strict new social distancing rules to slow the spread of the coronavirus. All non-essential services will be closed for a minimum of a month. Singapore has been doing a much …
Hungary’s Orbán granted unlimited power The Hungarian parliament’s decision to allow Prime Minister Viktor Orbán to rule by decree indefinitely has caused uproar among EU officials. Governments globally have assumed emergency powers to fight the …
This week has brought yet more evidence that the containment measures in place across the euro-zone have caused economic activity to collapse. The final Composite PMI for the region for March showed that the slump in private sector activity was even …
Sweden’s services PMI is even worse than it seems In ordinary times, the 9.5-pt fall in Sweden’s services PMI in March, from 56.4 to an 76-month low of 46.9, would be enough to make you choke on your filmjölk . After all, the monthly decline was the …
Despite policymakers’ best efforts, it is looking more likely that the unemployment rate and businesses insolvencies could rise as high as in the Global Financial Crisis. Policymakers aim high, but measures fall short The Treasury and the Bank of England …
Economy proved resilient in latest batch of data The robustness of the economy displayed in the data released this week is an encouraging sign but there is no doubt that coronavirus disruption will deal a severe economic blow over coming months. The …
New South Wales & Queensland are locked down We predicted last week that Australia will impose a similar lockdown as in New Zealand which would restrict activity to essential services. That hasn’t happened, largely because there’s been a drop in new …
Real-time indicators reveal slump The compilation of activity data for March and April will be severely curtailed as the Statistics Office is only partly operational amid the nationwide lockdown. That has placed extra importance on surveys and …
An uneven recovery The first monthly data points for March are so far broadly consistent with what the daily indicators we track have been showing – that activity began to recover last month but remains weak. The PMIs were derided by some as implausibly …
Saudi to play hardball over output deal Oil prices have surged amid hopes that Saudi Arabia and Russia will thrash out a deal to cut oil output, but recent developments suggest that the Kingdom will dig in and demand that the rest of OPEC+ share the …
2nd April 2020
Brazil’s response lagging Confirmed cases of the coronavirus have surged to nearly 3,000 in Brazil over the past week, and the stumbling response from the presidency could deepen and prolong the economic damage. The governments of some of the largest …
27th March 2020
Pulling down the shutters China has continued its slow return to normality this week. Remaining restrictions on movement within the country are being relaxed. Residents of Hubei outside Wuhan are now free to travel; Wuhan’s lockdown will end in early …
After its emergency decision to cut its policy rate to 0.25% and launch a quantitative easing (QE) program, the Bank of Canada told us that it will not be taking interest rates negative. Instead, it hinted that providing funds at a subsidised rate to …
This week we got an early sight of just how rapidly the euro-zone economy is collapsing. Meanwhile, the ECB has finally ditched the issuer limits on its asset purchases, freeing itself up to support the sovereign bond market whole-heartedly. But EU …
Better late than never While it’s been a relatively quiet week on the monetary policy front by recent standards, there is still plenty worth recapping here. The regular weekly data-dump from the SNB early on Monday morning indicated that the Bank made its …
Containment policies tighten…. The 21-day lockdown that took effect on 26 th March in South Africa is the most aggressive containment policy yet tried in any major African economy, but policymakers elsewhere in the region have also been imposing new …
CEE central banks expand their toolkit As the number of coronavirus cases has increased and the damage to the region’s economies has intensified, the policy response across Central and Eastern Europe (CEE) has become more aggressive. Central banks in …
First quarter data point to sharp slowdown GDP figures for Vietnam and Singapore for the first quarter of the year show growth slowing sharply. The worst is yet to come. Figures published yesterday show that Singapore’s economy contracted by 10.6% q/q on …
The agreement on a $2trn fiscal stimulus, the Fed’s actions and tentative signs that quarantine measures in Europe are beginning to curb the virus spread have all helped steady the mood in markets this week. But as the grisly 3.3m rise in jobless claims …
While we still expect the economy to rebound strongly after the virus has been contained, the surge in Universal Credit benefit claims this week raises the risk that it won’t get back to “normal” as quickly as we had previously thought. Policymakers throw …
New Zealand in Lockdown, Australia on the brink This week New Zealand entered a near-total lockdown in an effort to contain the spread of the coronavirus. The restrictions are more draconian than in most other countries that have imposed lockdowns. …
Fiscal loosening will need further ramping up Finance Minister Nirmala Sitharaman yesterday took her first shot at responding to the coronavirus outbreak – as well as measures to contain it – by announcing a fiscal package worth INR1.7trn (US$22bn, 0.7% …
Surveys point to slump in activity The March flash PMIs confirm our view that the coronavirus outbreak resulted in a sharp fall in economic activity. The output component of the manufacturing PMI fell by more than five points and now points to industrial …
Coronavirus policy response ramps up Confirmed COVID-19 cases in the region have more than doubled in the past week and, at the same time, governments have ramped up containment measures. While these will help to slow the spread of the virus, they will …
26th March 2020
Regional GDP to fall We now think that the growing economic damage caused by the coronavirus will result in falls in GDP across the region. Interest rates will be lowered much further too. The economic headwinds facing the region have increased …
20th March 2020
There is no doubt that the coronavirus health crisis has already led to an economic crisis and this week we saw the first real signs of severe disruption in the financial markets. Health crisis The spread of the coronavirus is at an earlier stage in the …
