Malaysia unveils fiscal response to virus The political wrangling that has been taking place since Malaysia’s Prime Minister Mahathir Mohamad unexpectedly resigned on Monday, did not prevent him from unveiling a stimulus package of 20bn ringgit (1.3% of …
28th February 2020
Virus likely to drag on exports and consumption The January activity data released today showed that the economy was recovering from the sales tax hike and the global economic slowdown on the eve of the coronavirus outbreak. What’s more, firms remained …
Mixed bag of data for private investment The capex survey in Q4 provided mixed news for private investment. The survey showed the sharpest fall in real capital expenditure since 2016. Admittedly, the construction work done data, which were also released …
Foreign demand and global supply chains at risk The number of new COVID-19 cases in China continued to decline this week. But local officials still appear cautious about relaxing containment measures, for fear of being held responsible for a renewed …
Gold losing its shine (in India at least) India is one of the world’s largest importers of gold. The recent surge in prices of the precious metal – driven by safe-haven flows amid concerns over the impact of the coronavirus – might therefore be regarded …
Saudi halts pilgrimages amid COVID-19 fears Saudi Arabia’s decision to temporarily halt religious pilgrimages to the Kingdom adds another downside risk to our already below-consensus forecast for economic growth this year. Amid rising fears over the …
27th February 2020
While the incoming data have remained mostly positive, the plunge in the Markit composite PMI in February suggests that economic growth could be set for a further slowdown in the first quarter, as the temporary drags from the crisis at Boeing and …
21st February 2020
Brazil: BCB showing concerns about growth Moves by Brazil’s central bank (the BCB) this week suggest that policymakers are shifting their attention to the weakness of the economy. On Thursday, the BCB announced that it would lower the required reserve …
Contrary to what we and the consensus had expected, the euro-zone Composite PMI edged up in February, with both the services and the manufacturing output components increasing. The rise in the PMI echoed the message from other surveys this week, which …
Turkish gov’t seeks more control over local banks The Turkish government’s plans to transfer the opposition party’s stake in a major bank to the Treasury adds to the evidence that it is trying to gain more leverage over the banking sector. But there are …
South Africa: Budget will be painful Finance Minister Tito Mboweni’s 26 th February budget speech will have to include tax rises and spending cuts as the government struggles to get a grip on its large deficit while providing financial aid to failing …
Policymakers agree to disagree Having drawn criticism for its optimistic projections for interest rates in the past, the Riksbank is keen to show that it means business with its forecast to leave the repo rate unchanged over the coming years. However, …
The data released this week and the negative effects of the rail blockades on the economy in February suggest that first-quarter GDP growth will rebound by less than we previously thought. Manufacturing sales were weaker in December than the timelier …
The first official data for January piled more evidence onto our view that the economy will rebound in Q1 2020 after hitting a nadir in Q4 2019. But the growing impact of coronavirus on China’s economy and the weakness in the euro-zone threaten to stifle …
More countries considering fiscal response to virus Bank Indonesia this week became the latest central bank in the region to cut interest rates in response to the coronavirus outbreak (see here ), and we expect further easing over the coming week with the …
Half of the economy running at half speed While the number of new coronavirus cases has continued to trend down in the past week, the disruption to economic activity has persisted. There are some tentative signs of an uptick in property sales and …
Activity data disappoint across the board We have long argued that Japan’s economy will shrink this year and the recent string of bad news has only made that outcome more likely. But we still don’t expect the Bank of Japan to respond with more policy …
Unemployment rate jumps to 5.3% The unemployment rate jumped in January from 5.1% at the end of 2019 to 5.3%. And that’s despite the ABS excluding the areas of Australia that were worst hit by the bushfires. It’s possible that the number of unemployed …
Low expectations for Trump visit Progress on trade negotiations (as well as the opening of the world’s largest cricket stadium in Ahmedabad) will be high on the agenda during US President Donald Trump’s visit to India next week. There are suggestions that …
Lebanon nearing default It is looking increasingly likely that Lebanon’s government will default on a Eurobond payment in March. And while the government is now turning to the IMF to work through its crisis, time is running out to secure external …
20th February 2020
The prices of most industrial commodity prices rose this week on hopes that the coronavirus is near to its peak and that economic activity in Asia will start to pick up soon. The announcement of output cuts by several metal producers in China has also put …
14th February 2020
After a few months of weakness, the data this week showed increases in residential building permits and housing starts around the turn of the year. Building permits rose by 3.2% m/m to 227,000 annualised in December, while housing starts increased by 8.8% …
Judy Shelton’s rocky Senate nomination hearing this week means that President Donald Trump’s efforts to reshape the Fed from the outside could yet fail at the first hurdle. But the dovish Christopher Waller should secure Senate approval and, with the …
South Africa: Ramaphosa doesn’t rock the boat President Cyril Ramaphosa used Thursday’s State of the Nation Address to outline his plans to reform South Africa’s ailing power sector, but his focus on building consensus among key social actors suggest that …
Support for the current policy stance Speeches this week by members of the ECB Executive Board, Philip Lane and Isabel Schnabel, were clearly part of a concerted effort to rebuff criticism of the ECB’s ultra-loose monetary policy. Ms Schnabel’s talk was …
Singapore to produce strong fiscal response to virus Singapore’s very strong fiscal position (it has fiscal reserves equivalent to 100% of GDP) mean it could afford a significant loosening of fiscal policy when it unveils its 2020 budget on Tuesday to …
Riksbank will need to ease policy soon It was no surprise that the Riksbank left its repo rate on hold at zero percent this week or that it continued to forecast rates staying there until 2022. However, we think that underlying growth and inflation will …
Further falls in store for the real Intervention by the Brazilian central bank seems to have stemmed the fall in the real over the past 24 hours. But even if the recovery continues in the next few weeks, we think the currency will end the year weaker than …
The resignation of Sajid Javid as Chancellor on Thursday and the promotion of Rishi Sunak raises the chances that a relaxation of the fiscal rules allows government policy to boost the economy by more than we expect over the next few years. (See here .) …
Inflation baring its fangs Inflation rose above the upper level of central banks’ targets in Central Europe in January for the first time in over seven years. Inflation jumped in Hungary (4.7%), Poland (4.3%) and the Czech Republic (3.6%), largely …
Virus has pushed economy into extended slumber During the week-long holiday that follows Lunar New Year day (25 th Jan. this year) it’s common for much of the economy to slow or even grind to a halt as workplaces shut down and migrant workers return home. …
Travel ban extended until February 22 nd The ban on travel from China to Australia was set to end this weekend. But given the continued growth in infections of the coronavirus in China it has now been extended to 22 nd February. That’s not particularly …
Bank of Japan will prevent a public debt crisis In its Article IV report, the IMF this week called Japan’s public debt trajectory “unsustainable” and proposed a further increase in the sales tax from 10% to 15% to reduce fiscal risks. Arguing that the …
BJP policy shift unlikely after Delhi loss The Election Commission confirmed this week that the local Aam Aadmi Party (AAP) stormed to victory in the Delhi Union Territory election, winning almost 90% of the available seats. (See Chart 1.) Prime Minister …
Hopes for deeper output cuts wane The unexpected rise in Saudi oil production last month may be a sign that the authorities are no longer willing to bear the brunt of oil output cuts, reducing the chances of a deal to lower output further in response to …
13th February 2020
Bad week for Argentine policymakers Policymakers in Argentina faced two setbacks this week, which have weakened their hand in debt restructuring talks with creditors. First, the province of Buenos Aires (PBA) made a $250mn capital payment on Wednesday, …
7th February 2020
Romania moves one step closer to snap elections Romania’s three-month old government collapsed this week following its defeat in a no confidence vote brought by the opposition. This increases the chance of early elections this year, bringing forward …
December’s trade data reinforced our view that GDP rebounded strongly at the end of the year, but the latest business surveys confirm that the outlook for exporters remains challenging. Export volumes rebounded by 2.8% m/m (see here ) and, while we only …
Coronavirus: No infections won’t mean no cost Despite the lack of confirmed cases in the region, African economies are probably already feeling the indirect effects of the coronavirus outbreak. African economies are, at least, unlikely to be directly …
When the results of the Iowa caucuses were eventually released they only increased the uncertainty over who will eventually become the Democratic nominee. According to the latest betting odds, Joe Biden’s fourth place in the caucuses has all but written …
Some signs spread of virus may be slowing… China’s near-term economic outlook hinges on how long measures to contain the spread of the virus remain in place. We know that the hit to activity has been significant , though – as today’s delay of the release …
Activity in Norway set to regain pace this year The release of Q4 GDP data from Norway this morning confirmed that the mainland economy lost momentum at the end of last year. The slowdown in quarterly growth, from a downwardly-revised 0.6% in Q3 to 0.2% …
More disappointing data Data published this week shed a little more light on the euro-zone slowdown in Q4, and the strength of any possible rebound at the start of this year. We won’t get the output or expenditure breakdowns of fourth-quarter GDP until 14 …
New GDP growth forecasts With the coronavirus continuing to spread, the economic costs to the rest of the region are starting to mount. There is clearly a great deal of uncertainty over how long the crisis will last, but based on the assumption that the …
This week brought the clearest sign yet that the economy has turned a corner, with January’s all-sector activity PMI consistent with a 0.3% q/q expansion in GDP in Q1, up from a probable 0.1% decline in Q4. (See here .) Admittedly, with the moves in the …
Coronavirus could hit Japanese industry Two weeks ago we argued that the hit to tourism from the Wuhan virus had the potential to lower GDP by as much as 0.6%-pts this quarter (see here ). Since then, China’s intensified efforts to contain the virus have …
Growth in Q4 set to remain subdued The decline in retail sales in December is consistent with our view that the surge in sales in November was driven by Black Friday discounts. After adjusting for price effects, real retail sales rose by 0.5% in Q4, the …
Finance ministry steps up These have been a busy few days for India’s policymakers. The finance ministry on Saturday confirmed in the Union Budget that it had changed tack and was aiming for much looser fiscal policy than it had been. (See here .) That …
Lebanon: hopes rise for March Eurobond payment Lebanon’s Eurobond that matures in March has rallied over the past week amid rising hopes that the authorities will make the payment, but this will simply delay the inevitable debt restructuring. The price of …
6th February 2020
The new coronavirus was first identified exactly a month ago. In our first mention of it three days later, we noted that it was “drawing comparisons to SARS.” Initially, SARS was an illustration of how bad the outbreak could be. But SARS now looks like a …
31st January 2020
