More talk of deeper OPEC+ oil production cuts Rumours that OPEC+ oil producers are contemplating deeper production cuts underlines the desire of policymakers in Saudi Arabia to push up oil prices. But this would come at the expense of weaker GDP growth as …
24th October 2019
Despite the much-vaunted “mini-deal” on US-China trade, most industrial commodity prices fell this week . Uninspiring activity data across major commodity consumers, notably for the US and China, appear to have reignited fears over the health of demand. …
18th October 2019
Mexico: Counting the cost of the GM strike The knock-on effects of the strike by GM auto workers in the US mean the Mexican manufacturing figures due in the coming months will make for grim reading. But if GM’s deal with striking workers is approved, the …
Over the past week the Conservatives have overtaken the Liberals in the polls for next Monday’s federal election. Whichever party wins, we doubt the election will materially affect the economic outlook. Prime Minister Justin Trudeau’s incumbent Liberal …
Agreement to end GM strike won’t save October The tentative deal agreed this week between General Motors (GM) and the United Auto Workers (UAW) Union came too late to prevent a sharp downturn in October’s employment data, but any declines should be …
The five-day ceasefire in Syria agreed by Turkey and the US yesterday has prompted a rally in Turkish markets, but the calm could prove temporary and the charges brought against Halkbank this week underline the vulnerability of the banking sector. In …
Statistics Sweden sound a health warning The news that the Swedish unemployment (UP) rate was unchanged at its highest level since June 2015 in September (7.4%) initially caused the krona to fall against the euro on Thursday morning. However, the currency …
Draft budgets not quite what they appear At first glance the budget proposals submitted to the European Commission (EC) this week might raise hopes for a big fiscal stimulus next year. But we think they should be taken with a pinch of salt. Admittedly, …
Last week, we said that there were two big obstacles in the pathway to a Brexit deal. With the UK and the EU having come to an agreement, one hurdle has been overcome. (See here .) The second, whether Parliament passes that agreement, will be clear enough …
Credit growth will pick up as lending rates fall Data released this week showing that credit growth to the private sector dropped to a two-year low in September (see Chart 1) have raised concerns that the monetary transmission mechanism is lacking …
Nigeria: Abuja doubles down on protectionism The Nigerian government unexpectedly banned all trade (imports and exports) across the country’s land borders on Tuesday. Officials said the closure, which they described as an effort to combat smuggling, would …
More stimulus on the way in Korea GDP figures due to be released next week are likely to show Korea’s economy remained subdued in Q3 – we have pencilled in growth of just 0.4% q/q. (See our data preview below for more details.) However, with policy …
Further policy tightening for property Bank lending to the real estate sector continued to slow in Q3 according to quarterly data published by the People’s Bank this week. (See Chart 1.) This reflects policy tightening for the sector which shows no signs …
Underlying inflation set to weaken further The Reserve Bank of Australia will have breathed a sigh of relief after the unemployment rate dipped from 5.3% to 5.2% in September despite the fact that job growth slowed. And the minutes of the Bank’s October …
Bank of Japan’s bond holdings on track to fall The Bank of Japan bought ¥5.2 trillion (¥63 trillion annualised) of Japanese government bonds in September and its purchase plan for October foresees purchases of just ¥4.9 trillion (¥60 trillion annualised). …
Egypt: IMF help won’t remove risk of fiscal splurge Reports that Egypt and the IMF are in negotiations over some kind of future cooperation suggests that the authorities are trying to soothe investor fears of fiscal loosening. To recall, in July, Egypt …
17th October 2019
With little in the way of major economic data releases this week, most commodity prices rose on the back of news that the US and China may agree a “mini deal” as part of ongoing trade talks . This could reduce the immediate risk of a further rise in …
11th October 2019
Crisis in Ecuador rages on Intensifying anti-austerity protests in Ecuador caused bond spreads to widen this week and threaten to dilute the government’s agenda. For now, though, we think that the government will be able to navigate this turmoil with …
Bank of Canada Governor Stephen Poloz once described net business creation as “one of my favourite variables”. That data, released this week, were hardly encouraging. Despite the bumper 3.7% annualised rise in second-quarter GDP, annual growth in business …
Trade talks with China look set to conclude today with a “mini deal”, reducing the immediate risks of a further rise in tariffs. But existing tariffs will remain in place, including the September tariff hike, which has yet to really affect the economy. …
A mini trade deal probably wouldn’t last The US and China may be on the brink of a mini deal that postpones the US tariffs that are due to come into force next Tuesday. China has reportedly offered to buy more US agricultural goods in return. It has …
Swedish activity data flatter to deceive On the face of it, the stronger than expected activity data from Sweden for August released this week lend support to the Riksbank’s forecast that it will hike rates over the next six months or so. Production in …
Turkish markets to suffer as risk of sanctions grows The threat of sanctions against Turkey is growing and, given the context of the country’s large external debts, the fallout for local financial markets could prove to be more severe than that the …
Still scope for agreement on more ECB stimulus The account of September’s ECB meeting supports our view that when the Bank is eventually forced to loosen policy again, it will opt to cut interest rates and increase its corporate bond buying. The divisions …
Still significant obstacles on the pathway to a deal After more than three years since the Brexit vote, it only took a two-hour chat between Boris Johnson and his Irish counterpart, Leo Varadkar, on Thursday to find a “pathway to a possible deal”! It’s …
Thailand takes steps to combat strong baht With the baht continuing to appreciate against the US dollar, the authorities in Thailand earlier this week unveiled a couple of further measures designed to put downward pressure on the currency. The steps …
Supermarket sales plunge after tax hike Daily data from supermarkets show that there was a sizeable drop in sales in the days following last week’s sales tax hike. But we are not convinced that this is a bellwether for the tax hike’s impact on the wider …
Nigeria’s budget: Timing is everything The draft budget published this week was more notable for its timing than its contents. This is the first time in several years that the document has been published in Q3, raising the possibility that lawmakers may …
Slip in competitiveness ranking should reverse The World Economic Forum’s (WEF) Global Competitiveness Index for 2019 released this week showed that India’s ranking slipped 10 places to 68 th out of 141 countries. (See Chart 1.) Chart 1: India’s WEF …
Waning confidence Business and consumer confidence data released this week provided yet another signal that economic activity in Australia is set to remain weak in the coming quarters. Following the May election, business confidence surged, probably …
Tunisian elections risk policy paralysis The second round run-off of Tunisia’s presidential election will take place on Sunday and will face the immediate challenge of trying to work with a highly fragmented parliament. A period of policy paralysis would …
10th October 2019
The weak tone of the international business surveys in September shows that large parts of the global economy continue to struggle. We think this weakness will prompt the Bank of Canada to cut interest rates this year but, as we explain in our latest …
4th October 2019
Peru’s constitutional crisis easing, for now The political turmoil that erupted in Peru earlier this week now seems to be fizzling out. President Martín Vizcarra swore in a new cabinet on Thursday and the electoral authority has announced the date of new …
The slump in the ISM manufacturing index to a decade-low in September together with the fall in the non-manufacturing index to a three-year low triggered renewed fears that the US economy is headed for a recession. (See Chart 1.) But September’s payroll …
Poland: Swiss-franc loans put banks in the spotlight The ruling by the European Court of Justice (ECJ) that Polish households can potentially convert their Swiss franc mortgages into zloty could result in bank losses but should not have a major macro …
What’s Swedish for ‘disastrous’? The plunge in Sweden’s manufacturing PMI in September, from 51.8 to just 46.3, was bad enough on its own. (See here .) But taken together with the sharp fall in the services PMI (data released yesterday), the overall …
Boris Johnson unveiled his “two borders, four years” proposal for a Brexit deal this week. The first border, comes from Northern Ireland aligning with some EU regulations after the UK has left the EU. This would create a border in the Irish Sea between …
The trade war takes to the skies The WTO’s decision this week to grant the US permission to raise tariffs on the EU over Airbus subsidies increases the risk that the bloc is drawn into Mr Trump’s trade war. Tariffs of 10% on large civil aircraft, and 25% …
Growth looks to have stabilised in Q3 Countries across Emerging Asia are due to publish third quarter GDP figures over the coming weeks. But even before the official data are announced, it is possible to get a good idea of how growth in the region is …
Nigeria: CBN lending push will have little effect The Central Bank of Nigeria has increased pressure on commercial banks to extend more loans by announcing that the minimum loan-to-deposit ratio will rise from 60% to 65% in December. In aggregate, banks …
Stimulus running into diminishing returns The RBA cut interest rates to 0.75% on Tuesday as most had anticipated. It put more emphasis than usual on its intention to achieve full employment. In June, the Bank revised down its estimate of the unemployment …
Not bad enough for another rate cut The rush of data released this week was a mixed bag. Overall, there still isn’t a clear-cut case for the Bank of Japan cutting interest rates when it “re-examines” its policy settings at the end of the month. Amidst the …
PMC Bank fraud highlights governance concerns India’s authorities have recently received plaudits for their efforts to clean up the banking sector. But news this week of a fraud scandal at the Punjab & Maharashtra Co-operative Bank (PMC Bank) is a stark …
US investment curbs unlikely to trump tariffs Recent media reports suggested that the Trump administration is considering ways to restrict US capital flows into China, including delisting Chinese firms from US stock exchanges and prohibiting government …
Gulf slowdown has further to run National accounts figures released this week showed that Saudi Arabia’s economy officially entered recession in Q2 and Qatar’s economy shrunk too, all of which supports our below-consensus 2019 GDP growth forecasts for the …
3rd October 2019
As the fall-out from the attacks on Aramco began to fade, the spotlight swung firmly back to concerns about global economic activity this week with falls in the prices of most industrial commodities . What’s more, our forecast that economic indicators …
27th September 2019
We said in the previous Weekly that it would take a very strong performance from wholesalers to prevent GDP from contracting in July. Well, wholesalers certainly came to the rescue. The 1.7% m/m rise in sales in July was far better than the consensus …
Brazilian households on the rise… Figures published this week support our view that Brazilian households should help to drive a modest economic recovery over the coming quarters. The first positive surprise in the incoming data came from the payrolls …
The impeachment inquiry launched by the House Democrats against President Donald Trump will dominate the headlines over the coming months. It is unlikely to have any major impact on markets or the economy during that time but, if it clears a path for …
No signs of green shoots in the Swedish economy Another week, and yet more evidence that the Swedish economy is stuck in first gear. The Economic Tendency Indicator fell for the fifth month in a row in September (data released on Thursday), driven by a …
