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Strong Q1 growth masks lacklustre domestic recovery Hong Kong’s GDP surprised to the upside in Q1, expanding by 2.3% q/q, up from a downwardly-revised 0.4% q/q in Q4 (the Bloomberg median was +0.9 and out forecast was +0.8%). While growth slowed in y/y …
2nd May 2024
This page has been updated with additional analysis since first publication. Industry dragging on the CEE recovery The weak set of manufacturing PMIs out of Central and Eastern Europe (CEE) for April suggest that industrial sectors remained a drag on the …
Chinese policymakers won’t risk reliving the turmoil of 2015 by engineering a sudden devaluation of the renminbi . They may allow the currency to weaken gradually over the coming years to help industry deal with oversupply or to offset the impact of new …
1st May 2024
This Rapid Response has been updated with additional analysis, as well as a chart and table of key data. Growth to strengthen over 2024 Saudi Arabia’s flash estimate of GDP showed that the economy exited recession in Q1 and we expect the recovery to …
Is progress stalling on efforts to get inflation under control? Why are price pressures proving more stubborn than expected? When will central bankers get the genie back in the bottle? Our Global Economics team hosted an online briefing about the global …
30th April 2024
This is a revamped version of our quarterly Financial Risk Monitor to include commentary and analysis of our latest EM risk indicators. EM risks ease further, but fiscal risks remain acute Higher US bond yields and a stronger dollar have put some EM …
Emerging Asia Chart Pack (April 2024) …
China Chart Pack (Apr. 24) …
Most analysts expect China’s inflation rate to rebound to around 2% by 2026. In contrast, we think that persistent imbalances between supply and demand will keep it close to zero for the foreseeable future. This will make it harder to manage China’s high …
The Polish government’s white paper on Monday set out a scathing review of the previous government’s fiscal record and highlighted the challenges facing the public finances, but if we’ve learned anything from the report it is that the government will take …
Leadership promises continued policy support, new round of reforms The readout of the Politburo’s quarterly meeting on economic affairs has just been published by state media. The tone remained dovish, suggesting that policy will remain supportive in the …
Recoveries continue The slightly better-than-expected Q1 GDP figures out of Hungary and Czechia suggest that economic recoveries had a little more momentum at the start of this year than we previously thought and that the risks to our growth forecasts for …
This report was first published on Tuesday 30 th April covering the official PMIs and the Caixin manufacturing PMI. We added commentary on the Caixin services and composite PMIs on Monday 6 th May. A touch softer but recovery still intact, for now The …
José Raúl Mulino, the front-runner in Panama’s presidential election scheduled for Sunday, has pledged to reinvigorate growth. But as we’ve been arguing for some time, the economy’s time as Latin America’s growth star is coming to an end. If anything, …
29th April 2024
We think the Fed and most other developed markets (DM) central banks will be able to ease monetary policy this year and next more than investors currently anticipate. DM bond yields will end 2024 below their current levels, putting downward pressure on …
All the signs suggest that a second Trump administration would take a more protectionist approach to trade. Export demand in Mexico, East Asia and ASEAN would be particularly hard hit by a universal US import tariff or a dollar devaluation, and those …
A second Trump presidency would almost certainly lead to a protectionist lurch from the US, with profound implications for the emerging world. But which EMs would see the biggest hit to export demand? What would a more isolationist shift signal about the …
The dollar is once again sending shivers through global markets as its rise again generates fearful headlines about risks to economies large and small. Central bankers are clearly getting nervous – and some have good cause to be so – but the consequences …
This page has been updated with additional analysis since first publication. Fairly strong start to Q2 The European Commission's Economic Sentiment Indicators for Central and Eastern Europe (CEE) were a mixed bag in April, but our regional …
In the latest episode of The Weekly Briefing, Group Chief Economist Neil Shearing previews the coming week’s Fed meeting, tackles market talk that the next move on the US policy rate could be up, addresses an intriguing report about Fed independence and …
26th April 2024
SARB hawkishness continues, no rate cuts in 2024 This week, the SARB published is biannual Monetary Policy Review , which showed a Bank less confident about South Africa’s disinflation trend and reiterated a desire to move to a lower inflation target. …
US aid package a (large) sticking plaster for Ukraine The $61bn US aid package for Ukraine approved this week will provide a much needed boost to Ukraine’s efforts on the battlefield, but the delays that the funding has faced over recent months casts a …
Overview – Progress in getting back to central bank targets has slowed in several major economies. In advanced economies, a rebound in energy inflation has offset most of the drag on headline rates from lower non-energy goods inflation, and services …
Softer inflation figure (just about) keeps a 50bp cut in May in play The slightly lower-than-expected Brazilian inflation figure for the first half of this month, of 3.8% y/y, and signs of softening underlying core price pressures might just be enough to …
Hawkish CBR worried about upside inflation risks The hawkish communications accompanying the decision by the Russian central bank (CBR) to leave its key policy rate on hold today suggests that monetary easing will probably arrive later than we previously …
New monetary tool aimed at risk mitigation, not QE Speculation had emerged that the PBOC might start quantitative easing (QE) after it was revealed earlier this month that President Xi Jinping had called on the central bank to increase the buying and …
Ongoing heatwaves are a risk to inflation The past couple of weeks have brought more good news on India’s economy. The flash composite PMI for April released on Tuesday rose to a near 14-year high. (See Chart 1.) That suggests that the strength of …
Stalling privatisation drive a blot on Egypt’s reforms Having previously pledged to reinvigorate its state privatisation drive, Egyptian officials have significantly pared back their targets. This could remain the one demerit on its IMF report card. …
25th April 2024
Hawkish message as rates remain on hold Turkey’s central bank left its policy rate on hold at 50.00% at today’s meeting, but the statement continued to strike a hawkish tone amid persistent inflation risks in the economy. While we think the tightening …
The paring back of expectations for interest rate cuts in advanced economies this month has generally come alongside an upward revision to interest rate expectations across Emerging Europe. However, we think analysts may still be overestimating how far …
Even if the US dollar stays strong against most currencies this year, we think that much of the broad-based weakness in EM (emerging market) FX has run its course. While some EM central banks may now slow their easing cycles, major shifts in policy are …
24th April 2024
India has been the star performer among major EMs over the past several quarters and the latest data suggest that the strength of economic activity has continued through to the eve of the election. Headline inflation is grinding back to the RBI’s 4% …
The policy shifts underway in Turkey, Nigeria, Argentina and Egypt have ticked a lot of the right boxes so far, but it will take years for the full economic benefits to materialise and require policymakers to remain committed to reforms. We’re most …
The Central Bank of Nigeria’s (CBN) monetary policy reforms have injected a welcome dose of momentum back into the country’s policy shift. But the minutes to the latest MPC meetings also suggest that a slowdown in growth could prompt a (premature) shift …
The escalation of the conflict between Israel and Iran has largely been shrugged off by the oil market and risk premia in the Gulf remain low. Even so, growth will remain weak in the Gulf this year. There will be bigger macro consequences from …
Our China Activity Proxy (CAP) suggests the economy saw a healthy expansion in March, driven by the continued strength of industry. While we think that fiscal support will keep fuelling the economy in the near-term, structural headwinds will start to drag …
While EM policymakers haven’t raised concerns about Chinese overcapacity in the same way that their counterparts in the US and Europe have, they too are facing widening trade deficits with China. We suspect EMs will be less likely than DMs to turn to …
This publication has been updated with additional analysis since the post-meeting press statement and press conference. MNB shifting down the monetary easing gears The communications accompanying the decision by the Hungarian central bank (MNB) to opt for …
23rd April 2024
The better-than-expected budget figures out of Argentina at the start of the year are undoubtedly good news and show that the fiscal adjustment is happening more quickly than we’d expected. That said, many of the factors that have helped to flip the …
South Africa’s upcoming general election looks likely to result in a much more fragmented parliament and mark a shift to coalition government. The lesson from elsewhere in the emerging world is that this can often lead to a worsening fiscal position. …
Weak end to Q1 Poland’s weaker-than-expected activity data for March suggest the risk to our forecast for GDP growth of 2.5% y/y in Q1 (up from 1.0% y/y in Q4) are tilted to the downside. While we maintain our above-consensus GDP growth forecast of 3.0% …
The UAE’s economy outperformed the other Gulf economies in 2023 and we think that this outperformance will continue this year. While we are still waiting for the full 2023 GDP data from the UAE, we can piece together the data from Abu Dhabi and Dubai, the …
This page has been updated with additional analysis since first publication. Activity strong on eve of election The flash composite PMI reading for April suggests that the strength of economic activity over the past few quarters has continued through to …
A week spent visiting client s, contacts and friends in Beijing and Shanghai has underlined the extent of the pessimistic shift in sentiment within China. At first glance, China’s economy is doing fine . The streets of Beijing and Shanghai are bustling …
A weak labour market and high interest rates will continue to weigh heavily on Korea’s consumer sector this year. The poor prospects for consumer spending is one of the main reasons we think overall GDP growth will remain subdued. Korea’s recovery from …
22nd April 2024
Recent currency falls and higher oil prices are unlikely to put significant upward pressure on consumer prices across Asia. We continue to expect inflation in the region to remain low over the coming year. Consumer price inflation has fallen back sharply …
Will the naira’s rebound last? The sharp recovery in the naira in recent weeks has been somewhat of a surprise and it has come at the expense of a steep decline in FX reserves. Without substantial improvements in the current account position or capital …
19th April 2024
GDP breakdown points to stronger services activity The better-than-expected Q1 GDP figures released earlier this week added to wider evidence that the economy has regained some momentum recently. The detailed sectoral breakdown, published a day after the …
Tensions increase, but hopes for de-escalation Tensions between Israel and Iran ratcheted up this week as both sides launched military strikes at one another, raising concern about a broader regional conflict. (Read our research here .) Following Iran’s …
Worries about the currency Bank Indonesia is the only central bank in emerging Asia that has a mandate to ensure currency stability. It surprised markets (and us) when it raised interest rates to support the rupiah at its October meeting. With the …
