Note: the last chart was previously uploaded incorrectly and was corrected on the 8th October The pivot toward stimulus reduces near-term risks and should provide some much-needed support to an economy struggling with a softening labour market and a deep …
1st October 2024
Inflation in Thailand is the lowest not just of any country in Asia, but across the emerging world. (See Chart 1.) The headline rate in August fell to just 0.4% y/y, while the core rate was 0.6%. (See Chart 2.) We expect inflation to rise a little over …
Some signs of life in manufacturing The ISM manufacturing index was unchanged in September, although the jump in the production index and rebound in new orders paint a slightly less negative picture heading into the fourth quarter. The unchanged reading …
Apartment markets are turning a corner, and we now expect the sector to outperform over the five year forecast. As new supply drops back from the second half of next year, we expect a mixture of Southern metros and the major markets to see the greatest …
We now expect the ECB to cut interest rates by 25bp at each of its next four meetings, taking the deposit rate down from 3.5% currently to 2.5% in March. Following Christine Lagarde’s comments to the Committee on Economic and Monetary Affairs yesterday, …
Sharp rise in PMI suggests economic recovery is on track South Africa’s manufacturing PMI rebounded in August, finally replicating the improvements we have seen in other survey indicators. A backdrop of interest rate cuts and improving supply conditions …
This page has been updated with additional analysis since first publication. Services inflation remains sticky The drop in euro-zone headline inflation below 2% in September should be sufficient to persuade the ECB to cut rates in October, even though …
Overview – We are not expecting the planned fiscal policies of the government to derail the economy – we expect GDP to grow by 1.0% this year and by a decent 1.5% in both 2025 and 2026. Instead, the main influence of the government’s plans to raise public …
PMIs sink in Turkey and Russia The sharp fall in the manufacturing PMIs in Turkey and Russia in September provide further evidence that their economies are slowing. But the continued rise in the prices balances of the survey in Russia will be a concern …
The September PMIs from Asia generally declined from the previous month. And while the PMI surveys aren’t always a good guide to the hard activity data, their recent signals are consistent with our expectation for manufacturing activity in Asia to …
We recently held a series of Asia-focussed roundtable discussions with clients in London, covering an array of topics including the impact of Fed easing, the US election, global fracturing and China’s stimulus blizzard. This Update answers several of …
This page has been updated with additional analysis since first publication. Consumer rebound not as strong as it seems The solid pickup in retail sales in August was driven in part by temporary factors, meaning that the underlying momentum behind …
Slowdown in house-price growth has further to run With new listings rising rapidly, the housing market is shifting in favour of buyers. Accordingly, we think house price growth will ease further in the months ahead. Allowing for seasonal swings, house …
The economy is stuck in a period of below-potential GDP growth, with previous interest rate hikes weighing on consumer spending and investment. This will keep downward pressure on core inflation, which we expect will reach the Bank of Canada’s 2% target …
30th September 2024
Headline GDP growth in the Gulf economies will strengthen in 2025 as oil output cuts are unwound. But lower oil prices will prompt a turn to fiscal consolidation in most of the Gulf, causing growth in non-oil sectors to slow. Elsewhere, balance sheets in …
The trouble with European green policy Mario Draghi’s report on EU competitiveness , published this month, provided food for thought on the EU’s decarbonisation strategy. There were a couple of key points of discussion. First, Mr Draghi emphasised the …
Germany and Italy HICP (September) Fall in inflation strengthens case for rate cuts The falls in headline and services inflation in the major euro-zone economies in September, along with evidence that price pressures are softening and activity slowing, …
The strike by Israel in Lebanon that killed Hezbollah’s leader represents a major escalation of hostilities in the Middle East and all eyes are now on the next actions by Israel and Iran. On its own, this escalation would point to higher oil prices and …
We doubt China’s equities will continue to outperform Japan’s through the end of 2025, despite their recent divergence. Stock markets in two of Asia’s largest economies have continued to head in different directions today. China’s CSI 300, for example, …
Net lending to property sees further increase as investment recovers Net lending to property reached £1.26bn in August, up from £520m the previous month. While lending to standing assets was responsible for the lion’s share of the increase, lending for …
Tankan points to continued recovery This website has been updated with additional analysis since first publication. The slight rise in business conditions across all firm sizes in the latest Tankan suggests that the robust rebound in activity in Q2 will …
German state data point to sticky core inflation CPI inflation data published by the major German states this morning suggest that headline HICP inflation fell sharply in both Germany and the euro-zone in September, as was widely expected. But core and …
This page has been updated with additional analysis since first publication. Fading drag on credit from higher interest rates is supporting the economy August’s money and lending data provide further evidence that the gradual improvement in credit demand …
For good reason, much of the attention around what another Donald Trump presidency would mean for the US economy has centred on his proposals to jack up tariffs and clamp down on immigration. If he wins in November and makes good on these pledges, you can …
Asia Chart Pack (September 2024) …
This page has been updated with additional analysis since first publication. House prices rise in Q3 and will rise further next year September’s 0.7% m/m rise in Nationwide house prices suggests that August’s 0.2% m/m fall was just a blip and that the …
This page has been updated with additional analysis since first publication. Softer rebound in activity, but another major downturn unlikely Q2 GDP growth of 0.5% q/q was a bit weaker than the previous estimate of 0.6% q/q, but the ONS also confirmed …
While banks have issued more housing loans that don’t meet APRA’s serviceability guidelines over the last couple of years, we aren’t convinced that this poses significant risks to financial stability. The Australian Prudential Regulation Authority’s …
This page has been updated with additional analysis since first publication. Stimulus measures will shore up near-term activity While the official PMIs held up okay in September, the Caixin PMIs dropped quite sharply which suggests that the economy lost …
Economic recovery lost some pace in Q3 While the plunge in industrial production in August creates some downside risks to our forecasts, the continued strength in consumer spending is encouraging. According to the preliminary estimate, industrial …
GDP-GDI gap resolved Leading up to this week’s annual revisions to the national accounts, we were attuned of the risk that the expenditure-based real GDP measure might be revised lower to match up with the income-based real GDI, given the wide gap that …
27th September 2024
Economists from our China and Markets teams held a special briefing to assess the recent flurry of stimulus announcements from Beijing. During this, the team answered audience questions as they addressed key issues around the China outlook in light of …
We don’t see compelling reasons for policymakers in the US or the euro-zone to lower policy rates as much as market pricing suggests, so we expect long-dated bond yields there to edge up before long. That would probably be a wash for the euro. Today’s …
Today’s release of weaker-than-expected US PCE data for August led investors to revise down slightly their expectations for the fed funds rate, and the DXY index slipped as a result. This, alongside an upside revision to US economic growth, leaves us more …
CBN rate hikes about inflation and credibility The Central Bank of Nigeria’s surprise hike this week highlighted the greater progress that the MPC wants to see on the inflation front and also importantly its steadfast ambition to restore its trust and …
Overview – A pivot towards fiscal and monetary stimulus should support China’s growth in the near-term. But the economy continues to be propped up by investment, still elevated levels of construction, and the willingness of trading partners to allow …
Worrying signs in the CFIB Business Barometer Although the CFIB Business Barometer covers only small firms, in recent years the survey indicators have provided a fairly accurate steer to economic conditions. The headline index fell to 55.0 in September …
Fiscal risks in Romania continue to build Romania’s fiscal watchdog this week warned that the country’s budget deficit could come in at 8.0% of GDP this year. This is significantly above the government’s original target of 5.0% and also above its new …
Government hinting about more investment The government appears to be laying the ground for a rise in public investment in the Budget on 30 th October. This week the Chancellor said “growth is the challenge and investment is the solution.” That was …
A 25bp interest rate cut by the ECB at its next meeting in mid-October is now more-or-less fully priced into the market. The decision will be a close call, but a cut is far from a foregone conclusion. Our base case remains that the Bank will wait until …
Stronger monthly GDP growth will be short lived Although the rise in GDP in July was stronger than expected, the preliminary estimate of unchanged GDP in August suggests that the momentum was short lived and puts third-quarter growth on track to surprise …
Trump lashes out at Mexico Comments from Donald Trump this week highlight how big a threat his return to the White House would pose to Mexico’s free trade relationship with the US. Earlier this week, Trump threatened to hit John Deere with a 200% tariff …
Africa Chart Pack (Sep. 2024) …
The stimulus packages announced by Chinese policymakers were the main reason behind the chunky increases in industrial metals prices this week, and explain why they performed better than most other commodity prices. However, the stimulus measures are no …
Fiscal policy to hold back Pakistan’s recovery The IMF this week approved a new long-term US$7bn loan for Pakistan. The country will receive the first US$1bn immediately, with the remainder to be paid over the three years of the deal. Pakistan was close …
Core price pressures easing; Q3 consumption growth solid As we calculated based on the earlier price data releases, the core PCE deflator increased by a muted 0.13% m/m in August, with the headline deflator up by 0.09% m/m. Admittedly, although the …
China’s leadership finally took action this week to staunch the economy’s bleeding with a flurry of stimulus announcements and pledges to do more. But will it be enough? Group Chief Economist Neil Shearing talks to David Wilder about whether the outlook …
Stimulus implementation gets underway A flurry of policy announcements propelled the largest weekly gains in Chinese equities since 2008 this week (CSI 300 up 15.7%; Hang Seng 13.0%). The catalyst was Tuesday’s stimulus announcement , which included …
