After dodging recession, economy made decent start to Q2 April’s activity data out of South Africa suggest that, after dodging a technical recession in Q1, the economy made a bright start to the second quarter. But external and domestic headwinds, …
14th June 2023
Output will weaken despite increase in April The uptick in industrial production in April was mostly driven by strong growth in Ireland, with many other major euro-zone economies recording a fall in output. We expect industry to struggle this year as …
Struggling exports a prelude of downturn to come Export values inched up by just 0.6 y/y in May. That translated into a 3.1% m/m fall in seasonally adjusted terms. With export prices having risen by 2.0% m/m in May, volumes probably saw a sharp fall, …
Resurgence in activity unlikely to last Note: We’ll be discussing the UK’s economic, housing market and policy outlook in light of the BoE’s June rate decision in an online briefing on 22nd June at 10:00 EDT/15:00 BST . Register now . The 0.2% m/m rise in …
Inflation coming down but Riksbank to hike by 25bp Headline inflation fell back into single digit territory in May, but the underlying rate came down a bit less than anticipated. This suggests there are upside risks to our forecast that the Riksbank will …
While selling its exchange-traded fund (ETF) holdings at book value to the government wouldn’t impair the Bank of Japan’s balance sheet, we don’t think it would provide the boost to fiscal revenue that policymakers seem to be hoping for. And while the …
Resurgence in activity unlikely to last The 0.2% m/m rise in real GDP in April will further raise hopes that the economy will escape a recession this year. But the rise in GDP is not as good as it seems. And with the full drag from high interest rates …
Inflation coming down but Riksbank to hike by 25bp Headline inflation declined as expected in May but the underlying measure fell a bit less than anticipated and points to upside risks to our forecast that the Riksbank will raise interest rates just once …
We think UK real GDP rose a bit in April (07.00 BST) Euro-zone industrial production probably edged up in April (10.00 BST) We expect the Fed to leave interest rates unchanged (19.00 BST) Key Market Themes The 10-year Gilt yield has continued to march …
13th June 2023
The latest OPEC oil market report confirms that OPEC countries implemented a fresh round of voluntary production cuts in May, slashing the group’s crude output by 0.4m bpd. Similar to OPEC’s own view on the oil market, we think that it will tighten …
The latest OPEC oil market report confirms that OPEC countries implemented a fresh round of voluntary production cuts in May, slashing the group’s crude output by 0.4m bpd. Similar to OPEC’s own view on the oil market, we think that it will tighten later …
With inflation still running hot, the Bank of England has little choice to keep raising interest rates. But how high will policymakers take Bank Rate, and – with headlines dominated by news of 6% mortgage rates – what will that mean for the UK economic …
Core inflation still uncomfortably high Headline CPI inflation fell to a more than two-year low of 4.0% in May, thanks to favourable base effects and another sharp drop back in energy prices last month but, with core price inflation still as high as …
Click here to read full text. Overview – Sub-Saharan Africa is set to record its weakest growth this year, outside of the pandemic, since 2016 as the drags from domestic headwinds are exacerbated by a less favourable external environment. Our GDP growth …
Core inflation remains uncomfortably high for the Fed Headline CPI inflation fell to a more than two-year low of 4.0% in May, thanks to favourable base effects and another sharp drop back in energy prices last month but, with core price inflation still as …
Borrowing curbed in response to rising interest rates With mortgage rates surging, the number of loans issued to buy a home dropped sharply in Q1, with Buy-to-Let (BTL) lending seeing the most severe drop. Those that did press ahead with a home purchase …
We think an upcoming shift in emerging market monetary policy towards rate cuts will provide long-dated local-currency government bonds there with a bit of a tailwind. But gains may be limited in the coming months if, as we expect, global appetite for …
The Polish government’s ambitious plans to raise defence and social spending are unlikely to be achieved without pushing up the public debt-to-GDP ratio later this decade. Imminent risks to the sustainability of the public finances still appear relatively …
This page has been updated with additional analysis and charts since first publication. A worrying deceleration Broad credit growth slowed sharply in May and has now reversed almost all its reopening recovery. This poses a downside risk to growth and …
Activity growing at a more subdued pace The latest industrial production and retail sales data for Turkey for April suggest that GDP growth is likely to have remained subdued this quarter following the Q1 slowdown. A shift towards economic orthodoxy – …
Reacceleration in wage growth supports the case for further rate hikes Note: We’ll be discussing the Fed and ECB June decisions and previewing the Bank of England's upcoming meeting in a briefing at 10:00 EDT/15:00 BST on 15 th June. Register here . The …
Reacceleration in wage growth supports the case for further rate hikes The labour market became tighter in April and wage growth reaccelerated. That will only add to the heat already on the Bank of England to raise interest rates further at the policy …
This report was first published in response to the PBOC’s cut to its 7-day reverse repo rate. It has since been updated to reflect subsequent developments. 13th June: Additional analysis and charts added. 15th June: Coverage of MLF cut added. 20th June: …
One reason for the slump in productivity is that the recent surge in working hours is producing diminishing returns. And we suspect that disruptions caused by the pandemic prevented firms from stepping up business investment in response to record capacity …
UK wage growth probably accelerated in April (07.00 BST) We think US core inflation eased to an 18-month low of 5.2% in May… (13.30 BST) … and the headline inflation rate may have fallen to 4.1% (13.30 BST) Key Market Themes Emerging Market (EM) …
12th June 2023
Overview – The RBI’s tightening cycle has come to an end and, as the economy comes off the boil and inflation settles at comfortable rates, we think interest rates cuts will materialise in early 2024. Over the longer term, India’s growth prospects are …
Pakistan’s central bank (SBP) left its main policy rate unchanged today at 21%, but we think this represents a pause rather than an end to the SBP’s tightening cycle. With inflation well above target and concerns about the external position unlikely to …
With less than a year and a half to go until the next general election, calls for the Chancellor, Jeremy Hunt, to cut a range of taxes have been growing. But recent economic developments mean the Chancellor is unlikely to have much fiscal firepower …
Saudi Arabia’s fiscal position has deteriorated over the past few quarters on the back of lower oil prices and production, and officials are increasingly doing all they can to sustain the current loose fiscal stance. But if, as we expect, oil prices fall …
Headline inflation to remain anchored within the RBI’s 2-6% target range Headline consumer price inflation fell to a 25-month low in May and is likely to remain within the RBI’s 2-6% target range for the foreseeable future. That means the tightening cycle …
Surprise increase in lending in May, but signs of distress growing While bank net lending to commercial real estate (CRE) turned positive again in May, growing signs of distress for existing loans point to further weakness ahead. (See Chart 1.) The …
The latest Deloitte Crane Survey showed that legal firms have been an increasingly important sector for London office demand, accounting for a third of all pre-lets since Q3 2022. The rise reflects strong growth in legal jobs over the past year. In turn, …
Having fallen steadily for much of the last year, European natural gas prices surged last week. The catalyst was constrained supply. Given seasonally high stocks and subdued demand, we are not worried yet about another price spike. But Europe has to avoid …
The suspension and potential removal of Godwin Emefiele as Nigeria’s central bank governor raises hopes that there will be a shift away from the current unorthodox and interventionist monetary and exchange rate policies. A large devaluation of the naira …
Harry Truman famously asked aides to find him a one-handed economist because all of his “‘say on the one hand this. . .’, but ‘on the other hand that. . .’”. The president’s quip has become synonymous with a profession that is prone to hedging its bets. …
Overview – The economy held up better at the start of the year than we had anticipated, but we still expect it to enter a recession in the second half of the year. Even though underlying inflation probably hasn’t peaked yet, we suspect the Bank of Japan …
The fall in employment in May suggests the Bank might not need to follow its 25bp hike this week with another in July. But with employment among prime-age people continuing to rise strongly and house prices surging last month, we still suspect the Bank is …
9th June 2023
Inflation ticks up as central bank sounds hawkish Russian inflation picked up slightly to 2.5% y/y in May and we think it will rise above the central bank’s 4% target in the coming months. Against a backdrop of large upside inflation risks and the hawkish …
We think US core inflation slowed from 5.5% to 5.2% in May (Tue.) We expect the Fed to leave its policy rate on hold this week, but hike in July (Wed.) ECB will probably deliver another 25bp rate hike but BoJ set to leave policy on hold Key Market Themes …
The US dollar looks poised to end another week down a touch – the DXY index’s first consecutive weekly fall since April. That probably reflects yield gaps vis-à-vis most other developed markets (DMs) shifting against the greenback as surprise central bank …
Petro crisis sparks rally in Colombian assets Colombia stumbles from political crisis to political crisis. After a major cabinet reshuffle in April, this week’s scandal included allegations of phone tapping and violation of campaign financing rules and …
The oil price ended the week flat despite Saudi Arabia pledging to cut output by 1m bpd in July at the OPEC+ meeting last weekend. Most other commodity prices rose, supported by China’s May trade data which showed strong growth in most commodity imports. …
The seven-month run of house price declines recently ground to a halt, with the Case-Shiller index showing an increase in prices in both February and March. This was partly driven by the temporary boost to demand at the start of the year from declining …
Agriculture dampened SA growth in Q1 South Africa’s Q1 GDP figures released this week revealed a big drag from the agricultural sector. Some of the factors that weighed on output (namely the weather) are likely to prove temporary but, even so, confidence …
Note: We’ll be discussing whether China’s post-zero-COVID recovery is already over in an online briefing at 09:00 BST/16:00 SGT on 15th June . Register now . Property support of limited use in isolation Stocks of Chinese property developers surged …
These are not normal economic times and that makes the job of policymakers – and economists – that much harder. Group Chief Economist Neil Shearing talks to David Wilder about why this cycle is unlike any other, but also why it's likely to end in …
The euro-zone has fallen into recession, albeit only by the finest of margins – the economy contracted by 0.1% q/q in both Q4 last year and Q1 this year. The consensus view is that the worst is now behind us and that growth will accelerate, presumably in …
Labour market starting to loosen The fall in employment and the increase in the unemployment rate to 5.2% in May will probably not prevent the Bank of Canada from raising interest rates again at its July meeting, but the moves reinforce our view that the …
We expect the Fed to leave interest rates unchanged at next week’s FOMC meeting but, in what could be characterised as a “hawkish skip”, to signal via forward guidance (updated SEP forecasts and language in the statement) that officials are minded to hike …
