Recent data releases suggest the global economy is holding up better than anticipated by gloomy forecasts (including ours). But it's far too soon to breathe a sigh of relief. In this latest episode of The Weekly Briefing, Group Chief Economist Neil …
25th November 2022
China’s dominance in the supply of some key materials needed for the green transition means that tracking imports of certain goods from the country can offer a timely, albeit imperfect, window into the rollout of renewable technology elsewhere – …
Download the PDF for the full report here . Our Long Run Returns Monitor provides our updated long-term projected returns for major asset classes, as well as a summary of the macroeconomic forecasts which underpin them. All projections in this publication …
Over a year ago, we warned that surging shipping costs posed an upside risk to inflation going into 2022, and it looks like these risks did indeed materialise. But now that global shipping costs have collapsed, we expect them to drag down on inflation …
Warmer words in US-China relations There has been a palpable easing of strains between China and the West since the cordial meeting last week between Xi and Biden . Xi agreed to restart the high-level talks that China halted when Nancy Pelosi visited …
Strike highlights need for labour market reform The costs of a strike by Korean truck drivers – the second this year – are starting to mount, with steel and cement producers reporting disruption. The Korean government estimated that the economic losses …
Most developed market (DM) government bonds and equity benchmarks have rallied over the past month or so, but we doubt this twin rally will persist. While we think bond yields will end 2023 lower than they are now as inflationary pressures ease, we expect …
Foreign visitor numbers jump but services struggle Japan received 461,000 foreign visitors in October (seasonally adjusted), almost double the September figure. This is helping businesses in accommodation and transport, which media reports say are …
The most eye-catching statistic published this week was the net migration into the UK of 504,000 people in the year to June 2022. That’s a record high. It continued the recent trend of net inflows from the non-EU and net outflows to the EU. And it …
Riksbank has further to go This week’s 75bp hike by the Riksbank was in line with expectations, and the Bank’s new projections took its policy rate forecast closer to ours. (See here .) The higher interest rate path – despite Stefan Ingves’s suggestion …
As China's new infection numbers hit a record, its zero-COVID policy is coming under severe strain. Despite hopes that the government would be moving away from the controversial policy, more and more cities across China are being locked down as …
The Treasury has started to make payments to the Bank of England’s Asset Purchase Facility (APF) to cover the losses it has racked up because of the Bank of England’s gilt purchases. While this won’t force the Chancellor to tighten fiscal policy …
The reduction in the required reserve ratio (RRR) that the PBOC just announced will help banks follow through on a directive to defer loan repayments from firms struggling with widening lockdown restrictions. Market interest rates may also edge down as a …
RBNZ willing to send New Zealand into recession While the analyst consensus is that New Zealand will generate decent GDP growth of just under 2% next year, we already predicted last month that the economy will enter recession. And with the RBNZ this week …
Manufacturing powerhouse takes to the polls We’ve previously written at length about why state elections in India matter for economic policy . The upcoming vote in Gujarat – due to take place between 1 st and 5 th December with results expected on the 8 …
Nationwide inflation to rise further and drag spending growth Headline inflation in the capital set a new three-decade high in November on aggressive rises in food inflation excluding fresh food and industrial goods inflation. The upshot is that …
Tokyo prices point to further rises in nationwide inflation Headline inflation in the capital set a new three-decade high in November on aggressive rises in food inflation excluding fresh food and industrial goods inflation. The upshot is that nationwide …
24th November 2022
OPEC+ schisms growing as Saudi doubles down The volatility of oil prices has highlighted the uncertainty over the current OPEC+ oil output agreement and adds to our view that we do not think it will make it to its end-2023 expiry date. The price of Brent …
A fall in Tokyo’s inflation might suggest that Japan’s national inflation has peaked (Thu.) Catch up on today’s Asia Macro Drop-In, and all our Drop-Ins, here … …or check out our Weekly Briefing podcast episodes here Key Market Themes Despite the …
The big surprise so far this year has been the resilience of housing starts which, despite falling from their 10-month high of 300,000 annualised in September, remained at a relatively strong 267,000 in October. While developers have largely shrugged …
Inflation appears to have finally peaked for emerging markets – but how quickly will price pressures now ease, and what will that mean for the 2023 outlook? In December's monthly dive into the big stories in EM macro and markets, economists from across …
Today’s decision in South Africa to raise the benchmark rate by 75bp, to 7.00%, signalled that policymakers remain in inflation-fighting mode and the tightening cycle has further to run. That said, the balance on the MPC appears to be shifting towards …
Growing domestic and external headwinds have taken a bigger toll on the region’s economies in recent months, with growth slowing sharply in Turkey and Israel in Q3 and GDP contracting outright in Czechia, Hungary and Latvia. Admittedly, there have been …
ECB account gives little away on next steps There are no significant clues in the account of the ECB’s October meeting about the pace and extent to which the Bank will raise interest rates in December and next year. A 50bp hike seems most likely next …
Marked pick-up in growth unlikely following Q3 slump GDP growth in Nigeria slowed to 2.2% y/y in Q3 as woes in the oil sector intensified and key parts of the non-oil economy, such as agriculture and manufacturing, performed poorly. Even with …
Stronger core inflation will support the hawks at Banxico The further fall in Mexico’s headline inflation rate, to 8.1% y/y, in the first two weeks of November was driven by easing non-core price pressures. But core inflation picked up, which will …
Metals demand growth improved markedly in the third quarter, but demand is unlikely to hold up as global economic activity deteriorates further. Our Capital Economic Demand Proxies, which we update every month here , aim to gauge the true state of …
Malaysia’s new prime minister, Anwar Ibrahim, lacks a majority in parliament and his appointment is unlikely to bring to an end the political instability and uncertainty that has held Malaysia’s economy back since 2018. Just keeping the government …
CBRT final act? Turkey’s central bank (CBRT) delivered another 150bp interest rate cut, to 9.00%, at today’s meeting and suggested that this marked the end of the easing cycle. We’ll take the CBRT for its word but there is clearly a risk that President …
The latest IPF Consensus survey showed a significant upgrade to 2022 European office rent growth expectations, largely due to strong rent outturns in Q2 and Q3 this year. A slowdown is expected in 2023, but in our view the consensus is still too …
Monetary tightening cycles in EMs are advanced relative to DMs, and are now drawing to a close in many countries. Elevated inflation will mean that policy will stay tight over the coming months, but the conditions for several EM central banks to start …
This morning’s 75bp increase in the Riksbank’s policy rate was in line with expectations, and both the press statement and Monetary Policy Report are consistent with our view that policymakers will raise rates to a peak of around 3% next year. Beyond …
Small improvement in business climate won’t prevent recession The increase in the Ifo Business Climate Index in November does not change the big picture that the German economy is likely to contract in Q4. November’s uptick in the Business Climate Index …
Tightening cycle not yet finished This morning’s 75bp increase in the Riksbank’s policy rate was in line with the consensus and market expectations while the press statement is consistent with our view that policymakers will raise rates to a peak of …
The proposed multi-employer wage agreements risk further fuelling inflation by disruptive industrial action. And while employers could circumvent them by striking traditional enterprise agreements, there’s a risk that this locks in strong pay growth for …
The Bank of Korea (BoK) today raised interest rates by a further 25bps (to 3.25%) and the accompanying hawkish statement suggests the tightening cycle still has a little further to run. We are tweaking our forecasts for next year and now expect one more …
Inflation to fall alongside November output price index November’s flash PMIs point to further weakness in the manufacturing sector, corroborating firms’ forecasts. At the same time, services activity appears to be struggling due to the rapid rise in …
The Bank of Korea today raised interest rates by a further 25bps (to 3.25%), but with growth slowing and inflation easing, we think there is a good chance this marks the end of the central bank’s tightening cycle. Today’s decision came as little surprise …
Downbeat readings reinforce 2023 recession narrative November’s flash PMIs point to further weakness in the manufacturing sector, corroborating other data. At the same time, services activity appears to be struggling under the weight of rising inflation. …
How many is “various”? The minutes of the Fed’s early-November policy meeting suggest that although most officials were in favour of slowing the pace of rate hikes at upcoming meetings, there was no consensus on how high the peak in rates would ultimately …
23rd November 2022
Commercial crude stocks fell for a second consecutive week and are likely to come under further pressure if strategic reserve releases wind down. Despite this, oil prices slid on demand worries and as rumours around the G7’s plan to cap the price of …
Banks are likely to tighten credit conditions over the next year to protect themselves from house price falls. But their more cautious approach to lending in this cycle means we don’t think they will have to tighten conditions as significantly as in …
November’s flash PMIs were a mixed bag, with unexpected increases in Europe and a sharp fall in the US. However, the headline indices are now at levels consistent with falling activity in all major advanced economies. And the surveys continue to suggest …
We expect central banks in Korea, Sweden and South Africa to hike policy rates… …but think Turkey’s central bank will cut rates, and that a RRR cut is imminent in China Client can sign up here for our Drop-In on Asia’s big macro and market stories …
Sales level off, but leading indicators point to declines New home sales have levelled off in recent months, but leading indicators support our view that sales will fall a little further by the end of the year. Looking ahead, we expect stretched …
Despite the resilience evident in the latest round of hard data, our recession tracker models suggest the odds of a downturn next year are still rising. Odds of recession rising Our recession tracker indicators all but guarantee the economy will contract …
