The sharp drop in the Turkish lira on the news that the main opposition leader, Ekrem İmamoğlu, has been arrested will complicate the central bank’s task of bringing inflation down and raises big questions about the government’s ability to sustain …
19th March 2025
Soft inflation keeps rate cut in play The weaker-than-expected South African inflation figure for February, of 3.2% y/y, keeps the door open for the Reserve Bank to lower the repo rate by 25bp (to 7.25%) at its meeting tomorrow. The outturn was unchanged …
Rates on hold, but further easing likely later in the year Bank Indonesia today left its main policy rate unchanged (at 5.75%) but hinted that further easing was likely later in the year. We are maintaining our view that the central bank will cut rates …
With the Bank of Japan sounding a bit more worried about downside risks to activity from US tariffs than about upside risks to inflation, we’re pushing back our forecast for the next rate hike from May to July. However, we still expect the Bank to lift …
Bank of Japan will lift rates to 1.5% by 2027 The BoJ’s decision to leave policy settings unchanged today was widely anticipated but we still think that the Bank’s tightening cycle has much further to run. After having lifted its policy rate to 0.5% in …
A big spending plan nears in Germany, but that might not mean higher yields or a stronger euro. Germany’s Bundestag, the federal parliament, has agreed today to reform the “debt brake”, the strict constitutional fiscal rule that notably prevents the …
18th March 2025
The latest PREA consensus forecasts reveal a downward revision in total returns and capital value changes across most sectors, especially for offices and industrial. However, the consensus remains more optimistic than our projections. That said, the …
Rise in output the calm before the tariff storm The rise in industrial production in February should further soothe concerns that the economy is on the cusp of recession. Nonetheless, with production supported by rebounds in motor vehicle and aerospace …
Housing starts rebound but tariff concerns loom The sharp rebound in housing starts in February and healthy permit issuance shows that the housing market is still holding up well. Nonetheless, with tariff concerns continuing to weigh on homebuilders’ …
Upside surprise makes the Bank of Canada’s job even harder The large upside surprise to CPI inflation in February, together with another set of above-target consistent gains in CPI-trim and CPI-median, reduces the chance of the Bank of Canada cutting …
Deflation has reared its head again in China, underscoring the problem of persistent supply and demand imbalances. The limited extra support for consumption outlined at the National People’s Congress and in the new “Special Action Plan” for consumption …
The sharp fall in Indonesia’s stock market today seems to reflect growing worries about the direction of fiscal policy and the state’s role in the economy under President Prabowo Subianto, which could weaken medium-term growth and raise the country risk …
Growth in Chile’s economy slowed to 0.4% q/q in Q4, but more timely monthly activity data suggest that the economy headed into 2025 with more momentum. This, combined with above-target inflation, means that the central bank is likely to stand pat at its …
While a notable shift in Canadian fiscal policy is likely regardless of who wins the upcoming election, we doubt this will move the needle for the loonie or Canadian government bonds, given that the outlook for Canadian financial markets depends more on …
Lingering fiscal risks in South Africa, alongside the challenging global backdrop, prompt us to expect a dim outlook for the country’s bonds, equities and the rand over the rest of this year. The negative reaction in markets to rumours that South Africa’s …
Canada’s housing market falls victim to trade war While unseasonably severe winter weather has undoubtedly played some role in the recent weakness of home sales, we suspect the sharp drop in house prices in February can also be blamed on the growing …
17th March 2025
On the face of it, the US administration’s focus on lower oil prices, even at the cost of industry “disruption,” bodes ill for US oil production. That said, our forecast for WTI to fall to $56pb by end-2026 is consistent with output flatlining rather than …
China’s government has launched a new “Special Action Plan” to support consumption. Talk of prioritising consumption is encouraging on paper. But the leadership has been talking about this since a Politburo meeting in July. The latest plan doesn’t include …
Peru’s economy grew strongly in 2024 but we think that a combination of domestic and external headwinds will cause growth to slow by more than most expect over the coming years. But it is still likely to outperform most other major Latin American …
Consumers not completely collapsing under the weight of policy uncertainty after all Although retail sales only edged up in February, the much larger rebound in control group sales – which feeds into the BEA’s consumption estimate – is something of a …
The prospects for Chinese equities still appear quite bright to us, and in fact we expect that they will keep outperforming those in India over the rest of this year. Chinese equities were a bit of a mixed bag today. China’s offshore equity market …
The US president’s approach to trade policy may be – putting it charitably – inconsistent, but Donald Trump has at least been consistent in how he views the US balance of payments. As far back as the late 1980s, Trump was publicly complaining about how …
While trade tensions create downside risks, we expect GDP growth to be around trend this year. And following another strong showing in this year’s spring wage negotiations, wage growth will remain high enough to keep inflation above the Bank of Japan’s 2% …
Recovery hits a speed bump China’s economy appears to have slowed last month, likely due to a pullback fiscal borrowing. We expect a renewed pick-up later this year as fiscal support ramps up again. But any near-term improvement is unlikely to be …
Group Chief Economist Neil Shearing discusses what the latest signals from the US economy say about recession risk. He talks about what the coming week’s retail sales data might say, and how they might swing the debate around a downturn. Neil also …
14th March 2025
The dollar has stabilised after its historic tumble last week, with the DXY index set to end broadly flat on the week. At the margin, the greenback was lifted by relatively hot CPI and PPI data this week, which we think point to a 0.35% rise in the core …
SA 2025 Budget: will a compromise be reached? South Africa’s budget was finally delivered this week, but without the DA’s support. There are enough reasons to think that a compromise within the GNU will eventually be brokered, but it will still need to …
Prime Minister Starmer’s announcements this week to abolish both NHS England and the Payment Systems Regulator are the government’s latest initiatives aimed at boosting productivity and, in turn, improving the UK’s medium-term economic prospects. It’s …
Will high inflation or weak growth win out? Brazil’s central bank is all but certain to follow through with a clearly-signalled 100bp hike in the Selic rate to 14.25% next week, so all attention will be on the statement: whether it includes forward …
Trump torments Tiff The Bank of Canada’s decision to lower its policy rate by a further 25bp, to 2.75%, at its meeting on Wednesday was largely expected given the growing downside risks to the economy from US tariffs. While the temporary carveout …
Tariffs drive divergence in metals price outlook The price premium for industrial metals in the US surged in anticipation of the 25% tariffs on steel and aluminum, which were implemented this week. For example, the Midwest premium for aluminum has jumped …
What Trump put? Investors had until recently been relatively sanguine about the economic and financial market risks posed by President Donald Trump’s more extreme policy inclinations. His cabinet lacks the establishment types that served as a check on …
Bond market investors don’t seem to believe that monetary policy will be eased any further in China. Two-year yields have risen from 1.0% to 1.5% since the start of the year, putting them into line with overnight rates. They are higher now than they were …
Ceasefire proposal met with resistance by Putin The US proposal for a 30-day ceasefire in Ukraine has been met with a mixed response in Russia, with President Putin saying that he “supports the idea” but that it needs “serious reworking”. The ceasefire …
Policy concerns weigh heavily on sentiment The plunge in the University of Michigan Consumer Sentiment Index in March, paired with the surge in inflation expectations, indicates that consumers’ concerns about the impact of the Trump administration’s …
Strong start to the year not a sign of things to come The large rises in both manufacturing and wholesale sales volumes at the start of the year suggest that GDP may have done even better than the flash estimate of a 0.3% m/m rise in January, although …
Europe’s plans to increase its defence expenditure are still evolving but based on what we know so far, we estimate that it will rise by around 0.5% of GDP between 2024 and 2026 for the euro-zone as a whole, lifting GDP by 0.2-0.3% over two years. The …
Duterte arrest puts political instability in spotlight The arrest this week of former Philippine president Rodrigo Duterte by the International Criminal Court for his role in extra-judicial killings of over 6,000 suspected drug dealers has no direct …
Key risks: food prices, banks, tariffs This week we published our Q2 India Economic Outlook , which contains all of our latest analysis of India’s economy and financial markets (the forecasts and underlying data can also be viewed in our interactive India …
The yen shrugged off the results of Japan’s “Shunto” spring wage negotiations today, even though the unions’ demands for another year of strong wage growth were broadly agreed to by firms. That’s not too surprising: it’s been clear for some time that …
Broad credit growth picks up, but private demand still weak While bank loan growth continued to slow to record lows in February, that was more than offset by stronger growth in non-bank credit. Strong government bond issuance should continue to provide a …
Shunto results in largest pay hikes since 1991 Japan’s Trade Union Confederation (RENGO) today released the first round of results of this year’s spring wage negotiations (Shunto). Including seniority pay hikes, RENGO’s preliminary tally showed a 5.46% …
The 0.1% m/m fall in real GDP in January (consensus +0.1%, CE -0.2%) highlights the weakness of the economy before the full effects of the rise in business taxes and the uncertain global backdrop is felt. Only a small part of the fall in GDP in January …
