Overview – Inflation still looks set to be in line with central banks’ targets next year (see Chart 1), but upside risks have increased outside the US. With the sharp falls in energy and food inflation behind us, disinflation has slowed amid …
25th July 2024
This page has been updated with additional analysis since first publication. German recovery petering out The large fall in the German Ifo BCI in July, which follows a similar drop in the Composite PMI published yesterday, adds to the impression that the …
Surprise cut points to mounting policymaker concern The PBOC’s decision to cut the 1-year interest rate on its medium-term lending facility (MLF) earlier today is unusual for two reasons. First, the 20bp reduction is double the size of the PBOC’s usual …
Following a wobbly period around the turn of the year, the economy is on the mend and should gather further momentum as real wage growth turns positive in the second half of the year. With goods inflation still having strong momentum, we now expect the …
The latest GDP figures suggest that the central bank’s concerns about the weakness of domestic demand will only rise. With concerns about the health of the economy set to overtake those about inflation, we continue to expect the Bank of Korea to start …
Regional growth appears to have slowed in Q2 and we think it will be sluggish in the next few quarters. At a country level, we expect the Andean economies to outperform Brazil and Mexico in the next couple of years. With inflation set to rise further in …
24th July 2024
While the pound has outperformed all major G10 currencies so far this year, we still expect it to depreciate against the greenback later in the year as the Bank of England (BoE) eases monetary policy more than money markets currently discount. While it …
Alongside its decision to cut interest rates today, the Bank of Canada struck a more dovish tone than in June, supporting our forecast that another cut is coming at the next meeting in September. The Bank’s second 25 bp cut, taking the policy rate to …
Business surveys released this morning add to evidence that the Olympics will lift activity in France slightly in Q3. However, activity is likely to drop back again in Q4 and we still think annual GDP growth will only be around 1%. Meanwhile, we don’t …
The latest flash PMIs suggest that while GDP growth probably slowed in Europe at the start of Q3, it continued to recover in Japan. Although the rise in shipping costs has caused manufacturers’ input prices to rise, central banks may take comfort from the …
Today’s sell-off in the US stock market in the wake of a poor reception to yesterday’s results from the first two members of the ‘Magnificent 7’ to report during this earnings season is likely to have reassured those arguing we are in the early stages of …
Supermarkets struggled in 2023, as falling food sales volumes hit profits and rental growth. But the future looks brighter. As food price inflation has fallen supermarket profits have recovered and the past surge in food sales values points to stronger …
New home sales remain weak New home sales were essentially unchanged in June after their 15% slump the month before, not helped by mortgage rates which remained stubbornly high at around 7%. So far in July, borrowing costs have declined and currently sit …
Gradual loosening cycle continues and another cut in September looks likely Following its interest rate cut today, the Bank of Canada reiterated that further cuts are likely if inflation continues to ease in line with its expectations. Our forecast for …
Disinflationary trend broadening out Fed officials growing more concerned about labour market downside risks Interest rate cut likely in September With the disinflationary trend broadening out and the unemployment rate rising, recent comments from Fed …
The economy is primed to grow by 6.5-7% per year between 2024 and 2026, which would put India on course to become the world’s third-largest economy within the next couple of years. Headline CPI inflation will gradually fall over the coming months, …
Booming demand for LNG in Asia this year has helped push prices in Asia to a sizeable premium over those in Europe. We think that this premium will remain above 10% over the rest of the year but will shrink when a huge increase in global LNG supply begins …
The larger-than-expected rise in Mexican inflation in the first half of July, to 5.6% y/y, was driven entirely by a jump in non-core inflation; core inflation fell. Our base case remains that Banxico will resume its easing cycle next month (as has been …
This dashboard contains all of our proprietary data and forecasts as well as supporting historical data. Use the filters to search across geographies, commodities and by specific indicator and choose your chart type option. If you have any questions …
This page has been updated with additional analysis since first publication. Recovery stalling The flash PMIs for July suggest that the euro-zone’s recovery may be fizzling out at the start of Q3, while output price pressures eased but remained high in …
Inflation edges down providing cover for interest rate cut in September South Africa’s headline inflation rate edged down to 5.1% y/y in June and with core inflation returning to the mid-point of the SARB’s 3-6% target range, we think the SARB will be in …
GDP growth appears to be slowing at the start of Q3 July’s composite PMI suggests some of the recent rebound in activity this year may have been due to catch-up growth following the weakness of activity last year and GDP growth is easing towards a more …
Bank has pledged that it will keep tightening policy if inflation evolves as expected If anything, weak yen creates upside risks to Board’s inflation forecasts Bank will hike its policy rate by 20bp in both July and October At its upcoming meeting, we …
Recovery will retain momentum across second half of 2024 The strong rebound in the composite PMI in July suggests that the recovery of Japan’s economy will continue across the second half of the year. According to the flash estimate released today, the …
23rd July 2024
The recent sharp deterioration in Brazil’s public finances has forced Finance Minister Fernando Haddad to outline further fiscal tightening measures, but we doubt that the government will do enough to prevent public debt from rising in the coming years. …
We think there are a number of factors supporting the recent rally in US bank shares, not just the rotation out of tech stocks. So, while we doubt this rotation is here to stay, we think bank stocks will recover further ground on other ‘non-tech’ sectors. …
There are several structural factors that explain the underperformance of Canadian productivity growth compared to the US since the 1980s, but the underperformance in the last few years specifically reflects more cyclical factors including extremely …
Spike in rates takes sales to 13-year low The sharp rise in mortgage rates in April was the catalyst for existing home sales falling to a 13-year low in June. However, borrowing costs have since receded and timelier indicators of activity such as mortgage …
Donald Trump has said that he could quickly end the war in Ukraine if he is re-elected as US President. This Focus answers key questions on what the shape of any agreement might look like, what might happen to sanctions on Russia, and the possible …
A growing number of EMs have adopted fiscal rules to improve investor confidence in the management of their public finances. But the recent deterioration in fiscal health in some EMs has led to the breach (or at least threat of a breach) of these rules. …
Cardoso’s 50bp hike likely the last, but cuts a long time off The Central Bank of Nigeria delivered a 50bp hike to its policy rate, to 26.75%, at its meeting today and, while this probably marks the end of the tightening cycle, Governor Cardoso’s …
Recent surveys of real estate lenders paint a picture of a European lending market that is still seized up, as loan terms tightened and credit demand fell in H1. Lenders are optimistic that demand for credit and origination will both pick up over the …
Easing cycle continues The Hungarian central bank (MNB) cut interest rates by 25bp again today, to 6.75%, and the post-meeting press conference suggests that, while there are some MPC members who want to pause the easing cycle, the balance is a bit more …
Which commercial real estate markets are set to recover first, and where will recovery be strongest? The Capital Economics real estate team has been looking closely at the comparative performance of the US, European and UK markets to advise clients on …
Without wishing to downplay the ugly fiscal picture, we think the new government is overplaying the gloom. We suspect more optimistic economic forecasts and various tweaks to the fiscal rules will save the new Chancellor from hitting the electorate with …
Rates on hold, cuts still some way off Turkey’s central bank left its key policy rate on hold today, at 50.00%, and the communications accompanying the decision suggest that interest rate cuts are still some way off. While most analysts expect a monetary …
The electricity blackouts that have blighted Egypt this summer may be nearing an end. But in the absence of new major gas discoveries, in the longer run rising energy demand will result in renewed balance of payments problems from higher imports or will …
Fiscal policy has become almost as fraught in Germany as it is in France and Italy, but rather than from a desire to run very loose fiscal policy, Germany’s woes stem from its strict “debt brake”. Some loosening of the debt brake is likely in the coming …
Finance Minister Nirmala Sitharaman has shown a commitment to fiscal consolidation while for the most part placating the BJP’s coalition partners in today’s FY24/25 Union Budget announcement. There is always a chance of fiscal slippage, but recent success …
We doubt the independent pay review bodies’ recommendations for the government to give teachers and NHS staff a 5.5% pay rise will prevent wage growth from slowing to 3.0% by the end of next year. But if the government chooses to extend this pay rise to …
Much of the recent resilience in Australia’s house price growth can be attributed to a handful of capital cities where the property markets have gone from strength to strength. We believe that there are a number of factors that help explain the divergence …
The complete Third Plenum “Decision” document provides interesting details on the leadership’s reform agenda across a range of areas. Overall though, it reinforces the central message in last week’s initial Plenum communiqué: Xi Jinping continues to place …
22nd July 2024
President Joe Biden’s decision to drop his re-election bid adds another element of uncertainty to the election campaign, but it is unlikely, by itself, to alter the calculus facing market participants. Biden’s withdrawal (unprecedented for a sitting …
The recent set of mild inflation data and growing concerns among Fed officials about downside risks to the labour market reinforce our view that the first interest rate cut will come in September. We forecast that core PCE inflation will return to the 2% …
Overview – House prices will probably remain flat for the rest of 2024, but lower mortgage rates will provide scope for prices to beat expectations next year. Indeed, our forecast that Bank Rate will be lowered by more than investors anticipate suggests …
Increases in solar panel and battery exports propelled our proprietary measure of China’s green export volumes to a record high in June. Given the rapid expansion in Chinese manufacturing capacity, the large wedge between export values and volumes will …
The dramatic departure of Joe Biden throws fresh uncertainty into the US presidential election race. With just over three months to go, Democrats are scrambling to agree a candidate and Donald Trump is looking only slight less likely to win in November in …
Economic recovery still on track Poland’s retail sales data released today were slightly weaker than expected, but the big picture is that the whole set of activity data for June suggest that the economic recovery has remained relatively strong. Taken …
