Modelling the COVID-19 shock

We have developed a 45-sector spreadsheet model that allows clients to design their own shutdown scenarios and assess the impact on GDP in 20 major economies. This tool helps to shed light on how the different sectoral composition of various economies will determine the size of the overall hit to output from the shutdowns. One key message is that EMs are more vulnerable than DMs, and that large European countries are generally more exposed among advanced economies.
Simon MacAdam Senior Global Economist
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Global Economics Update

PMIs show growth easing and inflation pressures rising

The flash PMIs for September show that the pace of growth slowed across developed economies towards the end of Q3, suggesting that the boost to activity from reopening is fading. But inflationary pressures show no signs of abating, with indicators of firms’ price pressures increasing again in September.

23 September 2021

Global Economics Update

Thinking through how we could be wrong on Evergrande

If, contrary to our opinion and the consensus, a collapse of Evergrande ends up having a significant impact on the rest of the world, it will be because it first causes either major financial dislocation within China or a property-led slump in China’s economy. The latter is probably the bigger risk for the global recovery. In view of the wider interest, we are also sending this Global Economics Update to clients of our Emerging Markets Service.

Drop-In: Evergrande – What are the risks to China and the world? Chief Asia Economist Mark Williams and Senior China Economist Julian Evans-Pritchard will be joined by Senior Markets Economist Oliver Jones to take your questions about the Evergrande situation. They’ll be covering the implications of collapse for China’s financial system and growth outlook, and assessing the global markets fallout. Register here for the 0900 BST/1600 HKT session on Thursday, 23rd September.

22 September 2021

Global Economics Update

Surge in gas prices adds to near term price pressure

In this Update, we answer six key questions about the surge in natural gas prices. The key point is that it will keep inflation in DMs and many EMs above central bank targets for a few months longer than we had previously assumed. Governments are already preparing to limit the economic damage and central banks are likely to look through this temporary spike in inflation. But this comes at a time when a host of shortages are already pushing up prices and adds to the upside risks to our inflation and interest rate forecasts.

21 September 2021

More from Simon MacAdam

Global Economics Update

How far will rising commodity prices boost inflation?

We think that the broad-based rally in commodity prices will go into reverse later this year, so the upward pressure on inflation in advanced economies should be temporary. But there is a clear risk of a more sustained pick-up in inflation, especially if shortages persist. Drop-In: Great Inflation 2.0 – Are we facing a 70s revival? (1100 ET/1600 BST, Thurs 13th May) A special 20 minute briefing during which Jennifer McKeown, the head of our Global Economics Service, and Senior Global Economist Simon MacAdam will discuss whether advanced economies are in for a repeat of inflation levels last seen during the 1970s. Register here.

12 May 2021

Global Economics Focus

Great Inflation 2.0? Lessons from the 1970s

Policy stimulus and tolerance of inflation by central banks may lead to higher inflation in some G7 countries in the coming years. Given the parallels with the run-up to the high-inflation era of the 1970s, it is natural to be worried about history repeating itself. While we accept that medium-term inflation risks are probably skewed to the upside, the lessons from history suggest that the chances of a Great Inflation 2.0 are low.

29 April 2021

Global Economics Update

A closer look at ‘excess’ household savings

Income support and limits on spending had already led households in advanced economies to build up almost $3.5tn in extra cash by the end of 2020, equating to 7.6% of GDP. And the stockpile of these supranormal savings will continue to grow in 2021. We suspect that this money will be used to pay down debt and invested rather than spent in a hurry. Financial investment will support asset prices, while lower debt burdens will strengthen household finances, potentially supporting growth further down the line.

26 April 2021
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