Delta variant is a much bigger threat to EMs than DMs

The apparent success of vaccines at preventing severe illness and death from the Delta coronavirus variant should mean that it does not pose a major threat to recoveries in most advanced economies. However, the rapid spread of the Delta variant poses a more significant threat to recoveries in large parts of the emerging world, where vaccination rates are lower.
Neil Shearing Group Chief Economist
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Global Economics Update

Global PMIs flattening off at high levels

The main takeaway from today’s batch of manufacturing PMIs is that industrial output growth looks to have peaked. Output indices have generally stopped rising, and new orders indices have come off the boil. Even so, with supply unable to keep up with demand, price pressures show little sign of abating.

2 August 2021

Global Economic Outlook

Pandemic rebound peaks but recovery story still intact

The initial post-pandemic resurgence is nearing its zenith, but strong policy support and limited private sector debt should allow most economies to grow at a healthy pace over the next two years. The US and China were among the fastest to recover to their pre-virus paths or even beyond, so it is no surprise that they are slowing first, whereas growth in the euro-zone and Japan has yet to peak. The spreading Delta variant is a risk, but mainly to Emerging Markets where vaccination is less advanced. As goods shortages ease, activity normalises, and commodity prices fall, most economies should see inflation drop back towards central bank targets and policy tightening will generally be more limited or come later than markets expect. Even in the US, where inflation is a bigger threat, we do not expect interest rate hikes until the first half of 2023.

28 July 2021

Global Trade Monitor

World trade recovery levelling off

Real world goods trade edged down in May, suggesting that the recovery has levelled off. True, this slight fall comes after an impressive rebound since May last year, global trade remains well above its pre-virus level, and trade data are usually volatile. Nonetheless, the timely evidence indicates that May’s outturn was not a blip and was instead the beginning of a period of normalisation in the pace of trade growth.

26 July 2021

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Long Run Update

Scar free? The implications of a full economic recovery

While the consensus has become more optimistic about the near-term recovery, most analysts – and the majority of central banks – still believe that the pandemic will leave a legacy of lower global output over the long term. We disagree. And if we’re right, there will be profound consequences for everything from the future path of GDP to the outlook for inflation and the public finances.

21 May 2021

Global Economics Update

Four questions (answers) on r/Wallstreetbets

The volatility caused by retail investors co-ordinated on the r/Wallstreetbets forum does not pose a direct threat to the global economy, but it does illustrate some of the financial vulnerabilities that can stem from ultra-loose monetary and fiscal policies. In this Update we answer four important questions about the events of the past week.

1 February 2021

Global Economics Update

Surge in shipping costs adds to near-term price pressure

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19 January 2021
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