The most frequent question we received from clients during recent meetings in the Gulf was whether lower oil prices would lead to a sharp slowdown in Saudi Arabia’s non-oil sector akin to that in 2014-16. We do expect fiscal consolidation to lead to …
5th June 2025
President Lee’s pledge to provide fiscal stimulus would, if implemented, provide a much-needed lift to Korea’s economy. The country’s public finances could easily accommodate a temporary rise in spending. But any signs that a looser fiscal stance is here …
We’re hosting an online drop-in on Tuesday to discuss the outlook for India’s economy and equity market. Sign up here . India’s stock market has fared well this quarter, outperforming other emerging market equities in aggregate, but we doubt this bout of …
The recent court ruling on tariffs has put industrial demand back in the spotlight. Our view is that not enough has changed yet to make wholesale revisions to our short-term view and that, beyond this, healthy fundamentals should still be enough to pull …
4th June 2025
The Bank of Canada avoided surprising markets by keeping its policy rate at 2.75% today, as it continues to wait to see the full impact of US trade policy on the economy. Nonetheless, the Bank confirmed that its bias remains toward loosening policy …
Trade policy uncertainty has damaged investment intentions in the US, Canada, Mexico and South East Asia. But intentions elsewhere have held up better and investment growth itself has yet to falter. We suspect that ongoing uncertainty will act as a drag …
Any short-term boost to domestic steel and aluminium production from higher tariffs is likely to be short-lived and offset by declining output in metal-using industries – making the tariff hike a drag on both manufacturing and the broader economy. After …
Brazil’s monetary tightening cycle is very close to being (or may already be) over, and attention is quickly turning to when and how far Copom will lower interest rates. Historically, the market has tended to underestimate how far rates are lowered – and …
According to the measures of wage growth that we consider the most useful and the fundamentals of the recent easing in the demand for labour relative to the supply, it is only a matter of time before wage growth slows to rates that are more consistent …
May’s batch of PMIs across the Gulf point to a softer Q2 for non-oil sectors and the backdrop of lower oil prices will likely result in less fiscal support and weaker confidence that add to the economic headwinds. In contrast, Egypt’s improved external …
While tariff risks remain, the recent improvement in demand and weaker supply pipeline suggest the Dublin office market has reached a turning point. However, we don’t expect prime rental growth to rebound by as much as most expect given the high level of …
The manufacturing PMIs remained subdued across EMs last month despite the US-China trade truce. That said, the timely hard activity data released so far has shown more resilience than the survey data. The aggregate EM manufacturing PMI fell from 50.5 in …
3rd June 2025
April’s JOLTS data suggest the labour market remained healthy at the start of the second quarter, with job openings rising and layoffs low. While there are some pockets of weakness in areas most at risk from tariffs and the recent fall in foreign …
The latest PMIs suggest that global industrial activity has weakened so far in Q2. Meanwhile, goods price pressures remain subdued in most countries apart from in the US, where tariffs already seem to be having an impact. The output component of the …
We’re hosting an online drop-in on Wednesday to discuss the outcome of Korea’s election and the macro and market implications. Sign up here . Victory for Lee Jae-myung of the Democratic Party (DP) in today’s presidential election in Korea should help …
While this year’s minimum wage hike will be only slightly smaller than last year’s, it is unlikely to prevent a further slowdown in wage growth over the coming quarters. That said, with capacity pressures still elevated, we continue to believe that the …
The existing tariffs on aluminium and steel have already raised metals prices in the US relative to elsewhere, and it is logical to assume that the announced doubling of tariff rates will only exacerbate this effect. Against this backdrop, our Metals …
2nd June 2025
The suggestion that the Chancellor may be considering cutting 50,000 civil service job cuts wouldn’t weigh on employment growth much over the next few years. Only if the government were to cut public sector employment towards its post-austerity and …
We’re hosting an online drop-in on Wednesday to discuss the outcome of Korea’s election and the macro and market implications. Sign up here . The impact of the trade war on Korean exporters has so far been limited. Although exports to the US fell in May, …
Australian house prices edged up a notch in May, and leading indicators suggest they will gather further momentum over the coming months. However, with debt-servicing costs set to remain onerous despite the RBA’s rate cuts, the cyclical upswing is likely …
Domestic weakness weighing on growth This report was first published on Monday 2 nd June, covering the official PMIs . We added commentary on the Caixin manufacturing PMI on Tuesday 3 rd June and Caixin services and composite PMIs on Thursday 5 th June. …
Most emerging market equities have held up surprisingly well of late, and in fact broadly outperformed global equities. But we think further outperformance is unlikely, especially for commodity exporters. Emerging market (EM) equities have been remarkably …
30th May 2025
We’re nudging up our forecasts for equities in most non-US developed markets, partly in response to our upwardly revised projections for the S&P 500 . But we still think they’ll lag equities in the US, if perhaps less significantly than they did earlier …
U-turns on benefit and welfare spending, increased pressure to ramp up defence spending and higher borrowing costs have left the Chancellor, Rachel Reeves, in a sticky position. If she wishes to avoid a political backlash and/or an adverse reaction in the …
29th May 2025
The surplus in the EU carbon market dampened incentives to decarbonise in 2024, and the likelihood that the surplus is maintained until 2027 will keep a lid on carbon prices in the near term. Further ahead, a sharp contraction in the supply of carbon …
Our new estimates based on trade in thousands of individual products suggest tha t rerouting helped to offset around half of the fall in China’s exports to the US during the first Trump trade war . If the US continues to impose high tariffs on China, …
Emerging Markets Capital Flows Monitor (May 2025) …
The South African Reserve bank resumed its interest rate easing cycle today, with a 25bp cut to 7.25%, and there was a marked dovish shift among the MPC, suggesting – as we have long thought – that the repo rate will decline further over this year. The …
Leading indicators suggest most of the recent weakness in housing demand and prices is due to the temporary influence of the change in stamp duty rather than any longer-lasting influence of the softer outlook for the UK economy. This lends support to our …
Yesterday’s US court ruling has added yet more uncertainty to the EU-US trade relationship and at face value has weakened President Trump’s position. But the risk of tariffs remains very real not least because sectoral tariffs, which are unaffected by the …
In this Update, we answer several key questions about how the US Court of International Trade (CIT) tariff ruling might affect the US and other economies. The outlook may now rest on the decision of the Republican-stacked Supreme Court. The upside risks …
There were few major changes in the May IPF Consensus Survey despite increased economic uncertainty. Total returns at the all-property level are forecast to be around 8.0% p.a. over 2025-29, which leaves our forecast of 7.5% p.a. toward the bottom end of …
The recent substantial volatility in global sovereign bond markets hasn’t altered our view that in most cases 10-year government bond yields will end this year near, or below, their current levels. We also think corporate bonds will continue to do quite …
The dovish tone adopted by the Bank of Korea today, alongside what we think will be continued weakness of the economy suggest that further interest rate cuts are likely in the coming months. The decision to lower the policy rate by 25bps to 2.50% – the …
Debate around whether or not India’s economy has surpassed Japan’s in size is raging, but the big picture is that India was always going to overtake Japan – and also Germany – given its positive demographics and scope for continued productivity gains. So …
28th May 2025
The latest low-profile data suggest that Saudi Arabia’s non-oil economy has started to lose momentum. And with the shift to a more aggressive oil output policy causing oil prices to fall, further fiscal consolidation is in the pipeline, which will weigh …
As was widely expected, the RBNZ cut its Official Cash rate by 25bp, to 3.25%, today. The revelation that the decision to cut was not a unanimous one has been interpreted as a hawkish signal by financial markets. However, we would put more emphasis on the …
For most of the time since the euro was established, the ECB’s “one size fits all” interest rate policy was a major problem for the single currency area. It contributed to imbalances between countries in the 2000s and to a prolonged downturn in peripheral …
27th May 2025
Less favourable conditions for global goods production and trade will be yet another factor weighing on demand for industrial metals and supports our view that prices will fall by more than the consensus expects. While we expect price declines across …
Russia’s invasion of Ukraine caused grain prices to surge to record levels in 2022, but a peace deal won’t lead to large falls in prices. This is mainly because Ukrainian grain production has already largely recovered from the war-related disruption. …
European residential property outperformed all-property for the third consecutive year in 2024 and our updated forecasts suggest that this will continue over the coming five years. Returns were especially strong in the Netherlands, but going forward we …
The bulk of the evidence suggests that the recent sharp slowdown in regular earnings growth is a statistical anomaly rather than genuine. With this year’s spring wage negotiations resulting in the fastest pay hikes in decades, we still expect the Bank of …
The latest flash PMIs point to weak activity and a softening of price pressures in advanced economies outside the US. But the surveys suggest that tariffs are already having an inflationary impact in the US. Our estimate of the weighted average of the …
22nd May 2025
Despite the latest setback in the S&P 500, we are revising back up our end-2025 forecast for the index in response to the de-escalation of the trade war albeit to a lower level of 6,250 than the projection of 7,000 we had before “Liberation Day”. We are …
With housing affordability still extremely stretched, we expect house price growth to remain muted even as mortgage rates are set to fall further. However, there’s more scope for dwellings prices to rise in the smaller capital cities, while apartment …
We will be hosting a Drop-In at 3pm BST to discuss the key takeaways from the Budget and to answer your questions. Register here . South Africa’s Finance Minister Enoch Godongwana’s third attempt at delivering the 2025 Budget should have enough support …
21st May 2025
The low public support for (left-wing) incumbents in many of Latin America’s largest economies, taken together with weak public finances, suggests that the wave of the upcoming elections could act as a catalyst for a rebound in (beaten up) financial …
The lack of an income stream makes it notoriously hard to value gold objectively. And while the price of gold relative to other assets – such as silver, oil and equities – is often used to assess the fair value of gold, structural changes over time can …
Core inflation in India rose to an 18-month high in April, but there are reasons to think that this overstates the extent to which the economy is running into capacity constraints. And with headline inflation at a multi-year low, further policy easing …
The proposed 5% US tax on remittance outflows would have a particularly large negative impact on Central American economies such as Honduras, Guatemala and El Salvador. Remittance flows could plausibly drop by around 1% of GDP in these countries. And …
