Manufacturing activity holding up The small fall in the ISM manufacturing index in April suggests that, while tariffs are weighing on the economy, they are not crushing it. And although the prices paid index is still some way below its pandemic peak, it …
1st May 2025
A soft start to 2025 Saudi Arabia’s flash estimate of Q1 GDP showed that the Kingdom’s economy grew by 0.9% q/q , translating into a year-on-year increase of just 2.7% to kick off the year. But with revisions and rebases to the data, it suggests the Saudi …
Net lending to property falls back Net lending to property weakened to a one year low in March, with total lending of £514m down from £1.59bn in February. The drop was driven by lending to standing investments, which fell to £530m from £1.49bn. Debt …
This page has been updated with additional analysis since first publication. Households tighten their purse strings March’s money and lending data suggest households were starting to spend more cautiously even before the full hit to consumer confidence …
Bank of Japan will hike rates again in July The Bank of Japan revised down its growth forecasts and sounded more dovish when it left policy settings unchanged today. However, we believe that the trade war won’t be as damaging as feared and we’re sticking …
Inflation slows, but worst yet to come The almost unchanged level of core PCE prices in March is welcome news but, given the data precede the implementation of broad-based tariffs, core inflation will inevitably rebound sharply in the coming months. …
30th April 2025
GDP dragged down by pre-tariff import surge & DOGE cuts The 0.3% annualised decline in first-quarter GDP was entirely due to a pre-tariff 41.3% annualised surge in imports, with net exports subtracting a massive 4.8% points from GDP. This surge now …
Bad but not awful Although the 0.2% m/m contraction in GDP in February was worse than expected, the preliminary estimate of a partial rebound in March should soothe fears that the economy is rapidly falling into recession. We expect GDP growth to slow …
Euro-zone inflation probably unchanged in April, but will fall further this year National data published so far suggest that euro-zone inflation remained at 2.2% in April, and that core inflation probably rose from 2.4% to 2.6%. (Euro-zone data due on …
Weak economy argues in favour of another 50bp cut The 0.2% q/q expansion in Mexico’s GDP means that the economy dodged a technical recession last quarter. But growth was driven by a rebound in agriculture and the rest of the economy – and the …
Strong start to the year but tariff-induced slowdown ahead The acceleration in euro-zone GDP growth in Q1, to 0.4% q/q, suggests the economy started the year on a stronger footing than we expected and activity surveys suggested. Nevertheless, we still …
This Rapid Response has been amended from our original response to correct the food CPI figure. Fall in inflation paves the way for May rate cut The larger-than-expected fall in Polish inflation, to 4.2% y/y, in April, is probably enough to tip the …
Strong exports to support growth despite tariff risks Economic growth in Taiwan picked up strongly in the first quarter of the year, helped by very strong exports and robust investment. Although Trump’s tariffs pose a downside threat to the economy, we …
Hungary contracts ahead of tariff impact The Q1 GDP data released out of Hungary and Czechia showed that momentum in both economies slowed at the start of this year, with Hungary suffering a renewed contraction. The risks to our below consensus full-year …
Dovish BoT and rising downside risks prompts forecast change Thailand’s central bank (BoT) today cut interest rates by a further 25bps (to 1.75%) and the poor prospects for the economy mean more easing is likely soon. The decision was correctly …
This page has been updated with additional analysis since first publication. House price growth slows as stamp duty relief ends April’s bigger-than-expected 0.6% m/m fall in Nationwide house prices (consensus forecast 0.0% m/m, Capital Economics -0.1% …
This page has been updated with additional analysis since first publication . Impact of tariffs starting to show up in survey data The drop in the PMIs likely overstates the impact of tariffs due to negative sentiment effects, but it still suggests that …
CPI data don’t support the case for below-neutral rates Although trimmed mean CPI gained a bit of momentum in q/q terms last quarter, it probably won’t keep the RBA from cutting rates by another 25bp at its May meeting. However, given lingering price …
Manufacturing sector shrugging off trade tensions Japan’s economy approached Liberation Day with solid momentum and firms’ production forecasts suggest that the manufacturing sector won’t be affected much by higher US tariffs. The 1.1% m/m fall in …
House price growth should continue to cool February’s 0.4% m/m rise in house prices is still a bit stronger than the timely leading indicators - like rising months’ supply and longer average time on market - would suggest. However, along with a small …
29th April 2025
Pre-tariff import boom points to sizeable Q1 GDP contraction The advance economic indicators revealed a massive surge in consumer goods imports in March, as firms raced to beat the imposition of reciprocal tariffs in early April. As a result, we now …
MNB to stay on hold as above-target inflation persists The Hungarian central bank (MNB) left its base rate on hold today, at 6.50%, and despite downside risks to activity from US tariffs, we think its easing cycle will remain on pause throughout 2025. …
This publication has been updated with additional analysis ESI points to small hit from tariffs in April The ESI for April point to a small hit to the euro-zone from US tariffs in April and suggest that growth remained quite weak. With the drag from …
Sentiment holds up well in the face of Trump’s tariffs The European Commission's Economic Sentiment Indicators for Central and Eastern Europe (CEE) provide a tentative sign that the impact of US tariffs on the region has been fairly contained so far. The …
Spain’s economy to stay strong this year, but Sweden’s may struggle Spain’s rapid economic growth (+0.6% q/q in Q1) is likely to continue for some time yet, despite trade uncertainty. While consumption and government spending were weaker than expected in …
Slump in sentiment not yet weighing heavily on spending The moderate decline in retail sales volumes in February was probably due to the unseasonably severe winter weather rather than the recent slump in sentiment, with the latest flash estimate implying …
25th April 2025
Inflation rises but end of tightening cycle is near The further rise in Brazil’s headline inflation rate to 5.5% y/y in the first half of April means that Copom will press ahead with a 50bp hike in the Selic rate at its next meeting in early May. But …
CBR drops tightening bias, rate cuts likely in Q3 The Central Bank of Russia (CBR) left its policy rate on hold at 21.00% again today and dropped the language in its statement that further interest rate hikes are possible. With inflation nearing a peak, …
Leadership signals policy flexibility in the face of trade uncertainty The Politburo has just concluded its April meeting which, as usual, focused on economic affairs. The communique signalled that monetary policy easing is still on its way and that …
This page has been updated with additional analysis since first publication. March may be as bright as it gets as confidence slides March’s rise in retail sales volumes meant sales rebounded by an impressive 1.6% q/q in Q1, rounding off a …
You can’t buy what you can’t afford The fall in existing home sales in March serves as a good reminder that more home listings alone are not enough to revive the market. Affordability also has to meaningfully improve which, based on our view that …
24th April 2025
Boeing demand boosts orders The jump in durable goods orders in March was driven entirely by a large rise in orders received by Boeing. Excluding transport, core goods orders flatlined. With the post-strike boost from the restart in production at Boeing …
Inflation rises, but Banxico more focussed on weak economy The rise in Mexico’s headline inflation rate in the first half of April, to 4.0% y/y, is unlikely to shift Banxico’s focus away from the weakness of the economy and we expect it to deliver another …
Ifo resilient in the face of tariffs The rise in the Ifo Business Climate Index (BCI) in April suggests that US tariffs have not yet meaningfully hit economic activity in Germany, though some sentiment indicators have fallen sharply. But the economy is …
Korea’s economy weakened further in Q1 and we expect activity to remain weak in the near term due to headwinds from tariffs and the bleak outlook for the construction sector. Data released today show that GDP declined by 0.2% q/q in Q1 (following growth …
Sharp rise in sales shows market still has momentum Lower mortgage rates drove a sharp rise in new home sales in March, showing that the market still has solid momentum despite inventory creeping up in the resale segment. However, with mortgage rates …
23rd April 2025
This page has been updated with additional analysis since first publication. Tariffs dampening activity but not yet inflation The marked fall in the composite PMI in April raises the chances that the uncertainty stemming from the US tariffs chaos will be …
The larger-than-expected fall in South Africa’s headline inflation rate to 2.7% y/y in March will give the Reserve Bank more confidence that its easing cycle can resume. We expect a 25bp reduction to 7.25% at the next MPC meeting in May followed by a …
Hit from tariff chaos looks small so far but could get bigger April’s euro-zone flash PMIs suggest that the immediate damage to production from US trade policy has been limited so far. But firms reported some front-loading of orders, so output might take …
Rates on hold amid currency concerns, BI in no rush to cut The decision by Bank Indonesia to leave interest rates unchanged at 5.75% came as little surprise and was correctly predicted by 24 out of the 26 analysts polled by Reuters, including ourselves. …
This page has been updated with additional analysis since first publication. Fiscal position worse than OBR predicted even before US tariffs bite March’s public finances figures showed that public borrowing was overshooting the OBR’s forecast even before …
PMI data bolster the case for a shallow easing cycle Early signs suggest that the economy is holding up well despite heightened uncertainty. With firms also reporting stronger inflationary pressures, we’re sticking to our view that the RBA won’t cut rates …
Odds of a May rate cut shorten The weaker-than-expected Polish industrial production and wage data for March have increased the probability that the central bank (NBP) will restart its easing cycle at its next meeting in May, but that decision will still …
22nd April 2025
Fall in starts not a major concern The sharp fall in housing starts in March is less concerning than it seems at first glance, partly reflecting a normalisation in homebuilding after February’s weather-driven surge, rather than a collapse in the sector. …
17th April 2025
ECB acknowledges downside risks from trade uncertainty While the ECB’s decision to cut its deposit rate from 2.5% to 2.25% today was expected, the monetary policy statement clearly points to further policy easing to come. The statement says the outlook …
CBRT signals tight policy here to stay The decision by the Turkish central bank (CBRT) to hike its one-week repo rate by 350bp, to 46.00%, formalises the emergency monetary tightening delivered last month and is a strong signal of commitment to a tight …
Strong labour market lessens the need for aggressive cuts With the labour market broadly on solid ground, we expect the RBA to deliver only a shallow easing cycle. The 32,00 rise in employment in March was a touch softer than the 40,000 increase that we …
Interest rates on hold, but BoK to resume easing cycle soon The Bank of Korea today left its main policy rate unchanged at 2.75%, but we think this represents a pause not an end to the easing cycle. The decision was correctly predicted by 24 out of 37 …
Exports will rebound across Q2 While export values fell in March, we expect them to rebound over the coming months as US consumers rush to place orders before the suspension of reciprocal tariffs ends in July. The annual increase in export values slowed …
RBNZ won’t fret the modest uptick in inflation Although headline inflation in Q1 was stronger than it had anticipated, we suspect the RBNZ will take comfort from the fact that measures of core inflation continued to fall towards the mid-point of its 1-3% …
