RBA will tighten policy as soon as February The RBA sounded concerned about upside risks to inflation when it left its policy rate unchanged today and we now believe that its next move will be rate hike. The Bank’s decision to leave the cash rate …
9th December 2025
Poland’s monetary easing cycle has dragged down short-term government bond yields, but unlike in past cycles, long-term yields haven’t come down very far. Even with the policy rate now likely to fall to 3.50% next year, given the backdrop of underlying …
8th December 2025
The readout from today’s Politburo meeting strikes a relatively dovish tone, suggesting that more fiscal support and monetary easing is on the cards next year. The leadership continues to highlight the importance of domestic demand in driving the economy, …
Last week I outlined the key macro themes that are likely to shape the global economy in 2026 . This week I tackle a question that has come up frequently in subsequent client meetings: What are the key risks to our view? Ask an economist about “risks” and …
Level of output weak despite October rebound The rise in German industrial production in October was stronger than expected but it still left output close to a post-pandemic low. And though defence spending appears to be supporting production, this is …
As the final round of G10 central bank policy meetings for the year kicks off, the emerging theme is divergence. That applies to both the immediate policy decisions and, more importantly, to the outlook for 2026. We think the Fed and the BoJ will lean …
Exports to remain resilient next year The tariff cuts agreed under the US-China trade truce didn’t help to lift shipments to the US last month, but overall export growth rebounded nonetheless. We think China’s exports will remain resilient, with the …
Wage growth set to remain strong The Bank of Japan’s preferred measure of wage growth was little changed in October but that won’t prevent the Bank from resuming its tightening cycle next week. According to the preliminary estimate, labour cash earnings …
7th December 2025
Plunge in unemployment rate changes the narrative The risk that the Bank shifts course and begins hiking is one we had not focused on as closely until today’s November Labour Force Survey , which showed another big rise in employment and, more …
5th December 2025
The World in 2026 …
K-shaped manufacturing? Data this week showed manufacturing output was unchanged in September , capping off a weak third-quarter performance. Meanwhile, the November ISM manufacturing index fell by a cumulative 0.9 points over the past two months, …
As the new year approaches, we are highlighting the key themes that we think will set the overarching narrative for global commercial real estate in 2026. We’ve spent the last few weeks talking with clients at a series of in-person events, online …
NBP set for more rate cuts The National Bank of Poland (NBP) cut its policy rate by 25bp this week to 4.00% and we now expect two more 25bp cuts next year. (You can find our initial response to the decision here .) In his post-meeting press conference on …
Household spending driving Brazil’s slowdown The key release out of Brazil this week was Q3 GDP data , which showed that the economy essentially stagnated (GDP was up 0.1% q/q). Household consumption is now very weak, slowing from 5.8% y/y in Q3 last year …
Consumption growth set to slow this quarter The delayed September PCE data showed that monthly core price growth was only marginally above the target-consistent rate, with the annual core inflation rate edging back down to 2.8%. Real consumption was …
Post-shutdown sentiment boost Consumer sentiment ends this year a little stronger thanks to the government reopening and the stock-market rally continuing. This should help keep fourth-quarter consumer spending resilient despite lingering concerns about …
The Financial Times has named 'The Fractured Age' by Group Chief Economist Neil Shearing as one of the top economics books of 2025. Drawing on years of analysis by the Capital Economics team, the book reveals how the deteriorating US-China relationship is …
3rd December 2025
A red future for prices of the red metal? The rally in copper prices this week to an all-time high of around $11,600 per tonne appears to have its roots in rising concerns around the health of supply. Indeed, copper prices have risen by roughly 30% …
Fiscal splurge isn’t on the cards China’s Finance Minister Lan Fo’an’s article on fiscal policy, published in the People’s Daily this week, provided some insights into the leadership’s fiscal priorities ahead of the 15 th Five Year Plan period …
We expect euro-zone GDP growth to remain fairly slow in the coming years. Germany’s fiscal stimulus should provide a temporary and fairly modest boost, and we don’t think it will do much to raise growth elsewhere. Meanwhile, we think inflation will …
The raft of economic data released in South Africa over the past week suggests that the economy will continue to expand at a solid (albeit unspectacular) pace over the course of 2026-27. GDP figures published on Tuesday showed that South Africa’s economy …
The year began amid optimism that Europe was finally prepared to meet its economic potential. But as the end of 2025 approaches, how much has actually changed in the European story of weak growth and political fragmentation? In this special episode of The …
Yet another consensus-beating gain November’s much better-than-expected 53,600 rise in employment marks the third consecutive large consensus-beating gain, confirming that hiring has regained momentum after the initial tariff shock. The even more striking …
While the Chancellor, Rachel Reeves, succeeded in assuaging investors’ nerves after the Budget (see here ), the staunch criticism she is facing for misleading the public and MPs in the run-up to the Budget may mean that the full fallout of the Budget has …
Optimism that the euro-zone economy would gain momentum in second half of this year has been disappointed so far, and we think there will be only a small improvement next year. Data published earlier today show that euro-zone GDP expanded a little faster …
Further, gradual, rupee weakness likely The Indian rupee breached 90/$ for the first time ever this week, breaking through our end-2026 forecast in the process. In total, the rupee is now down by around 5% against the US dollar this year, making it one of …
Floods – limited impact on inflation and GDP Tropical storms have caused major disruption across large parts of South East Asia and have dominated headlines in recent days. Even so, they should have little bearing on the upcoming monetary policy meetings …
Copper’s supply crunch masks weakening demand The rally in copper, which has driven prices to all-time nominal highs, has its roots in supply concerns, which are likely to persist into 2026. But we remain of the view that weakening demand growth from …
The Reserve Bank of India (RBI) today resumed its easing cycle and struck a fairly dovish tone. With inflation set to stay well-below target and growth set to ease over the coming quarters, we remain comfortable with our non-consensus view that the RBI …
Will the AI bubble continue to inflate? How will US-China tensions shape trade flows? Will a new Fed chair lead to much lower US rates? We’ll be highlighting what we expect to be the key drivers of macro and markets in the coming year in online Drop-In …
RBI resumes easing cycle, further loosening likely next year The Reserve Bank of India (RBI) today resumed its easing cycle and struck a fairly dovish tone. With inflation set to remain subdued and growth set to ease over the coming quarters, we remain …
Yields surge as Ueda signals December rate hike Governor Ueda pledged in a speech on Monday that the Bank of Japan will debate a rate hike at its meeting in a couple of weeks. And with the usual press leaks on Thursday confirming that the Bank will …
The market reaction to the apparent ends of the Australian and New Zealand easing cycles could provide a blueprint for how Treasuries and the US dollar will behave as the Fed winds up its own. At the time of writing, the US dollar was on the front foot, …
Too hot to handle? While the 0.4% q/q rise in Q3 real GDP was a touch softer than the RBA had predicted, the data are unlikely to give the Board any confidence that capacity pressures are under control. The softness in output last quarter primarily …
Overview – Latin America’s GDP growth is likely to slow a little in 2026 and, with inflation softening, monetary easing is likely to continue. The scale of rate cuts will vary across countries, with a large cycle to come in Brazil and limited cuts in …
4th December 2025
The US stock market has rebounded close to its all-time high but is struggling to regain the ground it lost to equities elsewhere over the past year. While that was arguably a bad sign in the dotcom bubble, we think that a pick-up in big-tech sectors will …
Overview – Below-trend economic growth and high interest rates will continue to weigh on all-property total returns, which we think will average just 5.5% p.a. over 2026-30. Of the major sectors, we think retail is best placed to outperform thanks to a …
Inflation undershot the SNB’s forecast and fell to zero in November, but we think officials are unlikely to respond by lowering the policy rate next week. By June next year, however, we think that inflation will have been stuck close to zero for many …
PMIs: Egypt’s recovery kicks on The region’s PMI surveys for November were, with the exception of Saudi, stronger and Egypt’s reading hit a five-year high as the benefits of last year’s policy shift are being realised. Of the Gulf states, Saudi Arabia’s …
Overview – The Middle East and North Africa is set to record its fastest pace of GDP growth (outside the post-pandemic recovery) since 2011 next year. Continued oil output hikes and the switch on of Qatar’s North Field will boost the Gulf economies, …
Economy slows further, easing cycle approaching The further slowdown in Brazil’s GDP growth in Q3, to 0.1% q/q, was driven by weakness in household consumption. We expect the economy to slow further in 2026 and with inflation set to continue falling, we …
Labour market conditions have weakened across much of the emerging world over recent months and wage growth is, on average, back in line with pre-pandemic rates. But there are wide regional variations. In Asia, wage growth remains soft. In Latin America …
Household spending will remain subdued The unchanged retail sales volumes in October show that households remain reluctant to spend despite the fact real incomes have been rising. We expect consumption to rise only slowly in the coming quarters October’s …
Construction activity at five-year low The headline CIPS construction PMI fell for the second consecutive month to a new post-pandemic low of 39.4 in November. The drop was broad-based across the sectors, with the housing balance seeing a particularly …
