Dodging large tariffs Governments across Latin America are likely to be breathing sighs of relief following US President Trump’s tariff announcement on Wednesday. Mexico will remain subject to the duties announced through March which contained large …
4th April 2025
Direct hit from Trump tariffs to be limited African economies will, for the most part, be relatively unaffected by US President Trump’s tariff announcement this week, at least directly. But it may cause indirect harm through lower commodity prices. And …
Payrolls brings better news The bumper 228,000 rise in non-farm payrolls in March offers some welcome good news amid the escalating global trade war, showing that the labour market remains healthy despite the drag from DOGE-led federal job cuts. We expect …
Tariffs not entirely to blame for employment fall While US tariffs will be the obvious culprit for the fall in employment in March, two-thirds of the decline was concentrated in the services sector, suggesting that other factors were at play. Nonetheless, …
Asian economies were hit with some of the highest “reciprocal” tariffs by the US. (See Chart 1.) Our initial response is here , and more of our coverage can be found on this page . Chart 1: “Reciprocal” Tariffs Sources : White House, Capital Economics …
China has responded to US tariffs with an additional 34% tariff on all US goods, the most sweeping it has ever imposed. Some US companies have also been added to China’s unreliable entities list and export controls have been expanded. This is an …
President Trump’s decision to hit the EU with a 20% tariff on all imports has roiled European markets – the Euro Stoxx is down more than 7% since the announcement – and pose a growing risk to the global and European economies. Our forecast before the …
With President Trump announcing reciprocal tariffs of 34% and 20% on all US imports from China and the European Union respectively this week, the news that UK goods exports to the US will be subject to the minimum 10% “baseline” tariff from 5 th April …
The aftermath of “Liberation Day” It was notable that most commodities received exemptions from the latest round of US tariffs. Nonetheless, commodity prices have fallen sharply on the back of global growth concerns. See here for our full assessment of …
Near-term hit from tariffs for India won’t be big Our response to the Liberation Day tariff announcements includes analysis of the global macro impact here , the financial market impact here , online briefings that can be viewed on demand here and various …
Rising interest rates and costs weigh on construction activity The headline CIPS construction PMI saw a small rise in March to 46.4, from 44.6 in February. But that still left the balance below 50 and consistent with a contracting construction sector. …
There has been a marked dovish shift on th e Polish National Bank’s (NBP’s) MPC and it now looks like interest rate cuts will come this year , rather than in 2026 as we'd previously thought . But we think this will be another punctuated cycle of interest …
Underlying inflation to remain elevated for the rest of the year Despite easing in March, CPIF inflation excluding energy remained elevated and is likely to remain high throughout this year. We are forecasting the Riksbank to keep its policy rate at 2.25% …
Korea’s Constitutional Court upheld President Yoon’s impeachment today which should ease concerns around Korea’s institutional frameworks. With fresh presidential elections now set to occur soon, there is a chance that fiscal policy will be loosened but …
More policy support may be forthcoming Although the RBA left rates unchanged on Tuesday, it sounded a lot more dovish than it did in February. Indeed, it significantly toned down its concerns about upside inflation risks and the dangers of prematurely …
Tankan consistent with further tightening Compared to other Asian economies, the 24% US tariff on imports from Japan announced this week looks rather modest. Nonetheless, the chances that the Bank of Japan will hike rates in May as we’re forecasting have …
The exemptions granted to many commodities from reciprocal tariffs suggests that the Trump administration is reticent to drive a further wedge between US and international metals prices and/or risk boosting gasoline prices. More generally, against the …
3rd April 2025
Services sector weakens but not a disaster The fall in the ISM services index in March shows that the weakness isn’t isolated to the manufacturing sector. Our weighted average ISM index is consistent with the economy contracting, although it has …
We hosted two online Drop-In sessions on 3 rd April to discuss the fallout from President Trump’s Liberation Day tariff announcement. (See a recording here .) This Update contains answers to some of the questions that we received and links to several more …
Canada has escaped much more lightly than we feared from President Trump’s big announcement, with the import-weighted US tariff likely to be 8% based on current plans and potentially below 5% in the near future. Nonetheless, the much larger tariff rate on …
Gold playing a key role in the slight narrowing of the trade deficit The narrowing of the trade deficit in February was driven by stronger exports, mainly of non-monetary gold, while imports remained at record levels, as businesses continued to rush …
Tariffs knock trade balance back into deficit The large fall in exports in February was to be expected given the (albeit temporary) imposition of tariffs on goods imports into the US that month. While Canada may have gotten off relatively lightly on …
MENA can’t escape Trump’s trade war The Executive Order signed by US President Trump yesterday brought a flat 10% tariff on all countries’ exports to the US with an additional reciprocal rate for some economies. While the Middle East may be less …
We are significantly downgrading our end-2025 forecast for the S&P 500 for two key reasons. The first is yesterday’s announcement of greater tariffs on US imports than we had assumed . In such circumstances, we no longer think the economic backdrop will …
Mexico got off lightly from the tariffs announced by President Trump yesterday and the overall hit to the economy from US trade measures may be a bit smaller than we’d initially thought. Even so, we think growth will be very modest this year, perhaps just …
The pandemic triggered an exodus from large cities in both the UK and US as households used the freedom of remote work to move to cheaper locations with larger homes. In the rental market, that trend has largely reversed, with younger households valuing …
If the 20% US tariff on the EU is sustained it is likely to reduce economic activity in the euro-zone by more than the 0.1-0.2% of GDP we had previously assumed. The impact on inflation should be small but risks to growth and confidence cement the case …
Markets were roiled after Trump announced “Liberation Day” tariffs that were clearly bigger than many (including us) had expected. (Our first thoughts on the economic implications in general are here , and we have already written about the implications …
Softer inflation gives CBRT some breathing space The softer-than-expected Turkish inflation figure for March, of 38.1% y/y, suggests that the sell-off in the lira last month hasn’t exerted significant upwards pressure on consumer prices (yet). And as …
This page has been updated with additional charts and analysis. Inflation steady, but outlook weaker on tariffs Switzerland’s inflation rate was unchanged in March, but that news has been overshadowed by the much higher-than-expected tariffs announced by …
We’d already assumed substantial US tariffs on China in our forecasts. But the latest hikes take them even higher than we had anticipated. The economic hit to China will range between 0.5-1.0% of GDP depending on what happens to the exchange rate. China …
Asian economies will be hit harder than most by US reciprocal tariffs. We were already expecting more rate cuts than the consensus in most countries in the region, but there’s now a risk that central banks in Malaysia and Taiwan may have to start easing …
President Donald Trump’s country-specific reciprocal tariffs turned out to be bigger than expected, with our calculations pointing to an import-weighted average tariff of 15.0%. If, as the Executive Order suggests, the 25% product-specific tariffs already …
2nd April 2025
The easing in house price growth in both February and March suggests momentum in the housing market is waning. What’s more, as we now think the Bank of England will press pause on the interest rate cutting cycle later this year, mortgage rates may fall a …
Our scenarios of how different rates of US tariffs on UK exports could influence the UK are designed to provide clients with some real-time context when President Trump announces tariffs tonight. These are rough rules of thumb for blanket tariffs on all …
Spillovers from the war in Gaza and threats of cuts to foreign assistance from the US have thrown the spotlight onto Jordan’s shaky balance of payments and public finances. For now, we think that the dollar peg will remain intact, and a sovereign default …
Quick action by the Turkish central bank appears to have stemmed pressure in Turkey’s financial markets after the recent sell-off. But the rapid depletion of FX reserves means that policymakers have less scope to act in the event of a renewed spike in …
NBP remains on hold, although case for rate cuts starting to build The National Bank of Poland (NBP) left is policy rate on hold again today, at 5.75%, and while our forecast is for policy settings to remain unchanged throughout 2025, the risks of an …
Note: We'll be discussing how the pandemic continues to shape UK and European real estate markets at 9:00 BST/10:00 CET on Tuesday 8th April. Register here for the 20-minute online briefing. Five years since the onset of the pandemic, the share of remote …
Volatility in the US stock market hasn’t picked up sharply since Donald Trump returned to the White House, despite a very high degree of uncertainty about his economic policies. That may remain the case even after “Liberation Day”, judging by the …
We think Germany is likely to raise defence spending by around 1.5% of GDP between 2024 and 2027. With the government unlikely to cut other spending much and the defence industry well placed to raise output quickly that could add 1.2% to GDP over that …
With demand for LNG unlikely to keep pace with the looming surge in supply over the coming years, a glut of natural gas will weigh heavily on benchmark prices in Asia and Europe. Our forecasts for prices to fall to pre-pandemic levels over our forecast …
We expect the Reserve Bank of New Zealand to cut its Official Cash Rate by 25bp, to 3.5%, at its next meeting on 9 th April. Although activity is now on the mend, spare capacity will ease only gradually, consistent with a sustained decline in …
Although US corporate credit spreads have taken their cue from US equities over the past couple of years, we don't think they will reach new lows even if equities reach new highs. The sell-off in US stocks that started on the 19 th Feb has been …
1st April 2025
The EM manufacturing PMI ticked up in March on the back of a pick-up in China as well as a continued recovery in Central and Eastern Europe. But tariffs present a major headwind to EMs’ industrial sectors, and the surveys already suggest that Mexico’s is …
The latest PMIs suggest that global industry is heading into Q2 on a weaker footing. Meanwhile, price pressures accelerated sharply in the US but generally eased elsewhere. The output component of the global manufacturing PMI fell to 50.5 in March from …
