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October’s batch of flash PMIs supports our view that divergences have emerged in advanced economies, both between sectors and between countries. With Europe dealing with second waves of infections and a new round of restrictions, their recoveries are set …
23rd October 2020
Global Overview – The world economy has clawed back about 60% of the output lost in the first half of the year, but recoveries in most parts of the world have already slowed. Prospects now vary according to success in controlling the virus and the policy …
22nd October 2020
While there has been some good news on virus numbers in India and Latin America, Europe and parts of the US are grappling with a big resurgence in infections. Restrictions have already been tightened in several European countries, and more measures are …
19th October 2020
On the face of it, the rebound in retail sales in advanced economies suggests that the consumer sector is leading a V-shaped economic recovery. But other types of spending, including on consumer services, has been far weaker, and the import-intensity of …
16th October 2020
The state has taken on a much greater role in G7 countries during the pandemic and there is no guarantee that it will relinquish all its new powers when the coronavirus threat fades. The pandemic could accelerate the backlash against capitalism that had …
13th October 2020
While retail sales have rebounded rapidly and are now above pre-virus levels in most major DMs, overall consumer spending has failed to reach the levels seen at the end of last year. (See Chart 1.) That is largely because many of the consumer services …
12th October 2020
The latest data have revealed a marked divergence in inflation among advanced economies, with the core rate rising in the US but falling in the euro-zone and the UK. This largely relates to temporary factors, particularly the impact of government policies …
7th October 2020
With the US election result likely to have limited near-term implications for world GDP, the main issue for the global economy is how it affects US trade policy. Joe Biden would take a less aggressive approach, but he would not prevent a further …
5th October 2020
The output breakdown of Q2 GDP showed that virus containment measures hit the hospitality, recreation, and transport sectors hardest, while financial services were relatively unaffected. The more targeted nature of second wave restrictions suggests that …
2nd October 2020
Today’s batch of manufacturing PMIs suggest that production continued to rebound in September, albeit at a slower pace than earlier in the quarter. The big picture, though, is that the state of the recovery in manufacturing is unlikely to be a good guide …
1st October 2020
The immediate costs of the COVID crisis will be shouldered more by governments than the private sector. However, as fiscal support recedes in the coming years, a greater share of the costs will be borne by households and firms, and ultimately by their …
30th September 2020
At its trough, in May, world trade fell 17% below its December 2019 level. Data released today show that, by July, world trade had made up two thirds of the lost ground, standing at 6.6% below its December peak. Given the encouraging signs from the timely …
25th September 2020
The experience from second virus waves in Australia, New Zealand and Japan is that consumer spending falls even if governments don’t impose major restrictions. However, there are three key reasons why second waves may be less damaging to economic activity …
September’s weak batch of flash PMIs suggest that the rebound in activity in DMs seen over the past few months is losing steam, even in the countries where virus numbers are falling. The risk now is that renewed containment measures in the UK and the …
23rd September 2020
Global supply chains have functioned well this year despite the disruption of social distancing and lockdowns, and people in many places appear more appreciative of migrants. But the pandemic is widening the rift between China and the rest of the world. …
22nd September 2020
The fact that most governments were caught on the backfoot in the early stages of the pandemic meant that they had little alternative but to respond with widespread lockdowns. Six months on, a combination of a better understanding of the virus and …
Table of Key Forecasts Overview – The effects of demand weakness should continue to dominate those of supply constraints, leaving underlying inflation subdued in most parts of the world over the next few years. Policy measures including temporary VAT cuts …
21st September 2020
China’s economic rebound has been about as v-shaped as one could reasonably hope for – but it isn’t boosting growth elsewhere. One important point that gets missed in the debate over the likely shape of the post-virus recovery is that different economies …
18th September 2020
The macroeconomic consequences of the Covid-19 pandemic are likely to be very different from those of previous pandemics, largely because of the unprecedented response by governments and central banks. The most important lesson from history is that …
16th September 2020
Inflation has been close to the midpoint of the RBA’s 2-3% inflation target since its launch in the 1990s, but this has come at the expense of soaring house prices and household debt. Australia’s experience underlines that central banks need better tools …
15th September 2020
Our Global Covid Mobility Tracker* has risen in recent weeks, suggesting that the world economy has continued to recover despite rising virus numbers. But the national trackers reveal that renewed containment measures are having adverse effects in Spain …
14th September 2020
Economic activity rose sharply in most economies as lockdowns eased during May and June. But, outside China, GDP is still some way below pre-COVID levels and there are signs that renewed virus fears are already prompting a slowdown. Gains in industrial …
11th September 2020
Although low inflation is likely to be the story over the next couple of years, the huge amount of policy stimulus could push up inflation further ahead. Central banks, in theory, have the tools to nip any rise in the bud. So the bigger risk is if there …
10th September 2020
Other central banks won’t follow the Fed immediately… …but direction of travel is towards greater tolerance of inflation in advanced economies Japan’s experience highlights that some will have more success than others For the past thirty years the …
9th September 2020
August’s rise in the global manufacturing PMI was good news with improvements in economies hit hardest by the virus offering particular relief. But the index points to fairly modest growth and it is somewhat disappointing that the recovery has not gained …
1st September 2020
On the face of it, the rise in core inflation in several advanced economies in July seems to challenge the idea that lower demand will dominate lower supply in the tug of war over consumer prices. But we continue to think that spare capacity will keep a …
28th August 2020
The record monthly rise in global trade volumes in June was little surprise given both the size of the falls earlier in the year and that, by this point, most countries were past the worst of their lockdowns. While we think that the jump in June marks the …
26th August 2020
At first sight, the latest batch of flash PMIs suggests that recoveries in advanced economies are heading in different directions. However, this has a lot to do with individual economies being in different stages of fighting the virus and easing …
21st August 2020
In the advanced economies, the post-lockdown rebound in retail sales has been considerably faster than that in industrial production. But in China, the opposite has been true. This partly reflects the differing focus of policy and highlights the role of …
17th August 2020
GDP data for Q2 revealed sharp declines in activity in all major economies except China, driven primarily by slumps in consumer spending. Retail sales data for May and June pointed to an encouragingly sharp rebound, leaving sales above their pre-virus …
13th August 2020
The development of a vaccine would represent a breakthrough in the public health battle against Covid-19, but it would not necessarily transform the immediate economic outlook. President Putin yesterday announced that Russia had become the first country …
12th August 2020
Data for Q2 revealed widespread drops in GDP, but the extent of the damage varied markedly depending on the length and severity of lockdowns. Recoveries since then have followed the same pattern. Looking ahead, Asian economies including China and Korea …
6th August 2020
While high-frequency mobility data should be interpreted with caution, they are now consistent with a marked slowdown in the pace of recovery, dashing hopes of a V-shaped rebound in the world economy. July saw a pronounced acceleration in the spread of …
5th August 2020
While the future of the virus is very uncertain, three things seem clear from recent developments: the pandemic has entered its fifth phase; the Americas are still the global hotspots; and containment measures are more likely to be extended or tightened …
4th August 2020
While the global manufacturing PMI rose again in July, it masked a divergence in the strength of recoveries among major economies. With growing concerns in recent weeks over a resurgence in the virus in many parts of the world, the recovery of global …
3rd August 2020
While the auto sector was hit particularly hard by the virus lockdowns, sales and production now seem to be recovering. In the near term, this bodes well for economies which rely heavily on vehicle production including Germany, Japan and Czechia. However, …
Table of Key Forecasts Global Overview – The initial rapid pick-up in economic activity has offered encouragement after an almost unprecedented recession. But households and firms will remain in cautious mode, preventing a full V-shaped recovery. And …
27th July 2020
Data from the CPB Netherlands Bureau showed a further fall in world trade in May. Admittedly, the decline in trade so far this year has been smaller than the collapse in GDP might have led us to fear and timelier data are consistent with an improvement in …
24th July 2020
Jumps in the European PMIs and further increases elsewhere were another sign that activity in advanced economies continued to improve in July. However, the pace of the recovery is now likely to ease. We estimate that the developed markets composite PMI …
There has been an encouraging rebound in retail sales across advanced economies as lockdowns have eased, driven by a pick-up in sales of discretionary items such as clothing and furniture and a shift towards online sales. While the recovery should …
16th July 2020
In general, our Covid Recovery Trackers continued to improve at the end of Q2 and in the first ten days of July. Things are even looking up a bit in Latin America. But the US recovery risks going into reverse. Our global average tracker maintained its …
14th July 2020
On the face of it, history doesn’t offer much reassurance that the world economy will be able to return to the path it would have been on had it not been for COVID-19. Indeed, looking back at all the downturns that have taken place in the OECD since 1965, …
13th July 2020
Hard data for May generally revealed sharp improvements in activity, particularly retail spending, albeit not to pre-virus levels. This led us to revise our forecasts for several economies including the US, UK and euro-zone, where we now expect falls in …
9th July 2020
Renewed coronavirus outbreaks in some parts of the world have not caused us to rip up our economic forecasts. The initial stages of the recovery have been faster than we feared and we had always assumed that a limited recurrence of the virus would cause …
7th July 2020
Our Recovery Trackers suggest that activity generally continued to rebound heading into Q3. But higher infections seem to have taken a toll in some US states, while Latam is the weakest link in the global recovery. Our proprietary Covid Recovery Trackers …
2nd July 2020
Uptake of central bank lending facilities has been mixed But lending is reaching firms, either through governments or central banks… … and central bank backstops are offering important reassurance to investors This month has seen a further shift among the …
With lockdowns continuing to ease across the globe, it was of little surprise that the manufacturing PMIs rose in June. While the PMIs are still considerably below their pre-crisis levels, they have rebounded more swiftly than they did during the …
1st July 2020
It is by no means inevitable that the coronavirus crisis puts a big permanent hole in the supply capacity of economies (i.e. their ability to produce goods and services). With the right government policies, many economies should be able more or less to …
29th June 2020
April’s world trade data confirmed that coronavirus restrictions have taken a very heavy toll on trade flows. But the damage has been slightly less severe than we had feared and more timely data from early-reporting economies offer hope that the worst is …
25th June 2020
Table of Key Forecasts Overview – Over the next few months, inflation will be dominated by oil price effects as the previous slump unwinds and headline rates rise from their current lows. Some components of core inflation, such as airfares and …
