Filtered by Subscriptions: Global Economics Use setting Global Economics
While we still think that negotiations will win out over all-out trade war, the risks of a damaging trade conflict breaking out between the US and China have risen. If the latest US-proposed tariffs on an additional $100bn worth of Chinese exports were …
6th April 2018
The weakness of some recent economic data and business surveys has raised concerns that the global expansion is running out of steam. But we estimate that world GDP growth picked up a bit in the first quarter, closing the gap with overly-positive survey …
Growth of almost all monetary aggregates slowed in major advanced economies in February, but we are not worried for three reasons. First, money growth has only slowed a bit. Second, changes in money growth tend to lag, not lead, changes in real activity. …
4th April 2018
Markit’s global manufacturing PMI fell by the most in two years in March, providing further evidence that global growth has passed its peak. Nonetheless, the PMI remains at a high level and we think that the world economy will still expand by a decent 3½% …
3rd April 2018
The recent weakness of some economic data, business surveys and equity markets has raised fears that the global expansion is now fizzling out. We think that China will slow later this year and the US is likely to do so next year. But we do not see …
29th March 2018
We expect the Fed to raise interest rates three more times this year, and twice in 2019, but we think it will then begin to loosen policy in 2020. Other than the Bank of England, most major central banks will lag a long way behind the Fed in raising rates …
28th March 2018
An analysis of all the recessions which have occurred in G7 economies since 1960 throws up two main conclusions. First, while most had multiple triggers, monetary policy tightening was usually one of them. And second, the most common underlying causes of …
27th March 2018
As expected, on Friday the EU Council endorsed a transition period and the opening up of a new strand of negotiations on the future relationship. But unless the UK can come up with a solution to the Northern Ireland border issue, under the terms of the …
23rd March 2018
On the same day the US and China exchanged fire in what is potentially the beginning of a trade war, data published by the CPB Netherlands Bureau show that world trade made a great start to 2018. And leading indicators point to world trade volumes …
The economic impact of the tariffs which have been announced by the Trump administration will be small, even if they are implemented in full, and we suspect that any retaliation will be moderate. But fears that the rest of Trump’s presidency will be …
Preliminary PMIs, published by Markit today, slipped at the end of the first quarter. But they still support our view that GDP in advanced economies will expand by a decent 2½% or so this year. … Flash PMIs …
22nd March 2018
The US Fed’s decision to increase rates by 25bp yesterday and to raise its projection of future rate hikes has limited implications for the rest of the world. Other than the Bank of England, most major central banks will be well behind the Fed in raising …
The Fed’s decision to raise interest rates by 25bp today was widely expected but some investors may have been caught off-guard by the degree to which Fed officials increased their projections for future interest rate hikes. The median forecast for the fed …
21st March 2018
Finance ministers from the G20 are not going to resolve the differences between the US and most other members of the group on trade policy this week. They may, however, make a commitment to reduce excess steel capacity and bilateral imbalances, which …
19th March 2018
Commodity prices tend to go through extended boom and bust periods, sometimes known as super-cycles. The presence of super-cycles in commodity prices matters for a number of reasons but most importantly they can help to determine the long-term prospects …
16th March 2018
We expect the inflation rate in the G7 economies to average less than 2% this year and next. This is partly because average earnings growth has remained weaker than might have been expected given the recent increase in employment, and also because there …
14th March 2018
A sweeping overhaul of the structure of China’s government unveiled at the National People’s Congress today could improve financial regulation, reduce red tape for business, and boost productivity in agriculture, if implemented well. But the changes also …
13th March 2018
The Trump fiscal stimulus, which has turned out to be larger than seemed likely a few months ago, should boost economic growth in the US a little, and encourage the Fed to press on with six rate hikes between now and mid-2019. But at a global level, any …
9th March 2018
It looks increasingly likely that President Trump’s plan to impose tariffs on imports of steel and aluminium on grounds of national security will be implemented in some form. If so, other governments including the European Union, will respond with …
7th March 2018
Markit’s PMIs have recently pointed to faster economic growth than the official data show, once again raising questions about their accuracy. However, even if they are currently over-stating growth a bit, we think they are still the most accurate timely …
6th March 2018
The lengthy political uncertainty that seems likely to follow Italy’s election is unlikely on its own to do much economic damage. But we suspect that the prospect of looser fiscal policy, higher debt, and the possibility that the Five Star Movement once …
5th March 2018
President Trump’s plan to raise tariffs on US imports of steel and aluminium does not pose an immediate threat to the world economy. Together they account for only a small share of world trade, and we suspect that any retaliation from key trade partners …
The steel and aluminium import tariffs announced by the US yesterday are unlikely to have a major impact on emerging economies but fears that they might presage a broader shift towards protectionism have nonetheless rattled EM markets today. With this in …
2nd March 2018
Steel and aluminium account for about 2% of world trade, so the direct impact on the global economy of the tariffs President Trump announced yesterday would be minimal. But the fact that they are being justified under a flimsy pretext of national security …
Markit’s global manufacturing PMI once again held up close to a seven-year high in February, which sits well with our view that 2018 will be another strong year for global growth. … Global Manufacturing PMI …
1st March 2018
Central banks in the major advanced economies are now moving in the same direction, but they are doing so at very different speeds. The Fed is tightening policy in earnest, with six rate hikes likely by mid-2019, and we expect the Bank of England to raise …
27th February 2018
The “Canada plus, plus, plus” deal, including single market participation for some sectors, which UK Cabinet ministers reportedly agreed to this week is unlikely to be accepted by the EU in its current form. … Cabinet consensus won’t unlock …
23rd February 2018
Global trade volumes grew by 4.5% in 2017 as a whole – the fastest rate of annual growth in five years, and faster than the 3.7% expansion in global GDP. Encouragingly, the signs are that world trade growth has held up well at the start of 2018. … World …
Some economists have been considering whether, having been stubbornly low for years, wage inflation may take off as the world reaches full employment. This Update considers why this might occur. … Could the Phillips Curve be …
Preliminary PMIs point to continued strong growth in advanced economies in February and are consistent with our view that the world economy will expand at a decent pace this year. … Flash PMIs …
21st February 2018
The resignation of embattled South African President Jacob Zuma last night has provided a boost to local markets. His successor inherits an economy that is already well into a cyclical upswing. Over the longer-term, we think that the prospects for a big …
15th February 2018
The sell-off in financial markets, which was triggered by a reassessment of the outlook for US inflation and interest rates, has meant that government bond yields have jumped. But these recent moves are not yet a major cause for concern. Monetary …
One explanation for the recent slump in equity and bond prices is that investors have become concerned that inflation is about to take off, forcing central bankers to tighten policy more rapidly than previously expected. However, we doubt that inflation …
13th February 2018
This week saw negotiations resume for the first time since the EU Council agreed in December that talks could move on to a possible transition period. However, UK Government objections to some of the terms offered by the EU for the transition period mean …
9th February 2018
Notwithstanding the recent turbulence in equity markets, global economic growth should hold up well and inflation remain low this year. But next year, some of the shine will come off this strong performance as China loses momentum and the US expansion …
The slump in equity markets would have to go a lot further to cause economic growth to slow significantly. That may yet happen, but for now prospects for global growth still look fairly bright. … How will the market moves affect the …
6th February 2018
Falling global bond and equity prices in the past few days reflect upward revisions to expectations for inflation and US interest rates, rather than any concern that global growth is faltering. In the near term, equity markets may well recover their …
5th February 2018
Markit’s global manufacturing PMI stayed closed to a seven-year high in January, suggesting that the momentum of the world economy carried over into the New Year. … Global Manufacturing PMI …
1st February 2018
Contrary to suggestions that the ECB and Bank of Japan are gearing up to tighten monetary policy sooner than expected, we think they will be happy to trail a long way behind the Fed and Bank of England. Indeed, the case for the Fed to raise rates four …
EMs in Latin America and Emerging Asia have benefitted most from China’s recovery over the past 18 months. These economies therefore have the most to lose if China begins to weaken again, although the modest slowdown we expect this year is unlikely to …
31st January 2018
National accounts data published in the past few days confirm that the world economy maintained its momentum in Q4 last year, and all the signs are that it has started 2018 on a strong note. We expect this to be maintained for most of this year, but think …
30th January 2018
It will surely come as no surprise if President Donald Trump delivers another protectionist speech at Davos tomorrow. But his actions may continue to fall a long way short of his rhetoric. In any case, for now all the indicators suggest that world trade …
25th January 2018
The preliminary business surveys for January, published by Markit today, suggest that economic growth in advanced economies may have gained even more momentum at the beginning of the year. … Flash PMIs …
24th January 2018
Even though Bitcoin is almost certainly a bubble, the blockchain technology underpinning it has much greater potential. That said, claims that it will be “the next internet” may be overdoing it. … Will blockchain live up to its …
23rd January 2018
We broadly agree with the forecasts for global growth in 2018 which the IMF published today. But we think it is being over-optimistic about both global and US economic growth next year. … IMF forecasts too optimistic (as …
22nd January 2018
It is still possible that Congress will reach a late deal to avoid a partial government shutdown beginning this weekend, but the chances of agreement seem to be slipping away. … A primer on Federal government …
19th January 2018
