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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
We expect 2018 to be another year of fairly strong economic growth, led by household consumption and business investment in advanced economies. Inflation will remain subdued, other than in the US where we think it will rise above the target by year-end. …
Claims that cryptocurrencies will replace established fiat currencies are rubbish; our view is that Bitcoin is a bubble. Indeed, the latest price falls suggest that the bubble is bursting – although with prices still ten times higher than a year ago, they …
17th January 2018
We expect oil prices to fall back from their three-year high in the coming months due to increasing supply. But even if prices stayed around $70pb, they would not endanger the global economy. The resulting rise in inflation would be small and short-lived, …
12th January 2018
Monetary conditions should stay accommodative this year, even though the ECB has scaled back its asset purchases this month and the Fed will continue to gradually reduce its balance sheet. Bank lending is also likely to keep growing steadily. … Bank …
11th January 2018
While the global economy is set to grow strongly again in 2018, the recovery is likely to de-synchronise somewhat as China slows before the US, and Europe remains strong. This could have important implications for both policymakers and financial markets. …
10th January 2018
We estimate that household spending growth in the world’s major economies picked up from 3.1% in 2016 to 3.7% in 2017. In 2018, it is likely to grow at a similarly decent pace to last year, as real disposable incomes recover, consumers remain upbeat and …
9th January 2018
Global activity indicators suggest that the world economy ended 2017 on a very strong note. We expect this strength to continue in the near term, helped by a steady rise in employment and supportive policies. The soon-to-be-finalised fiscal stimulus in …
5th January 2018
Markit’s global manufacturing PMI rose to a near seven-year high in December, adding to evidence that the world economy ended 2017 in very good shape. We expect 2018 to be another year of strong growth. … Global Manufacturing PMI …
2nd January 2018
We expect 2018 to be another year of strong global growth, helped by a steady rise in employment and supportive policies, including a small fiscal stimulus in the US. In most advanced economies core inflation will rise too slowly to reach the targets. …
21st December 2017
There are reasons why the US Federal Reserve should be further along the path to policy normalisation than other major central banks. But there are also reasons why they should not lag too far behind. … Should other central banks follow the …
19th December 2017
Many advanced economies are close to full employment, but this is likely to lead to only a small increase in price pressures. We expect the core inflation rate to edge up in the euro-zone, Japan and US next year. And if oil prices drop back, as we expect, …
15th December 2017
Preliminary business surveys for December, which were published today, indicate that advanced economies in aggregate ended 2017 growing at a heady pace of around 4% annualised. They also suggest that the euro-zone will begin the New Year as the most …
14th December 2017
There are many reasons to think that inflation targeting has had its day. The framework has already evolved to some extent, with central banks adopting “flexible” inflation-targeting and macroprudential tools. But arguably this flexibility does not go far …
13th December 2017
Consumer confidence has surged to its highest level since 2000 in advanced economies but consumption growth has not picked up. We think this is largely due to weak real wage growth. As tight labour markets feed through to slightly higher pay growth in …
11th December 2017
Unlike the bubbles in the tech sector in the late-1990s and in US residential property a few years later, a bursting of the bitcoin bubble should not have systemic, macroeconomic implications. The total value of bitcoin is (still) too small, and it has …
8th December 2017
Provided that they follow the blue-print set out by the US Fed, the world’s major central banks should be able to scale back their balance sheets over the coming years without huge adverse economic consequences. The key is for them to do so slowly, …
7th December 2017
The world economy has continued to experience fairly rapid growth. Manufacturing output and global trade have picked up, and the latest business surveys and measures of consumer confidence have remained strong. The economic expansion is broad-based, with …
6th December 2017
Monetary and credit conditions remain supportive and should continue to be so, even though the stock of assets purchased under global QE programmes should peak in the coming years. … Credit growing at a healthy …
4th December 2017
There has been no let-up in the fast pace of global growth in November. Manufacturing PMIs remained strong and/or increased almost everywhere and the global index is at its highest level since March 2011. … Global Manufacturing PMI …
1st December 2017
Despite the fact that core inflation in advanced economies has generally remained very low, policymakers are committed to reducing policy support and/or raising interest rates next year. Fed officials have strongly hinted that they will raise interest …
28th November 2017
