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We expect 2011 to be a year of generally disappointing growth and fading fears of inflation in the developed economies. The performance of emerging markets is likely to be more mixed this year than last, but in general the outlook for these economies …
21st January 2011
The Fed's QE2 programme of Treasury purchases is yet to have any impact on the broader monetary aggregates, let alone price inflation. The annual growth rate of our Capital Economics' measure of M3 remains in negative territory, while the growth rate of …
17th January 2011
The upward pressure on inflation this year from the recent surge in the cost of agricultural commodities will be much greater than that from the pick-up in oil prices. Fortunately from this perspective, neither is likely to be sustained. The second round …
5th January 2011
The recent surge in the prices of agricultural commodities will put upward pressure on inflation well into 2011. But inflation in most major economies still looks set to peak some way below the levels seen in 2008, with reasons just as good now as then to …
23rd December 2010
We expect growth in emerging economies to stay strong in 2011 and, generally speaking, the major challenge facing policymakers will be to ensure that inflation remains contained and that capital inflows do not threaten financial stability. This will bring …
22nd December 2010
The additional fiscal stimulus in the US and the ongoing credit boom in China have improved the near-term prospects for the global economy, but they do nothing to resolve the underlying imbalances that threaten the sustainability of the recovery. World …
We do not believe there is a bubble in government bonds. Bubbles are more likely to develop in emerging markets but are not yet widespread. Instead, our greatest concern is the high levels of commodity prices, particularly industrial metals and …
9th December 2010
One of the biggest risks facing the world economy is a lurch towards protectionism, culminating in a trade war between the US and China that would threaten to spill over to other countries. We expect pressure to build over the next couple of years. But if …
6th December 2010
A run of improving data from the US, Europe and Emerging Asia (especially China) has raised hopes that global growth is accelerating again after a temporary slowdown over the summer. Earlier fears of an imminent double-dip have certainly dissipated. …
2nd December 2010
The Chinese economy appears to be heading for a soft landing, but any support for global commodity prices is likely to be short-lived. … Limited help for commodities from …
25th November 2010
The markets have swung too far from worrying about deflation towards worrying about inflation. To be sure, inflation will be higher than otherwise over the next few months as a result of the recent surge in global commodity prices. Tax increases will also …
17th November 2010
The G20 Summit was always likely to be an exercise in damage limitation and in that respect it successfully papered over the many cracks between the positions of participants, at least for a few hours. The statement certainly addressed all the markets’ …
12th November 2010
Asset prices of all types have surged following the announcement of additional QE from the US Fed, raising concerns about bubbles. The focus of these concerns has typically been on financial markets in the developing world. But we suspect that the first …
10th November 2010
Emerging market economies will continue to grow rapidly over the next few years. But with current account surpluses in most of Asia and among oil producers likely to remain high, this will not be of much benefit to the developed world. What’s more, while …
8th November 2010
The G20 Summit in Korea next week (11th – 12th) will be overshadowed by the fall-out from “currency wars”, hampering any attempt at the improved coordination of policies necessary to help rebalance the global economy. In particular, the US will find it …
5th November 2010
The latest CPB Trade Monitor shows global trade picked up in August, but that the pace of recovery has already slowed sharply this year. We believe trade growth will ease further in coming months and that it will stay on a weaker track in coming years. …
27th October 2010
The initially strong rebound in the world economy is fading as structural weaknesses come to the fore again. Many countries, particularly in the West, need to reduce debt. But others with stronger fiscal and external positions are unable or unwilling to …
22nd October 2010
Last night Brazil’s Finance Minister reportedly warned of a global “currency war”. We think direct currency intervention by policymakers in the major western developed economies at least is very unlikely. But we continue to believe that the risk of global …
28th September 2010
A rebound in some commodity prices and stabilisation of core inflation rates suggest that the immediate risk of deflation has diminished, but in fact it remains a significant threat in just about every major economy. Economic momentum is fading in much of …
6th September 2010
Rising food prices will put some further upward pressure on headline inflation in the US and Europe, but the impact should be smaller than during the 2007/08 shock, and just as temporary. The picture is very different in much of Asia, where the prices of …
25th August 2010
This report is only available as a PDF. Click to download. … World growth to continue to disappoint …
24th August 2010
The latest CPB Trade Monitor shows that global trade rose in May. We expect the pace of recovery to slow sharply later this year and in 2011 as the world economic upswing loses momentum. In addition, tighter bank regulation could hit trade finance while …
27th July 2010
This report is only available as a PDF. Click to download. … Is the world heading for a double-dip? …
19th July 2010
The world economy is predictably starting to slow as the fading of the policy stimulus again exposes the underlying fragilities left by the recession. … Shifting into a lower gear (Q3 …
16th July 2010
The latest CPB Trade Monitor shows that global trade fell back in April, albeit after a large gain in March. We expect the pace of recovery to slow more markedly later this year and in 2011 as the global economy loses more momentum. This could well mean …
25th June 2010
The latest CPB data suggest that global merchandise trade climbed at a fast pace in March. We have recently upgraded our global GDP forecasts and accordingly have lifted our world trade projections too. Nonetheless, the expansion of world trade still …
2nd June 2010
The Bank of Canada raised its key overnight rate by 0.25% today, to 0.50%, making Canada the first G7 country to see a rate hike. However, the tone of the accompanying statement suggests that this is not necessarily the first step on a long march towards …
1st June 2010
Despite the turmoil in financial markets, the near-term outlook for the world economy is brighter than a few months ago. Nonetheless, a seemingly impressive rebound in 2010 is likely to give way to renewed weakness from 2011 as the reversal of fiscal …
26th May 2010
Tomorrow’s general election will mark the beginning of a new and difficult phase for the UK economy. Get ready for the Great Squeeze. … UK election ushers in the Great …
5th May 2010
This report is only available as a PDF. Click to download. … Is Greece the next Lehmans? …
28th April 2010
Global merchandise trade climbed again in February. The improvement should continue but world trade growth will probably slow next year. … World trade still on the …
27th April 2010
Global manufacturing may be rebounding but the recovery in the wider economy is far from secure. The full disinflationary impact of the recession has yet to be felt and major central banks may still have to ease policy further. At the very least, interest …
26th April 2010
The Bank of Canada (BoC) this morning signalled clearly that it will begin hiking its key overnight interest rate at the next policy meeting in early June. We expect that rate to climb from 0.25% now to 1% by year-end, even as the Fed leaves US rates at …
20th April 2010
Immediate fears of deflation have eased as the global economy has begun to recover. But looking beyond the headlines, underlying price pressures remain subdued and are likely to fall further. The full disinflationary effects of the recession are only just …
9th April 2010
The result of the UK general election could have short-term effects on sterling asset markets, but it won’t transform the economic outlook. Whatever the outcome, the next five years will be characterised by a painful fiscal squeeze, sluggish economic …
6th April 2010
Today’s CPB Trade Monitor shows that global trade slipped back in January. The weakness should be short-lived but the recovery from now on will be slow and a hard slog. We believe that GDP growth in the major economies will disappoint in 2010-2011. …
25th March 2010
This report is only available as a PDF. Click to download. … Is the world heading for the wrong sort of bank levy? …
22nd March 2010
This report is only available as a PDF. Click to download. … How worried should we be about tightening in China? …
11th March 2010
The recent recovery in GDP in the major economies has typically been flattered by the boost from the inventory cycle and, in some cases, a rebound in net exports. Stripping out these factors, “final sales to domestic purchasers” are picking up in Canada, …
1st March 2010
Today’s CPB Trade Monitor shows that global trade grew rapidly in December. Asia is driving the upturn and will continue to lead the way in 2010 and 2011. But the big improvement in world trade has come through now and, with GDP growth in the world’s …
This report is only available as a PDF. Click to download. … Is Japan the next Greece? …
22nd February 2010
This report is only available as a PDF. Click to download. … Sectoral divergence reinforces doubts about the recovery …
4th February 2010
This report is only available as a PDF. Click to download. … G7 out in the cold …
3rd February 2010
Today’s CPB Trade Monitor shows that the recovery in global trade continued at a rapid pace in November. Strong near-term GDP gains should continue to support trade, but as the world economy slows later this year and going into 2011, world trade is likely …
27th January 2010
The recession has ended in most countries in the narrow sense that GDP is picking up again. But this is still a “feel bad” recovery, where consumers are unwilling to contribute as much as they would usually do, even if they are able. Indeed, the recovery …
21st January 2010
Today’s CPB Trade Monitor shows that global trade continues to recover, although the gain in October was inevitably less spectacular than the surge in September. We expect that world trade will continue to improve but the rebound phase following the …
24th December 2009
Worries about asset price bubbles, and the inflationary threat they might pose, are at best premature and at worst plain wrong. When thinking about the outlook for inflation we would continue to give far more weight to real world factors, notably the …
The financial markets seem confident that the West can avoid the prolonged period of economic stagnation and price deflation that took hold of Japan in the 1990s. Looking back again at the Japanese experience, we are not so sure. … A fresh look at the …
22nd December 2009
Emerging markets have, on the whole, weathered the crisis in the global economy well. But 2010 will bring a fresh set of challenges. Overall, we think Asia is best placed to prosper, followed by Latin America and Brazil in particular. There are some …
11th December 2009
