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Coronavirus fears have resurged, with some restrictions being reimposed in Europe. So far, the hit to activity seems fairly modest, but it will be enough to see economic recoveries in the euro-zone and parts of emerging Europe slow in Q4. And restrictions …
8th December 2021
One possible upside of the current labour market shortages in developed economies is that they could push firms towards expanding output by raising investment and productivity instead of relying on cheap labour. However, any gains in productivity may not …
2nd December 2021
November’s manufacturing PMIs suggest that global industrial production has continued to expand, albeit at a slower pace than earlier this year. There are tentative signs that supply disruptions may be easing, but from a very strained starting point, and …
1st December 2021
If Omicron turns out to be malign enough to prompt tighter restrictions, we suspect that the net result would initially be for inflation to be lower than otherwise. But by worsening product and potentially labour shortages, restrictions on household …
It goes without saying that it’s still too early to say exactly how big a threat the new Omicron variant poses to the global economy. We’ll have more to say as the picture becomes clearer, but in the first instance there are three points worth making. …
26th November 2021
World trade has continued to edge down from its high peak in March, as supply shortages have meant that Asian exporters remain unable to keep up with strong demand from consumers in advanced economies. Even when demand does eventually abate, large …
25th November 2021
The Flash PMIs for November showed that although there are tentative signs that supply shortages are easing slightly, labour and product shortages are still weighing on recoveries in advanced economies. At the same time, the surveys point to record gains …
23rd November 2021
With the Turkish lira down by 9% so far today and 20% over the past week, the currency is now firmly in crisis territory. Higher inflation and tighter domestic financial conditions are likely to sap Turkey’s recovery. But given the small trade and …
The slump in auto production related to supply chain disruptions has dragged down the pace of the global recovery this year. And while there have been some indications that supply of auto parts is starting to pick up again, meaning there is scope for an …
19th November 2021
Rising virus numbers have caused containment measures to be reimposed in Emerging Europe and now seem to be harming consumer activity in the euro-zone. There is a strong risk of further restrictions over the winter in several economies, but in most cases …
17th November 2021
Recent indicators confirm that the global recovery has continued, but also that it has entered a slower and more difficult phase. US GDP growth slowed sharply in Q3, and our China Activity Proxy suggests that there was a large contraction there. (See …
11th November 2021
While inflation will stay well above target in both the US and Germany in the months ahead, the detail of the latest inflation prints seems to confirm that price pressures are likely to be much more persistent in the US. Crucially, rents are becoming a …
With household saving rates still elevated in most developed economies, “excess savings” have continued to rise. If people were to run down these savings, this would breathe new life into consumer recoveries. Households’ saving rates (showing the …
9th November 2021
The raft of Q3 data that have been released so far have been the proverbial mixed bag with some countries (e.g. France) reporting surprisingly strong growth and others (e.g. the US) surprising on the downside. However, the big picture that emerges is that …
3rd November 2021
The October manufacturing PMIs gave us more of the same – evidence that supply disruptions are getting worse, industrial output growth is weakening, and price pressures are intensifying. This fits with our view that the world economy is in for a period of …
2nd November 2021
We have long been sceptical of the conventional view that inflation expectations have been an important determinant of inflation in advanced economies. At the same time, though, we doubt that expectations are as ‘anchored’ at low levels or at central bank …
1st November 2021
The evidence keeps mounting that world trade is unable to rise any further from its elevated level. And industrial supply and global logistics are likely to continue failing to keep up with demand in the coming months, even as the global recovery slows. …
28th October 2021
Table of Key Forecasts Global Overview – The global recovery will slow in the coming quarters as the initial post-lockdown rebound fades and policy support is reduced. At the same time, supply shortages are likely to persist well into next year, which …
26th October 2021
The flash PMIs for October brought news of an encouraging start to Q4 for services sector activity, alongside yet more evidence that shortages are holding back growth in industry and stoking even stronger price pressures. If it wasn’t clear already, …
22nd October 2021
The recent upward revision to our oil price forecast does little to alter our view that inflation will fall in 2022. Even if oil prices don’t fall as we expect them to and they stay at their current level, energy inflation would drop back next year, …
21st October 2021
The pandemic is still depressing the size of the labour force in many developed countries. This probably reflects a mixture of temporary and permanent factors, so some of it may yet be reversed. But even if the bulk of the reduction in the labour force …
19th October 2021
We think that Indeed job data are useful and timely indicators of labour demand, and we will continue to monitor them in the months ahead. The latest data support the view that labour shortages are rising, and are most acute in the US, Australia, and …
18th October 2021
With shortages of goods and labour still dominating the news, and following our Focus research into global shortages, we have added a new page to the Global Economics Chart Book to monitor their evolution. While the global economy has continued to grow at …
14th October 2021
Global Inflation Watch is our in-depth quarterly guide to how price pressures are developing across advanced and emerging economies. This exclusive publication includes insight into how traditional sources of inflation are contributing to the current …
11th October 2021
It is a year since we published our “ Economies after COVID ” series, so now seems like a good time to pause and take stock of how our predictions about the legacy of the pandemic are shaping up. There is a still a long way to go until the pandemic’s full …
8th October 2021
With supply shortages set to persist for the next 6 to 12 months, the current period of “stagflation-lite” will persist a while longer. But it is likely to remain a pale imitation of the 1970s stagflation episode. Meanwhile, we do not share the pessimism …
7th October 2021
Current supply shortages have been driven by several forces which look set to persist for six to twelve months. They have caused sharp increases in some prices (most notably energy and used cars) and also limited output. Central banks are unlikely to …
6th October 2021
The key message from today’s batch of PMIs for September is that supply constraints are still limiting growth in industry, and there is little to suggest they will ease materially any time soon. So, manufacturers and wholesalers will continue to face …
1st October 2021
Concerns that price pressures will become sustained have prompted a hawkish shift. We have brought forward anticipated rate hikes in the US, UK and some EMs. But we doubt that tightening will go as far as most central banks have implied. There has been a …
29th September 2021
It is an under-statement to say that house prices have weathered the pandemic well; housing markets are positively booming. Yet the drivers of this rise in prices are rather different to those of the pre-2007 housing boom, meaning that we do not seem to …
28th September 2021
While world goods trade fell in July, the signs are that it perked up a bit in August. But stepping back from the month-to-month moves, global trade flows have broadly flattened out at a high level, and we expect this pattern to continue into 2022. With …
27th September 2021
The flash PMIs for September show that the pace of growth slowed across developed economies towards the end of Q3, suggesting that the boost to activity from reopening is fading. But inflationary pressures show no signs of abating, with indicators of …
23rd September 2021
If, contrary to our opinion and the consensus, a collapse of Evergrande ends up having a significant impact on the rest of the world, it will be because it first causes either major financial dislocation within China or a property-led slump in China’s …
22nd September 2021
In this Update , we answer six key questions about the surge in natural gas prices. The key point is that it will keep inflation in DMs and many EMs above central bank targets for a few months longer than we had previously assumed. Governments are already …
21st September 2021
There have been growing signs of a slowdown in the pace of the global recovery in recent months. World industrial production fell in July and retail sales declined in almost all major economies, while the business surveys suggest that activity softened …
20th September 2021
We think that the ‘China’s Lehman moment’ narrative is wide of the mark. On its own, a managed default or even messy collapse of Evergrande would have little global impact beyond some market turbulence. Even if it were the first of many property …
16th September 2021
Our inflation forecasts already incorporate some passthrough of pipeline pressures including higher shipping costs to consumer prices. But given that maritime shipping costs have never surged anywhere near as much as they have done during the past year, …
14th September 2021
Supply shortages may continue to limit growth and put upward pressure on prices for several months to come before a new wave of COVID infections is brought under control, economies reopen, and spending patterns normalise. Shortages have related to both …
9th September 2021
The data released over the northern hemisphere summer break have suggested that economic recoveries in most countries have started to lose some steam. At the same time, while inflation is generally higher now that at the start of the summer, there are …
2nd September 2021
August’s global manufacturing PMIs brought more evidence of a slowdown in the sector. Growth was always going to fall back as activity approached more normal levels, but supply shortages are also playing a role. There is early evidence that the adverse …
1st September 2021
The latest data show that world trade has flattened off at a high level. While timely indicators suggest that trade is unlikely to reaccelerate, it doesn’t look set to weaken much either. Consequently, bottlenecks at ports, and associated delivery delays …
25th August 2021
The flash PMIs for August confirm that growth in developed economies is slowing from a strong pace. This normalisation was always to be expected after the rapid post-pandemic revival, but the renewed rise in virus numbers and staff and materials shortages …
23rd August 2021
Most attention has been concentrated on the transient drivers of higher inflation, but a more sustainable pick-up in rent inflation is also underway in the US. This Update recaps how rents are treated in the CPI data in major advanced economies and …
17th August 2021
Our Mobility Trackers suggest that the Delta variant has had limited impact on economic activity outside parts of Asia. The risk of stricter containment measures will continue to be greater in much of the emerging world than it will be in developed …
13th August 2021
Slowdowns in China and the US should not be taken as evidence that the global recovery is stalling. Admittedly, it is not just some high-profile data from the US and China that have weakened recently. Recoveries in retail sales, industrial output, and …
12th August 2021
If labour earnings growth took a decisive leg up, this would force central banks to rethink how long this year’s bout of higher inflation in advanced economies will last. The challenge is that the headline earnings data are affected by distortions that …
4th August 2021
The main takeaway from today’s batch of manufacturing PMIs is that industrial output growth looks to have peaked. Output indices have generally stopped rising, and new orders indices have come off the boil. Even so, with supply unable to keep up with …
2nd August 2021
Table of Key Forecasts Global Overview – The initial post-pandemic resurgence is nearing its zenith, but strong policy support and limited private sector net debt should allow most economies to grow at a healthy pace over the next two years. The US and …
28th July 2021
Real world goods trade edged down in May, suggesting that the recovery has levelled off. True, this slight fall comes after an impressive rebound since May last year, global trade remains well above its pre-virus level, and trade data are usually …
26th July 2021
The slowdown that we anticipate in China over the next 6-12 months is best viewed as a return to normality following a period of above-trend output. While it will be a headwind to growth in some industrial commodity producers, we do not think it will …
23rd July 2021
