We still don’t have much in the way of hard data, but the figures that have been published so far suggest the coronavirus and the measures that China has taken to contain it, are having a severe economic impact. Tourist arrivals into Thailand have fallen …
25th February 2020
Temporary disruption from the outbreak of the coronavirus should have limited macroeconomic impact on Indian industry. After all, India has a negligible supply-chain exposure to China (see Chart 1), where factory shutdowns are now having knock-on effects …
24th February 2020
Economic indicators have improved recently, but remain at low levels, meaning that the recovery in GDP growth is likely to be gradual. As a result, occupier demand is likely to continue to slow, keeping upward pressure on vacancy rates and causing rental …
21st February 2020
Although euro-zone rental value growth slowed in 2019, further falls in property yields supported capital values. Despite the soft economic backdrop, capital value growth should hold up in coming quarters. (See Chart 1.) However, a further slowdown in …
The coronavirus is severely impacting China’s economy and the incoming data suggest that this is spilling over to other economies, particularly in Emerging Asia. Tourist arrivals to Thailand are down by 50% y/y, while trade data for Korea collapsed in the …
20th February 2020
Although the Boeing shutdown and the coronavirus outbreak pose downside risks to the economy in the first quarter, there are mounting signs that underlying momentum in the economy is strengthening. We estimate the halt in 737 Max production could reduce …
19th February 2020
Given our view that investors’ expectations for further Fed rate cuts this year will be disappointed, we think that the twin rally in US equity and bond markets will end before long. After falling by about 3% in the immediate aftermath of the virus …
18th February 2020
While October’s sales tax hike and Typhoon Hagibis were partly to blame for the sharp drop in manufacturing output in Q4, the bigger picture is that any recovery this year rests on a pick-up in external demand. Japanese industrial production fell …
17th February 2020
The initial financial market reaction in Switzerland and the Nordics to the coronavirus followed the familiar pattern during times of uncertainty: the Swiss franc rose and Swiss bond yields tumbled on the back of safe-haven demand, while the Swedish krona …
13th February 2020
The new coronavirus has reshaped the global economic outlook for at least the next couple of quarters. From what data are available, it looks like the hit has been big enough for global GDP to contract this quarter. So, where the euro-zone crisis, China …
Even if the coronavirus outbreak in China is brought under control and the recent moves in equity and bond markets unwind, we think that most EM assets will not make significant gains this year. This reflects our long-held pessimistic view of China’s …
11th February 2020
A decline in apartment completions helped keep rental vacancy rates low over the latter part of 2019. But strong multifamily starts over the past couple of years suggest completions will pick-up in 2020. (See Chart 1.) That will lead to a modest rise in …
Signs of a recovery in industrial commodity demand were emerging at the beginning of 2020. Indeed, the economic data have improved and investor concern surrounding the US-China trade war has eased. But the recent coronavirus outbreak in China quickly put …
6th February 2020
House price growth and transactions picked up, as political uncertainty eased following December’s general election. In the near term, leading indicators hint at a further recovery over the remainder of Q1. But with house prices high and interest rates …
Signs that the economy has turned a corner support our view that interest rates won’t be cut from 0.75% this year. After all, the activity PMIs are no longer in the territory where rates have been cut by 25 basis points before. (See Chart 1.) And they …
Overview – Energy prices slumped in January owing to concerns about the hit to demand from the coronavirus outbreak. The evolution of the epidemic over the coming weeks will determine how lasting its impact will be on energy prices. For now, we are …
5th February 2020
The euro-zone economy ended 2019 on a weak note and the outlook for early 2020 remains gloomy. Euro-zone GDP slowed from 0.3% q/q in Q3 to 0.1% q/q in Q4, with contractions in French and Italian GDP. Although the euro-zone surveys for January point to a …
Overview – Commodity prices, and energy prices in particular, have been hard hit by the outbreak of coronavirus in China and the prospect of lower global commodities demand. There is still too much uncertainty to factor the virus into our forecasts. But …
4th February 2020
African central banks had a busy month in January. Policymakers in South Africa and Kenya surprised the markets (and us) by cutting their key rates by 25bp. We expect that both countries’ central banks will make one further cut, but that rising inflation …
31st January 2020
A combination of optimism about the prospect of a US-China trade deal and some better than expected economic data temporarily halted the decline in the Australian dollar towards the end of last year. Even so, the services balance surged into surplus in Q4 …
The decline in energy and metals prices caused by concerns about the coronavirus took a heavy toll on the region’s financial markets in the last few weeks. The Brazilian and Chilean currencies have been the worst performers in the emerging world this …
30th January 2020
The number of deaths inside China attributed to the new coronavirus is now on course to exceed those from SARS by early next week. The measures taken by the government and the public to limit transmission are having a significant economic impact. …
Before the coronavirus hit, the latest data suggested the region’s economies had turned a corner. Our regional GDP Tracker nudged up slightly at the end of last year, while GDP figures for Taiwan, Korea, Singapore and the Philippines (the only four …
We simply don’t know how far, or fast, the novel coronavirus outbreak will ultimately spread, so for the time being we are assuming that the response across asset classes will follow the same pattern observed during and after previous epidemics – that the …
29th January 2020
Fiscal plans announced across the Gulf over the past month suggest that governments will keep policy tight, a key reason why we think that economic growth will disappoint this year. The Saudi 2020 budget outlined that expenditure would be cut by nearly …
Regional GDP growth in Emerging Europe appears to have picked up from 2.2% y/y in Q3 to around 2.5% y/y in Q4. This was predominantly driven by a recovery in Turkey’s economy, where policymakers are pulling out all the stops to support activity. Russia …
Annual returns were just 2.1% in December, the lowest monthly figure since 2010. A marginal rise in yields in the retail sector caused all-property capital values to fall in December and was exacerbated by a slight fall in all-property rental values. (See …
Since the end of December, overnight index swaps have moved from pricing in no change in monetary policy over the next two years to implying 40 bp of loosening. (See Chart 1.) We had expected some move in that direction, as we thought that a further …
28th January 2020
There is no longer any doubt that China’s newly-identified coronavirus will hit its GDP growth in Q1 . And other parts of Asia (notably Hong Kong and Thailand) will suffer a drop in Chinese tourism receipts (see Chart 1), which could shave 1.5-2.0%-pts …
27th January 2020
The Fed’s interest rate cuts, a truce in the trade war, and a more positive global backdrop have all set the stage for an acceleration in economic growth this year. We calculate that GDP growth was a modest 2.0% annualised in the fourth quarter, as a …
21st January 2020
2019 was truly an annus horribilis for India’s economy but there are green shoots of a recovery in the data from the very end of the year. Industrial production growth jumped in November. (See Chart 1.) Meanwhile, growth in new passenger vehicle sales is …
20th January 2020
The Monetary Policy Committee’s decision on whether to cut rates in January rests on a knife edge and could go either way. The MPC must weigh up the weakness of the economy and low inflation in Q4 with the prospect that the election result, a Brexit …
16th January 2020
The fall in long-term bank lending rates in November will reinforce the concerns of some BoJ Board members that ultra-loose monetary policy is harming the profitability of private banks. November’s drop in long-term lending rates was the sharpest since …
The decision by the SNB to scrap its currency ceiling five years ago coincided with it slashing interest rates to a record low to reduce the attractiveness of holding Swiss francs. Alas, this ‘deterrence effect’ is not what it used to be: whereas the gap …
Our estimates of Q4 GDP based on national monthly data and surveys imply that global growth slowed from 3.1% to about 2.6% in quarter-on-quarter annualised terms. But we suspect that this will prove to be the low point before a gradual recovery begins. …
14th January 2020
Summary: The 30-year mortgage rate ended 2019 at close to 4%, and it is set to stay at around that level over the next or so. But tighter credit conditions will offset some of the benefit of lower rates on housing demand, and existing home sales will be …
December was a relatively strong month for both precious and industrial metals, with prices rising almost across the board. A weaker US dollar and safe-haven buying buoyed gold prices, while base metals prices benefitted from signs that industrial …
9th January 2020
Overview – The easing of US-China trade tensions and the escalation of US-Iran geopolitical tensions has caused oil prices to surge in recent weeks. In contrast, the prices of natural gas and coal have slumped owing in part to ample supply of natural gas. …
Hopes that the euro-zone economy will gather pace in the coming months are likely to be dashed. The latest business surveys point to growth stabilising but not recovering in the final quarter of last year. The slowdown over the past two years has been …
Overview – The prospect of a ‘Phase One’ trade deal between the US and China buoyed commodity prices in December. Although we expect trade tensions to remain elevated, we think that most commodity prices will rise in the year ahead as fears of a global …
6th January 2020
November’s 71,000 slump in the Labour Force Survey (LFS) measure of employment almost certainly overstates the weakness of the labour market. While we do not yet have the November data for the more reliable Survey of Employment, Payrolls and Hours (SEPH), …
23rd December 2019
The marginal increase in rental values in November was not enough to prevent capital values from falling on an annual basis. Indeed, the impact of rising yields, particularly in the retail sector, caused all-property capital values to fall by 2.9% y/y. …
20th December 2019
Downward price pressures in London have eased, driven by a slump in homes coming up for sale. But with house prices high and mortgage interest rates close to their floor, that is unlikely to drive a recovery in prices soon. Rather, we expect a 1% fall in …
The last round of economic data released in 2019 pointed to a mixed performance in Latin America. Growth seems to have remained robust in Colombia in Q4 – and to have strengthened in Brazil – but activity faltered elsewhere. For the region as a whole, …
19th December 2019
GDP growth appears to have slowed slightly, to between 1.5% and 2.0% annualised in the fourth quarter, but the more stable global backdrop and the lagged impact of this year’s loosening in financial conditions should drive a gradual recovery from mid-2020 …
Annual GDP growth in Australia has probably bottomed out already but we expect growth to remain below potential in 2020. As such, jobs growth will probably not be strong enough to absorb the expansion in the labour force and we expect Australia’s …
The final round of South African data released this year supported our view that the economy faltered in recent months. Output fell by 0.6% q/q saar in Q3, and the latest figures suggest that the economy may have entered another technical recession in Q4. …
18th December 2019
China’s apparent reluctance to commit to the extra $200bn of US imports relative to 2017 levels that the US is requesting over the next two years as part of the Phase One deal is understandable: achieving the target would require imports from the US to …
The citizen amendment bill – which aims to fast-track citizenship for non-Muslims from neighbouring Muslim-majority countries – has dominated the news over the past couple of weeks. This isn’t primarily an economic or financial issue, but there are …
Political developments across Algeria, Tunisia and Lebanon threaten to exacerbate already-poor balance of payments positions. Presidential elections that took place in Algeria last week don’t appear to have appeased protestors, who are no doubt …
17th December 2019
