TARGET2 imbalances are set to rise to record levels over the year ahead on the back of the ECB’s planned wave of asset purchases. While this may be dismissed by some as a benign and technical side-effect of the ECB’s policies, it would indicate that, …
11th June 2020
The high-frequency data that we track suggest that while economic activity is picking up across most of the region, the pace of recovery varies significantly by country. We expect China, Singapore, Vietnam and Taiwan to bounce back quickest from the …
8th June 2020
Record low mortgage rates, plenty of spare time, the need for more space, increased savings and the anticipation of picking up a cut-price home all help explain the surprise recovery in mortgage applications for home purchase. But tighter credit …
4th June 2020
We expect the palladium market to remain in a deficit this year as both demand and supply plummet. Palladium supply should bounce back reasonably quickly, but the medium-term outlook for palladium demand from the auto sector is much harder to call. On …
The swift and significant response of the Bank of England to the coronavirus crisis has prevented a financial crisis, but we think the Bank will need to do much more than the markets currently expect to get the economy back on track. By this time next …
Australia’s gross government debt/GDP ratio will hit the highest level since WWII by 2022/23. While the budget deficit will narrow again over the coming years as tax revenues rebound and stimulus measures expire, it will remain consistent with rising debt …
1st June 2020
The fiscal plans unveiled by China’s leadership today are as expansive as those in 2009 but credit growth will remain far more constrained. The focus again is overwhelmingly on measures to boost investment, primarily infrastructure. We expect stimulus to …
22nd May 2020
Inflation is the not the easy fix for the coronavirus-related rise in public sector debt that it might seem. Not only might it not actually do much to reduce public sector debt ratios, but higher inflation would impose other serious costs on economies. …
20th May 2020
Public debt ratios are set to rise sharply in all euro-zone countries this year but in most cases they should then start to fall again. The exceptions are Greece and, more importantly, Italy where we expect the debt burden to keep rising and potentially …
Before the virus outbreak, falls in prime retail rents were expected to be concentrated in Northern European markets. Now rental falls are likely to spread throughout Southern and Central Eastern Europe as well. The impact of the virus outbreak is highly …
14th May 2020
The huge hit to Turkey’s balance of payments position from the coronavirus crisis and the evaporation of investors’ confidence in policymakers makes the risk of a currency crisis like that seen in 2018 increasingly likely. Worryingly, the banking system …
11th May 2020
India’s economy is all but certain to contract this year for the first time since 1979. And the government’s reluctance to respond to the coronavirus crisis as aggressively as those elsewhere means that the recovery will be slow too, as household and …
6th May 2020
The coronavirus will leave in its wake a sharp rise in public sector debt. Low interest rates suggest that many governments will be able to live with this, rather than having to resort to austerity, default or inflating the debt away. But they would still …
5th May 2020
Efforts to contain the coronavirus will cause Dubai’s economy to contract sharply, exacerbating overcapacity in key sectors and making it more difficult for the Emirate’s government-related entities (GREs) to service their large debts. Our own database …
20th April 2020
It is now crystal clear that virus containment measures will deal an unrivalled blow to metals demand. But the extent to which these same measures may also hit supply is up for debate. Despite all the headlines, there is currently little evidence of a …
16th April 2020
The effects of the coronavirus will push Argentina's economy into an even deeper recession and make the government more tempted to unilaterally halt payments on its international bonds. While we think that an amicably negotiated solution to Argentina's …
7th April 2020
This Focus examines the implications of deflation for asset returns. It is motivated by the recent collapse in market-based measures of US inflation compensation amid the spread of coronavirus, to their lowest levels since the Global Financial Crisis …
25th March 2020
Central banks are already facilitating fiscal packages in various ways. But with the fiscal costs of the coronavirus likely to rise much further, policymakers might consider explicitly financing them with a permanent expansion of central bank money – the …
24th March 2020
This Focus is a reference guide for clients of our new US Commercial Property service. It outlines the key pillars of our forecasting approach, updating previous methodological work from our established European and UK Property Services. Our five-year …
17th March 2020
The coordinated fiscal and monetary stimulus announced by the Chancellor and the Bank of England today shows that policymakers are pulling out all the stops to ensure that the coronavirus results in the economy following a path over the coming quarters …
11th March 2020
There is a huge amount of uncertainty over how things will play out over the coming weeks as the coronavirus crisis continues to unfold, and any forecasts should be taken with more than the usual pinch of salt. We are pulling down our forecasts again for …
10th March 2020
Our current assumption is that the virus-related disruption is not severe enough to prompt a widespread business debt crisis. But if the virus triggers a sharper drop in profits or a bigger rise in borrowing costs than we envisage, then these pockets of …
6th March 2020
The new Chancellor Rishi Sunak’s first priority in the Budget on Wednesday 11 th March will be to deliver a package of measures to help those areas of the economy likely to be hit hardest by the coronavirus outbreak. He will presumably also get things …
4th March 2020
The structural economic slowdown which we expect in China over the coming decade will weigh heavily on consumption of industrial commodities and their prices. Steel will be by far the most affected commodity, but copper and aluminium will also suffer. In …
3rd March 2020
Fears about the coronavirus have weighed on oil prices and clouded the near-term outlook for Colombia’s economy. But even if – as we expect - the virus is brought under control soon and oil prices recover, growth will probably be a lot weaker than most …
24th February 2020
The profitability of Japan’s regional banks is likely to deteriorate further over the next few years. However, there’s little evidence of asset price bubbles and corporate balance sheets have continued to strengthen. In our view, even a shock akin to the …
19th February 2020
We side with the optimists regarding the chances of another major technological step forward, although we can only guess at the timing. We expect the US to remain at the forefront of these advances for now, but it will not lead in all areas of new …
18th February 2020
13th February 2020
Rising housing wealth may encourage households to spend a larger share of their incomes. But we expect income growth to weaken again as jobs growth slows and rising unemployment keeps a lid on wage growth. The upshot is that consumption growth may remain …
The impact of the coronavirus means aggregate EM GDP is likely to have contracted in q/q terms for the first time since the global financial crisis in Q1. If the outbreak is contained quickly, most lost output should be recovered later in the year. But if …
12th February 2020
China’s economy is likely to contract sharply in the first quarter, as a result of the measures that have been taken to limit the spread of the new coronavirus. The apparent slowdown in new infections in the last few days should raise hopes that output …
Hopes for a substantial boost to economic growth in the euro-zone from fiscal policy in the next year or two are likely to be disappointed. It seems likely that any fiscal stimulus will be very small. And even if governments agreed on a larger tax and …
6th February 2020
We think that the coming fiscal stimulus will raise annual GDP growth by about 0.6ppts this year and 0.25ppts in 2021. This is part of the reason why we expect GDP growth to beat the consensus forecast by rising to 1.8% in 2021 and helps to explain our …
3rd February 2020
The downward trend in interest rates that began in the 1980s contributed to large falls in household saving rates in most advanced economies. But with larger proportions of people now nearing retirement, some consumers are being forced to respond to low …
30th January 2020
President Putin’s plans to amend Russia’s constitution so that he can wield power beyond 2024 have fired up the Moscow rumour mill. But from an economic perspective, the much more important development has been the accompanying shift in the government’s …
29th January 2020
We are launching our new subscription service on US commercial real estate by outlining six key calls that we believe will shape the sector’s story in the coming years. The macroeconomic environment of low, but steady economic growth, alongside a …
28th January 2020
Despite lingering uncertainty around the next phase of the UK’s exit from the EU, we think that there is more upside for sterling, Gilt yields, and UK equities. The UK is set to leave the EU on 31 st January, but the risk of a disorderly end to the …
24th January 2020
Weakness in economic growth and unfavourable demographics mean that we expect most of the developed world, and China, to experience ‘Japanification’. One of the commodities most affected would be steel, which is why we are bearish on the long-term outlook …
If President Donald Trump were to win a second term, we’d expect both fiscal and monetary policy to remain loose, amid a push to install a more dovish Fed Chair in 2022. There would also be an upside risk of a second, smaller round of deficit-financed tax …
23rd January 2020
As the negotiations over the UK’s new relationship with the EU will be arduous and long, business investment probably won’t rise much this year as firms will worry about the risk of there being something similar to a no deal on 31 st December 2020. But if …
A wave of anti-government protests and a weak economy have increased the likelihood of the finance ministry delivering additional fiscal stimulus in the FY20/21 union budget on Saturday 1 st February. That would provide a small boost to growth over the …
22nd January 2020
We suspect that interest rates will neither go up nor down this year! But the markets may be caught out further ahead if, as we expect, a fiscal stimulus and easing in Brexit uncertainty results in interest rates rising above their current rate of 0.75% …
21st January 2020
Policy loosening will drive a stronger recovery in Turkey’s economy than most expect this year, but this is likely to come at the cost of higher inflation, a widening current account deficit and falls in the lira. That’s likely to force the central bank …
The trade deal between the US and China marks an end to the first phase of the trade war. China’s pledges on imports from the US are unlikely to be met but that may not matter to the deal’s long-term success. It removes the downside risk of imminent …
15th January 2020
The prevailing view that this will be the year when Brazil’s recovery finally shifts up a gear looks overly optimistic. We expect that GDP growth will come in at just 1.5% over 2020, which leaves us close to the bottom of the consensus range. ‘This year …
14th January 2020
The two key economic challenges facing Tsai Ing-wen in her second and final term as Taiwan’s president are the deteriorating demographic outlook and the long-term decline in productivity growth. A combination of the trade war, which is leading some …
13th January 2020
There is little to suggest that President Donald Trump’s deregulatory agenda has provided a significant boost to economic growth. While it may still be too soon to fully judge the impact, the historical evidence suggests that hopes of a more significant …
9th January 2020
Growth in Emerging Asia has struggled over the past year. While most economies should stage a modest recovery over the coming quarters on the back of looser fiscal and monetary policy, with China likely to slow, aggregate growth in the region is set to …
19th December 2019
2020 will be a year in which EM GDP growth edges up and many major central banks catch investors by surprise. This Focus outlines our key calls for next year. 1. Policymakers in China will ease monetary policy significantly as the economy slows . Growth …
18th December 2019
French President Emmanuel Macron’s emphasis on overhauling France’s ailing labour market is long overdue. But while there are signs that the changes are starting to take effect, the labour market improvement since 2015 is mostly thanks to a cyclical …
17th December 2019
