Putin seeks to consolidate power with referendum Russians began voting this week on amendments to the constitution which would give President Putin the opportunity to rule unfettered until 2036. The government has sweetened the deal with fiscal …
26th June 2020
While we were correct in forecasting a peak-to-trough fall in GDP of 25% (see here ) , recent data suggest that the rebound in economic activity began sooner and has been a bit stronger than we had previously anticipated. By May, the retail sector had …
Central government adds to the bond deluge The government and quasi-fiscal entities including LGFVs and policy banks have significantly ramped up borrowing in recent months. To the end of May, only 12% of this was by the central government. But since the …
Nordic consumers splash the ‘cash’ Retail sales data for May released this week show that consumers in the Nordics have splashed the cash since lockdowns have been eased (figuratively speaking, of course, given that cash usage is increasingly rare in …
This week kicked off with growing fears of a second wave in Germany, as the all-important R number jumped from around 1 to almost 3 last weekend. But as we argued here , the localised nature of the outbreaks and better monitoring mean that there is …
Taiwan continuing to perform well Data published over the past week provide further evidence that Taiwan’s economy is continuing to hold up extremely well. Industrial production grew 1.5% y/y in May, and while this was down from 4.2% the month before, it …
Money stuck in the admin pipeline The flagship measure of April’s supplementary budget was the plan to distribute ¥100,000 to every resident. That was deemed a faster and more effective way of lifting consumption out of its coronavirus slumber than the …
Almost all restrictions lifted in New Zealand New Zealand has almost entirely eliminated Covid-19 and has removed all domestic restrictions on activity. There have been a handful of cases among returning citizens at quarantine facilities at the border but …
Rural economy bounces back, urban areas suffer As always, we need to treat Indian labour market statistics with caution, but unemployment data from CMIE released this week were noteworthy. They show that the rural unemployment rate dropped sharply from a …
Banking sector risks rising in the UAE The UAE’s banking sector is continuing to show signs of vulnerability and reports over the past week have echoed our concerns. (See here .) Moody’s downgraded eight of the UAE’s largest banks, including Emirates NBD, …
25th June 2020
Chile’s push for QE gains momentum Chile’s central bank took a further step into unconventional territory this week, after announcing what appears to be the first QE programme in the region. (See our Update for more.) While few details were released at …
19th June 2020
We are growing more confident that the initial rebound in economic activity following the lockdown will be stronger than we first thought, but housing remains a key risk to the outlook beyond the next few months. Admittedly, the latest activity data have …
Poland’s central bank likely to consider other tools Comments from Poland’s central bank (NBP) this week highlighting the risk that a stronger zloty would hold back the economic recovery suggests that the NBP may pursue a more aggressive monetary stance. …
There was a large disconnect between the extent of the sizeable rebound in retail sales in May and the much more lacklustre recovery in manufacturing output last month. We expect the gap to close over the coming months, however, as more manufacturing …
On the road to recovery The sharper-than-expected rebound in retail sales in May shows that the economy has turned the corner and embarked on the recovery leg at pace. (See here .) The quicker reopening of the economy suggests that GDP might contract by …
Shallower downturns forecast in the Nordics Amid increasing signs that the Nordic economies have weathered the Covid crisis better than most (see here ) we have upgraded our forecasts for GDP growth over the coming years. (See Table ) As flagged in an …
TLTROs raise concerns about the doom loop There was record demand for the ECB’s ultra-cheap Targeted Longer-Term Refinancing Operations this week, at €1.3 trillion. (See here .) This is not surprising given that the interest rate on these loans will be …
Nigeria’s exchange rate: changing tack? Rumours are growing that Nigeria’s government is mulling a proposal to unify the country’s exchange rates, which essentially appears to entail allowing the official exchange rate (at around 360/$, which is used to …
Bureaucracy hampering wage subsidy programme Some companies which have had to furlough workers appear to have judged that applying for the government’s employment adjustment subsidy is more trouble than it’s worth. The labour ministry simplified the …
Will exports continue to defy gravity? Given the collapse in global demand, the relative strength of Asian exports has come as something of a surprise. We estimate that Asian exports are down by around 15% y/y, which is much less than the 40-50% declines …
Bank lending jumped in Q1, to the highest level relative to trend GDP since 2009. And recent data suggest that it has remained very strong this quarter. But comments yesterday by PBOC Governor Yi Gang suggest that bank lending will drop back in the second …
Unemployment rate may have peaked Employment fell a further 1.8% in May following the 4.7% decline in April, though we suspect that some of that decline reflects the delayed impact of people being stood down in April rather than fresh job losses. After …
Violence could trigger push back against China Himalayan border tensions between India and China are nothing new, but this week’s clashes takes them to a height not seen since the 1960s. We can only hope that tensions soon cool and there is no direct …
Lebanon’s “disasterclass” Comments from Hezbollah leader, Hassan Nasrallah, have raised concerns that the Lebanese authorities may back away from IMF talks, further increasing the risk that Lebanon’s crisis deepens. The Lebanese authorities had hoped for …
18th June 2020
Brazil’s Covid data now part of the problem Brazil’s handling of the crisis has come under even greater scrutiny after the government decided to halt publication of coronavirus statistics last weekend, before making a U-turn on the request of a supreme …
12th June 2020
Fiscal (un)realities in Nigeria Nigeria’s revised budget for 2020 is one step closer to approval, but we suspect that the deficit will be higher than the government estimates. Both chambers of the parliament passed the revised budget blueprint this week, …
Those of us in Toronto will still have to wait a little longer for a haircut and a meal out, but there was presumably a collective cheer elsewhere in Ontario this week after the provincial government announced that many regions are today moving to stage …
Scarring effects will be uneven across the region All economies will suffer a permanent loss of output as a result of the pandemic, but recent labour market developments offer early signs that activity in Central Europe may recover more quickly than in …
There is still huge uncertainty over how quickly activity will recover from the pandemic, but it’s clear that the economy is set for an unprecedented period of near-zero interest rates. The Fed sprang no real surprises on the policy front this week, but …
Nailed it! At the risk of tooting our own horn too much (and tempting fate), the 25.0% drop in GDP since February means that our forecasts for the impact of the coronavirus lockdown on the UK economy have been spot on recently. (See here .) Indeed, back …
All restrictions to be lifted from next Friday The Tokyo Metropolitan Government announced on Thursday that it will join the rest of the country and follow the central government’s plan to lift all requests for businesses to close from the 19 th June. …
Economic activity fell by about a quarter This week brought yet more evidence of the severity of the collapse in output, as well as the variation between countries. The third estimate of euro-zone GDP in Q1 showed that the economy contracted by 3.6% q/q. …
Sweden is getting off comparatively lightly The 11% peak-to-trough drop in Swedish household consumption between February and April puts paid to any notion that Sweden has escaped unscathed following its light-touch lockdown. Nonetheless, as grim as they …
Re-opening to foreign tourists Tourism across emerging Asia has been destroyed by the coronavirus pandemic. In Thailand, where spending by foreign tourists was the equivalent of around 10% of GDP before the crisis, all foreign visitors have been banned …
More signs that a construction boom is building What stood out most in the survey data for May was the official construction PMI, which rose to a nine-month high. The forward-looking components were particularly upbeat. New orders were the highest since …
Consumer confidence picks up As the lockdown in Australia has lifted, so too has economic sentiment which should help support the rebound in activity. Indeed, the pick-up in consumer confidence since the lockdown has been eased shows a sharp turn in the …
Activity edging up but recovery will be slow The impact on activity from the gradual scaling back of the lockdown over recent weeks is showing in the high-frequency data. Traffic congestion in major cities is edging up, while data from Apple show a rise …
Egypt: IMF deal strengthens case for rate cuts News over the past week that Egypt has secured an IMF deal and that headline inflation remains subdued should give the central bank room to resume its easing cycle later this month. Egypt’s new one-year …
11th June 2020
There was a sharp contrast between the two main data releases this week, with April data showing record slumps in goods exports and imports of 30% and 25% respectively (see here ), while May data revealed a surprising rise in employment and a larger gain …
5th June 2020
The 2.5 million rebound in employment last month reverses only a small fraction of the jobs lost since February. But considering we and the consensus had been braced for another large decline, it builds on the signs from some of the other macro data this …
Angola looks to restructure Angola’s debt problems finally seem to be surfacing. We’ve noted before that its public debt problem is, along with Zambia’s, one of the most acute in the region. (See here .) The government debt ratio was expected to breach …
Relief for the region’s currencies The improvement in global risk appetite has lifted financial markets in Latin America by more than most other regions. Indeed, the region’s currencies have been some of the best performers in the emerging world over the …
Business debt up, household savings up We got another look into how household and business finances are doing this week. Non-financial businesses took on another £8.4bn of bank debt in April, on top of the record £30.2bn they borrowed in March. This takes …
Russia: a long-overdue fiscal package arrives Russia’s government unveiled a stimulus plan this week to speed up the economic recovery. The details are limited and the government is only belatedly getting its act together, but the response suggests that …
Dreadful economic data from the Philippines Labour market and industrial production data released today for the Philippines confirm that output collapsed in April. With the lockdown being eased only gradually, the recovery in the Philippines is lagging …
Government spending was subdued at the start of the year, in large part because work on infrastructure projects was disrupted by the COVID-19 lockdown and by the subsequent labour shortages due to the slow return of migrant workers. But now that those …
Unprecedented slump in services spending We learned last week that retail sales plunged 9.6% m/m in April while Japan was in a state of emergency. Household spending on services is usually more stable than retail sending. But it has also been hammered …
SNB breathes a sigh of relief as the franc slides The positive policy moves out of Europe – including the ECB’s decision yesterday to increase the size and duration of its Pandemic Emergency Purchase Programme – have reinforced the sense that policymakers …
The economic data released this week have simply confirmed what we already knew: that April was completely catastrophic for the euro-zone economy but that there has since been a gradual resumption in activity throughout the region. Euro-zone retail sales …
Little market reaction from Moody’s downgrade Moody’s announced this week that it has cut India’s local and foreign-currency sovereign ratings from Baa2 to Baa3, leaving them just one notch above junk status. Moody’s cited the deteriorating fiscal …
