Rajya Sabha majority still on the cards The BJP’s disappointing performance in the Haryana state election is a setback for the government, but its victory in Maharashtra still leaves it on course to gain a majority in the Rajya Sabha (upper house). In …
25th October 2019
Rate cuts & dovish noises The raft of interest rate cuts and dovish noises out of central banks this week suggest that monetary policy is likely to remain loose or be loosened further across most of the region over the coming quarters. That said, we think …
Although the pound has fallen back from its recent high of $1.30 on Monday to $1.28 now, you could say that it has been remarkably stable given that, technically, if nothing changes in the coming days there would be a no deal Brexit in just six days’ …
Industrial policy still at odds with market reforms Chinese authorities announced new regulations this week that promise to cut red tape and help level the playing field for different types of firms from 1 st January. This appears partly aimed at …
Taiwan – benefiting from the trade war In contrast to the rest of the region, where growth has recently been touching post-financial crisis lows, Taiwan’s economy has rebounded strongly over the past year. Our GDP Tracker, which is constructed using …
Angola: Kwanza dives as BNA removes trading cap The National Bank of Angola’s decision to abandon its currency trading band and allow the kwanza to float freely suggests that policymakers are finally getting serious about FX reforms. But, after several …
Australia could have its cake and eat it too The new secretary to the Australian Treasury, Steven Kennedy, has pushed the RBA’s hopes for fiscal stimulus slightly further out of reach by endorsing the government’s current fiscal policy settings. He said …
Mixed bag of data not weak enough for a cut The upcoming meeting by the Bank of Japan is an important one as the Bank has indicated that “it is becoming necessary to pay closer attention to the possibility that the momentum toward achieving the price …
More talk of deeper OPEC+ oil production cuts Rumours that OPEC+ oil producers are contemplating deeper production cuts underlines the desire of policymakers in Saudi Arabia to push up oil prices. But this would come at the expense of weaker GDP growth as …
24th October 2019
Despite the much-vaunted “mini-deal” on US-China trade, most industrial commodity prices fell this week . Uninspiring activity data across major commodity consumers, notably for the US and China, appear to have reignited fears over the health of demand. …
18th October 2019
Mexico: Counting the cost of the GM strike The knock-on effects of the strike by GM auto workers in the US mean the Mexican manufacturing figures due in the coming months will make for grim reading. But if GM’s deal with striking workers is approved, the …
Over the past week the Conservatives have overtaken the Liberals in the polls for next Monday’s federal election. Whichever party wins, we doubt the election will materially affect the economic outlook. Prime Minister Justin Trudeau’s incumbent Liberal …
Agreement to end GM strike won’t save October The tentative deal agreed this week between General Motors (GM) and the United Auto Workers (UAW) Union came too late to prevent a sharp downturn in October’s employment data, but any declines should be …
The five-day ceasefire in Syria agreed by Turkey and the US yesterday has prompted a rally in Turkish markets, but the calm could prove temporary and the charges brought against Halkbank this week underline the vulnerability of the banking sector. In …
Statistics Sweden sound a health warning The news that the Swedish unemployment (UP) rate was unchanged at its highest level since June 2015 in September (7.4%) initially caused the krona to fall against the euro on Thursday morning. However, the currency …
Draft budgets not quite what they appear At first glance the budget proposals submitted to the European Commission (EC) this week might raise hopes for a big fiscal stimulus next year. But we think they should be taken with a pinch of salt. Admittedly, …
Last week, we said that there were two big obstacles in the pathway to a Brexit deal. With the UK and the EU having come to an agreement, one hurdle has been overcome. (See here .) The second, whether Parliament passes that agreement, will be clear enough …
Credit growth will pick up as lending rates fall Data released this week showing that credit growth to the private sector dropped to a two-year low in September (see Chart 1) have raised concerns that the monetary transmission mechanism is lacking …
Nigeria: Abuja doubles down on protectionism The Nigerian government unexpectedly banned all trade (imports and exports) across the country’s land borders on Tuesday. Officials said the closure, which they described as an effort to combat smuggling, would …
More stimulus on the way in Korea GDP figures due to be released next week are likely to show Korea’s economy remained subdued in Q3 – we have pencilled in growth of just 0.4% q/q. (See our data preview below for more details.) However, with policy …
Further policy tightening for property Bank lending to the real estate sector continued to slow in Q3 according to quarterly data published by the People’s Bank this week. (See Chart 1.) This reflects policy tightening for the sector which shows no signs …
Underlying inflation set to weaken further The Reserve Bank of Australia will have breathed a sigh of relief after the unemployment rate dipped from 5.3% to 5.2% in September despite the fact that job growth slowed. And the minutes of the Bank’s October …
Bank of Japan’s bond holdings on track to fall The Bank of Japan bought ¥5.2 trillion (¥63 trillion annualised) of Japanese government bonds in September and its purchase plan for October foresees purchases of just ¥4.9 trillion (¥60 trillion annualised). …
Egypt: IMF help won’t remove risk of fiscal splurge Reports that Egypt and the IMF are in negotiations over some kind of future cooperation suggests that the authorities are trying to soothe investor fears of fiscal loosening. To recall, in July, Egypt …
17th October 2019
With little in the way of major economic data releases this week, most commodity prices rose on the back of news that the US and China may agree a “mini deal” as part of ongoing trade talks . This could reduce the immediate risk of a further rise in …
11th October 2019
Crisis in Ecuador rages on Intensifying anti-austerity protests in Ecuador caused bond spreads to widen this week and threaten to dilute the government’s agenda. For now, though, we think that the government will be able to navigate this turmoil with …
Bank of Canada Governor Stephen Poloz once described net business creation as “one of my favourite variables”. That data, released this week, were hardly encouraging. Despite the bumper 3.7% annualised rise in second-quarter GDP, annual growth in business …
Trade talks with China look set to conclude today with a “mini deal”, reducing the immediate risks of a further rise in tariffs. But existing tariffs will remain in place, including the September tariff hike, which has yet to really affect the economy. …
A mini trade deal probably wouldn’t last The US and China may be on the brink of a mini deal that postpones the US tariffs that are due to come into force next Tuesday. China has reportedly offered to buy more US agricultural goods in return. It has …
Swedish activity data flatter to deceive On the face of it, the stronger than expected activity data from Sweden for August released this week lend support to the Riksbank’s forecast that it will hike rates over the next six months or so. Production in …
Turkish markets to suffer as risk of sanctions grows The threat of sanctions against Turkey is growing and, given the context of the country’s large external debts, the fallout for local financial markets could prove to be more severe than that the …
Still scope for agreement on more ECB stimulus The account of September’s ECB meeting supports our view that when the Bank is eventually forced to loosen policy again, it will opt to cut interest rates and increase its corporate bond buying. The divisions …
Still significant obstacles on the pathway to a deal After more than three years since the Brexit vote, it only took a two-hour chat between Boris Johnson and his Irish counterpart, Leo Varadkar, on Thursday to find a “pathway to a possible deal”! It’s …
Thailand takes steps to combat strong baht With the baht continuing to appreciate against the US dollar, the authorities in Thailand earlier this week unveiled a couple of further measures designed to put downward pressure on the currency. The steps …
Supermarket sales plunge after tax hike Daily data from supermarkets show that there was a sizeable drop in sales in the days following last week’s sales tax hike. But we are not convinced that this is a bellwether for the tax hike’s impact on the wider …
Nigeria’s budget: Timing is everything The draft budget published this week was more notable for its timing than its contents. This is the first time in several years that the document has been published in Q3, raising the possibility that lawmakers may …
Slip in competitiveness ranking should reverse The World Economic Forum’s (WEF) Global Competitiveness Index for 2019 released this week showed that India’s ranking slipped 10 places to 68 th out of 141 countries. (See Chart 1.) Chart 1: India’s WEF …
Waning confidence Business and consumer confidence data released this week provided yet another signal that economic activity in Australia is set to remain weak in the coming quarters. Following the May election, business confidence surged, probably …
Tunisian elections risk policy paralysis The second round run-off of Tunisia’s presidential election will take place on Sunday and will face the immediate challenge of trying to work with a highly fragmented parliament. A period of policy paralysis would …
10th October 2019
The weak tone of the international business surveys in September shows that large parts of the global economy continue to struggle. We think this weakness will prompt the Bank of Canada to cut interest rates this year but, as we explain in our latest …
4th October 2019
Peru’s constitutional crisis easing, for now The political turmoil that erupted in Peru earlier this week now seems to be fizzling out. President Martín Vizcarra swore in a new cabinet on Thursday and the electoral authority has announced the date of new …
The slump in the ISM manufacturing index to a decade-low in September together with the fall in the non-manufacturing index to a three-year low triggered renewed fears that the US economy is headed for a recession. (See Chart 1.) But September’s payroll …
Poland: Swiss-franc loans put banks in the spotlight The ruling by the European Court of Justice (ECJ) that Polish households can potentially convert their Swiss franc mortgages into zloty could result in bank losses but should not have a major macro …
What’s Swedish for ‘disastrous’? The plunge in Sweden’s manufacturing PMI in September, from 51.8 to just 46.3, was bad enough on its own. (See here .) But taken together with the sharp fall in the services PMI (data released yesterday), the overall …
Boris Johnson unveiled his “two borders, four years” proposal for a Brexit deal this week. The first border, comes from Northern Ireland aligning with some EU regulations after the UK has left the EU. This would create a border in the Irish Sea between …
The trade war takes to the skies The WTO’s decision this week to grant the US permission to raise tariffs on the EU over Airbus subsidies increases the risk that the bloc is drawn into Mr Trump’s trade war. Tariffs of 10% on large civil aircraft, and 25% …
Growth looks to have stabilised in Q3 Countries across Emerging Asia are due to publish third quarter GDP figures over the coming weeks. But even before the official data are announced, it is possible to get a good idea of how growth in the region is …
Nigeria: CBN lending push will have little effect The Central Bank of Nigeria has increased pressure on commercial banks to extend more loans by announcing that the minimum loan-to-deposit ratio will rise from 60% to 65% in December. In aggregate, banks …
Stimulus running into diminishing returns The RBA cut interest rates to 0.75% on Tuesday as most had anticipated. It put more emphasis than usual on its intention to achieve full employment. In June, the Bank revised down its estimate of the unemployment …
Not bad enough for another rate cut The rush of data released this week was a mixed bag. Overall, there still isn’t a clear-cut case for the Bank of Japan cutting interest rates when it “re-examines” its policy settings at the end of the month. Amidst the …
