Russia: boost from fiscal policy seems optimistic Signs that Russia’s government is ramping up spending have raised hopes that economic growth will strengthen further in the coming quarters. But we don’t think that it will provide the large boost that …
22nd November 2019
Latest data point to start of slow recovery Economic data published this week by Singapore and Korea, which are both good bellwethers for the rest of the region, add to evidence that the worst is now over for regional growth. The second estimate of …
Phone tariff hikes no immediate concern for RBI India’s three largest telecoms firms (Vodafone, Bharti Airtel and Reliance Jio) revealed this week that they will simultaneously raise mobile phone tariff prices at the start of next month. This appears to …
Government stimulus underwhelming The government appear to have had a change of heart with PM Scott Morrison this week promising additional stimulus in the Mid-Year Economic and Fiscal Outlook (MYEFO), which is usually released in mid-December. The …
Trump may move slow on HK bill amid trade talks On Wednesday, the US Congress passed the HK Human Rights and Democracy Act in a near-unanimous vote. Trump will need to sign the bill by early December unless he decides to veto it, which is unlikely as a …
PM Abe surpasses PM Katsura Shinzo Abe surpassed Meiji era leader Taro Katsura to become Japan’s longest serving Prime Minister this week. Overall, his track record on the Japanese economy has been mixed. Under PM Abe GDP growth has hovered around 1%, …
Lebanon triple crisis fears escalate The Lebanese government will probably meet a FX debt repayment due next week, but this will act as a further drain on the country’s FX reserves, piling the pressure on the dollar peg. The chances of a messy …
21st November 2019
Chilean markets recover on government offer The Chilean peso rallied against the US dollar today after lawmakers accepted protestors’ demand that a constituent assembly will play a role in writing a new constitution next year, which may help to …
15th November 2019
There was some good news for exporters this week, as US House Speaker Nancy Pelosi indicated that the Democrats will soon give their support to the revised NAFTA, aka CUSMA. We’re not convinced that the passing of the CUSMA into law will materially lift …
We expect economic growth to slow over the coming quarters, but the fading downside risks from the global backdrop and trade policy, together with new, less dovish language from the Fed means we are no longer forecasting a final 25bp rate cut. We now …
Turkey current account set to deteriorate Turkey’s current account has been in surplus for three consecutive months now, but the government’s efforts to speed up the recovery will probably cause the external position to deteriorate again soon. The surplus …
Views from the ground in Stockholm One of the issues that came up a lot in our client meetings in Stockholm this week (see here ) was the appropriate mix between fiscal and monetary policy in Sweden. In a speech on Wednesday, Martin Flodén added to the …
With employment falling and GDP contracting in September, the government will have been glad to close the door on Q3. But looking out of the window onto Q4, the view isn’t much better. It has (thankfully) been a relatively quiet week on the political and …
Q3’s 0.2% quarterly expansion in the euro-zone economy, which was confirmed this week in Eurostat’s second estimate of GDP , was almost certainly driven entirely by domestic demand. We will not have a Q3 GDP breakdown for the euro-zone by either …
South Africa: More signs of contraction in Q3 Mining figures released this week showed that the sector exceeded downbeat expectations in September, but that output still fell over Q3 as a whole. Indeed, the available activity data suggests that GDP …
Philippines: Will ill health force Duterte to resign? Speculation over the health of President Duterte continued this week following the announcement that he would be working from home in order to “have some rest”. Since becoming president in 2016, …
US tariff rollback would offer meagre gains Despite some hiccups, US and Chinese negotiators still appear to be making progress towards a “Phase One” trade deal. In an encouraging step, both countries have relaxed restrictions on bilateral poultry imports …
Consumption still likely to plunge in Q4 The preliminary estimate of Q3 GDP showed that growth slowed to 0.1% q/q, held back by a sizeable drag from stockbuilding and falling net exports. (See here .) While the 0.4% q/q rise in private consumption would …
Spare capacity in the labour market to rise We wouldn’t read too much into October’s largest fall in employment in three years. The data are volatile and a renewed rise in November is likely. Even so, the labour market is clearly deteriorating. The …
Monthly data suggest another weak quarter in Q3 After a very weak first half of the year, the latest monthly data suggest that the economy hasn’t fared any better in the second half. Data released this week show that industrial production contracted 4.3% …
Lebanon: bailout wouldn’t be a silver bullet The situation in Lebanon is going from bad to worse and the chances of a combined debt, currency and banking crisis are rising. President Aoun seems to be seeking a bailout package but this would only pave the …
14th November 2019
Brazil: Reforms accelerate, oil auction stalls President Jair Bolsonaro’s government announced new constitutional reforms this week, which we think will improve the management of fiscal policy. The plans would rebalance the distribution of resources …
8th November 2019
Commodity price moves were surprisingly muted this week considering the news that the “Phase One” trade deal between the US and China may involve the lifting of some of the tariffs already in place . That said, there is still considerable uncertainty …
The shutdown of the Keystone pipeline, following an oil spill last week, could weigh heavily on GDP in November. On Friday, the owner of the pipeline, TC Energy, said that it would be ready to be partially restarted by early next week. But the US …
We still expect GDP growth to slow a little further in the fourth quarter, but the recent stabilisation in the activity surveys, along with the growing prospect of a meaningful trade truce with China, suggest that the prospects for the economy next year …
Musical chairs at the Riksbank The announcement this morning by the Riksbank that Anna Breman will fill the vacant seat on the Executive Board ends the period of uncertainty since the news of Kerstin af Jochnick’s departure was made public in July. It was …
Mixed performance across the region The batch of Q3 GDP data to be released next week are likely to show that Russia’s economy continued to struggle while Central and Eastern Europe held up well, particularly given the context of sluggish growth in the …
The policy debate has shifted this week to just how large a fiscal stimulus is in prospect and whether the Monetary Policy Committee (MPC) might soon cut interest rates. We warned this would happen. We were the only ones to predict that any MPC members …
Spanish poll unlikely to break deadlock All the signs are that Spain’s fourth election in as many years, which takes place this Sunday, will result in another hung parliament, and that Prime Minister Pedro Sánchez will continue to struggle to cobble …
Philippines: more easing in 2020 Governor Diokno was pretty emphatic earlier this week when he said that the central bank (BSP) had “absolutely” “done more than enough” this year. In response we are taking out the interest rate cut we originally had …
South Africa: Inflation, growth both weak Figures out this week suggested that South Africa’s economy faltered in Q3 and that both inflation growth will be soft in the last quarter of the year. Manufacturing production figures were even worse than most …
Phase One comes into focus The outlines of a “Phase One” trade deal with the US are coming into focus. The two sides have agreed in principle to a “proportional” rollback of tariffs, according to China’s commerce ministry, with China also likely to pledge …
Fiscal rather than monetary stimulus on its way Bank of Japan Governor Kuroda argued this week that fiscal policy should play a larger role in supporting demand in the current environment. The Bank has recently been cutting purchases of bonds with very …
India drags its heels on trade agreement India this week opted out of the Regional Comprehensive Economic Partnership (RCEP), the Asia-wide trade deal that will be among the largest in the world when it finally becomes operational. The potential benefits …
GDP growth to remain subdued This week we got a clear indication there has not been a strong rebound in economic growth in the third quarter as policymakers were hoping. Admittedly, before the release of the September trade data we had pencilled in a 0.4 …
More details emerge on Aramco IPO The Saudi government launched preparations for the Aramco IPO earlier this week and a few more details have trickled out in the last few days. We looked in detail at the economic implications of the Aramco IPO in an …
7th November 2019
Argentina: Fernández uncertainty a bad sign The victory for Peronist Alberto Fernández in Argentina’s presidential election on Sunday provoked a small negative shock in local financial markets. The peso has held up, though, largely due to the drastic …
1st November 2019
Although the clear message from the Fed this week was that they do not intend to ease policy further, we expect a continued slowdown in economic growth and persistently below target inflation will ultimately force them to cut rates once more. That said, …
While the Bank of Canada kept its policy rate unchanged at 1.75% on Wednesday (see here ), there were hints that an interest rate cut is coming. In his opening statement at the press conference, Governor Stephen Poloz told us that “the Governing Council …
The confirmation that Brexit has been rescheduled from yesterday to the 31 st January cleared the way for MPs to agree to a general election on Thursday 12 th December that could resolve Brexit. With the Conservatives well ahead in the polls, a …
Deflation rears its head again in Switzerland… Perhaps fittingly in the week of Halloween, data released this morning showed that deflation came back to haunt the SNB in October. (See here .) With the KOF Economic Barometer confirming that the economy …
It seems fitting that “Count Draghila” ended his term at the ECB on Halloween. And as Christine Lagarde takes over, the euro-zone’s immediate prospects are not nearly as frightening as they were when Mr Draghi took the helm in 2011. In fact, some of the …
New financial market forecasts Having previously expected equity and currency markets to fall sharply across Emerging Asia before the end of the year, we have revised our forecasts and now expect financial markets to remain broadly stable over the next …
Nord Stream 2 gets the go ahead The Danish government’s decision to approve the Nord Stream 2 gas pipeline this week is widely seen as a victory for Russia. The project may be completed in the coming months, allowing Russia to ship gas directly to Europe …
Finance Ministry easing alongside the RBI Only a few weeks after corporate taxes were cut, media reports this week suggest that the government is considering a reduction in the personal income tax rate, as well as an abolition of taxes on dividends paid …
South Africa: Moody’s won’t be pleased New debt estimates from South Africa’s Treasury will probably prompt Moody’s to adopt a ‘negative’ outlook on the country’s local currency debt rating later today, paving the way for a downgrade to ‘junk’ status. We …
Plenum offers few clues on economic policy The communique released following the end of China’s Communist Party Plenum was long, but barely touched on the economy and, where it did, it said nothing new. Mentions of “the decisive role of the market in …
Bank brings output gap to the fore The Bank altered its forward guidance when it left rates unchanged this week. It had previously pledged to maintain the current extremely low levels of short- and long-term interest at least until spring 2020. Now it …
Goods inflation climbs to 10-year high The inflation data released this week were stronger than we had anticipated. Core market services inflation duly weakened from 1.3% to 1.2% as the looser labour market probably restrained wage growth. But core market …
Lebanon inching closer to the precipice The situation has remained chaotic in Lebanon this week, with protests continuing and PM Saad Hariri submitting the resignation of his government. There are some suggestions that Mr. Hariri may be asked to form a …
31st October 2019
