The high-frequency data suggest there is a growing risk that the recovery stalls over the next month or two, even as the growing potential for effective vaccines together with a bipartisan fiscal stimulus mean the balance of risks to our forecasts further …
10th November 2020
An effective COVID-19 vaccine would dramatically improve the economic outlook. It may allow GDP to rise to its pre-virus level a year earlier than otherwise and mean that the unemployment rate peaks at 7% next year instead of 9%. But while this would …
If an effective vaccine is rolled out in the euro-zone in the coming months, it would lead to stronger growth next year but slower growth in 2022. With light at the end of the tunnel, policy support may be just as generous in the short term and be more …
9th November 2020
A vaccine with a 90% efficacy rate would clearly represent a major boost for both public health and the economy. While there remain issues around the likely speed of production and distribution of the Pfizer vaccine, today’s news raises the chances that …
Italy’s new tiered COVID-19 restrictions are likely to cause GDP to fall by about 2.5% q/q in Q4, and there is a risk that government is forced into a more severe national lockdown. That said, the news today on a potential vaccine is an upside risk to our …
A survey of firms from France’s central bank and high frequency mobility for last week suggest that the new national lockdown will have a smaller impact on France’s GDP than the first, perhaps of “only” 8%-points. This is broadly in line with our own …
High-frequency mobility data have their flaws but have offered some guide to how economies have responded to government restrictions. As Europe enters a fresh set of lockdowns, careful interpretation of these data will again allow us to shine some light …
Saudi Arabia’s economic recovery has lost momentum in recent months and persistent low oil prices reinforce our view that policymakers are unlikely to row back on fiscal austerity and there is rising probability that current oil production cuts are …
Joe Biden is likely to take a different approach to trade relations than Donald Trump, but his election will not reinvigorate globalisation, which has stalled over recent years. This will act as a headwind for the region’s poorer economies. Joe Biden …
China’s commodity import volumes remained high in October, although they eased back from September levels. We expect import volumes to remain solid in the coming months given the strength in economic activity, but higher prices should prevent a repeat of …
The sacking of Turkey’s central bank governor, as well as the (possible) departure of Finance Minister and President Erdogan’s son-in-law Berat Albayrak, has prompted a rally in local financial markets on expectations that breaks within the ruling AK …
Cladding issues are a downside risk to our already weak housing transactions forecasts for next year. If there continues to be severe testing delays and no change in policy, transactions could end up significantly weaker than our expectations in 2021. …
While card transaction data have overstated the health of consumer spending in recent years, we suspect they didn’t do so recently. As such, we’re willing to take the jump in transaction amounts in Q3 at face value and have pencilled in a strong rise in …
Much of President-elect Joe Biden’s agenda will be dead on arrival with the Republicans maintaining control of the Senate, but there is still a chance of more fiscal stimulus being passed, albeit probably not until after Biden takes office on 20 th …
7th November 2020
While the US election has dominated the news cycle across the world, the outcome is unlikely to have a significant impact on the world economy. Short-term global prospects will continue to be overwhelmingly driven by the evolution of the virus and the …
6th November 2020
New national lockdowns in Europe have led us to revise down our oil demand forecasts for Q4. But the decline is likely to be much smaller than in Q2, not least because the economic hit will be less severe . European oil demand slumped in early 2020, as …
A Biden presidency won’t reverse the tide of US-China decoupling and could lead to economic strains on new fronts if climate change and human rights become greater US priorities. While some ballots are still being counted and the composition of the US …
The apparent failure of the Democratic Party to win a ‘clean sweep’ in this week’s US election means that many of the policy initiatives and spending proposals made by presidential hopeful, Joe Biden, during his campaign are likely to be – at best – …
Poland’s central bank left its policy rate on hold at 0.10% at today’s MPC meeting and opted to reinforce its commitment to its asset purchase programme rather than announce new unconventional measures. These asset purchases are likely to work in tandem …
German occupier demand has slumped in the pandemic, though rents have generally held steady so far this year. But with demand likely to remain weak and an overhang of supply in some markets, declines are still likely over the next 12 months or so. Our …
While there could still be more twists and turns to come after this week’s elections in the US, in general we expect equities there to outperform Treasuries between voting day and the end of 2022. The S&P 500 has risen significantly since voting day, even …
With the markets still relatively calm amid the ongoing election uncertainty, the Fed took the predictable decision to stand pat today. However, if the election results in a divided government – as now looks likely – that will reduce the odds of any …
5th November 2020
The Czech National Bank (CNB) kept interest rates on hold at today’s MPC meeting and, despite its downbeat view on the economic outlook, gave no hint that monetary policy would be loosened further. We expect interest rates to remain on hold for some time …
The imminent easing of restrictions in Ontario is another reason to think that GDP will keep rising in the fourth quarter, but there is clearly a significant chance that restrictions will be reimposed again soon. The most populous provinces have had …
This UK Economics Update contains full details of our new economic and financial market forecasts if there is a Brexit deal and for two different kinds of no deal Brexit. It also highlights that business investment is going to remain in the doldrums for …
T he second virus wave in CEE came at a time when the region’s retail sector was already on its knees. We now expect the fall in rents to continue in Q4, albeit at a slower pace than in Q2. After successfully controlling the virus outbreak in the spring, …
As expected, the Norges Bank did not set off any fireworks this morning, and the decision to leave its key interest rate on hold at zero was never in doubt. The economy is likely to prove comparatively resilient during the second wave, but we still expect …
Despite a small revival in thermal coal prices ahead of winter in the Northern Hemisphere, we doubt it will be long before they start to test historic lows again. And if, as we expect, the COVID-19 pandemic serves to accelerate the push towards …
The deterioration in Gulf public finances this year has pushed governments across the region to finance a significant portion of their budget deficits through international debt markets, which we expect to continue in the coming years. While this doesn’t …
Back in June, we predicted that the Bank of England would expand quantitative easing (QE) by a further £350bn over the following 18 months (consensus £100bn). (See here .) By announcing an extra £150bn of QE today, the Bank has already done £250bn of …
While Switzerland has not yet followed France and Germany in announcing a new national lockdown, we now expect GDP to contract in Q4, broadly in line with the euro-zone. Meanwhile, although the Nordics economies will remain comparatively resilient, we …
4th November 2020
The recent strength in Asian exports reflects sustained growth in global electronics demand, which has been a factor underpinning the recent rally in industrial metals prices. We expect electronics exports to hold up well in the months ahead, which should …
While the final results are yet to be determined, whoever wins the US presidency probably faces continued gridlock in Congress. That may explain why the moves in markets overall so far have been limited. Admittedly, Treasury yields have fallen as the …
The new lockdowns in Germany and France, as well as the stricter virus containment measures in other countries, are likely to cause low inflation in the region to become even more entrenched. The lockdowns being implemented across the euro-zone are …
The second lockdown will have a smaller immediate impact than the first as the housing market is allowed to remain open this time. But it will also put the economic recovery into reverse and push the unemployment rate up to 9% next year. With policy …
The volume of available sublease space already exceeds that seen in the last two downturns. And an average discount of 20% to landlord asking rents, rising to 30%-plus in some cities, will reduce the demand for available landlord space. As a result, while …
We still don’t know the winner of the presidential election or which party will control the Senate, and, with President Donald Trump threatening to challenge the outcome, the legal wrangling and uncertainty could drag on for some time. It is still …
We now expect euro-zone GDP to contract by 3% q/q in Q4 and to be unchanged in Q1 2021, based on the latest lockdown measures staying in place for three months. A return to the stricter measures of the first wave, which is a quite plausible, would result …
3rd November 2020
We think that energy commodities will claw back a bit of the ground that they have lost relative to industrial metals over the next two years or so, as some cyclical factors linked to COVID-19 which have weighed more heavily on the former unwind. However, …
The recent pressure on the Argentine peso and the Turkish lira has echoes of the currency crises both countries suffered in 2018. But there are also some important differences which mean that, even if Turkey and Argentina were to suffer outright currency …
