Any remaining confidence in the credibility of Turkey’s central bank (CBRT) was shattered after today’s larger-than-expected 200bp interest rate cut, to 16.00%. The lira hit a fresh record low against the dollar and we think that it will continue to …
21st October 2021
After a fall this year, we expect Warsaw retail rents to return to growth in 2022. That said, the city’s reliance on office workers means that the shift to remote working will weigh on retail spending and keep a lid on rental growth. Following …
Although slowing growth in China has probably weighed on US Treasury yields in the past, we don’t expect it to prevent them from rising over the next couple of years. The latest activity data out of China emphasise how much the country’s economy – which …
Despite the improving outlook for the public finances, the rumours that the Chancellor will set himself some fairly stringent fiscal rules suggest that there’s not going to be a net giveaway in the Budget and Spending Review on Wednesday 27 th October. …
Falling oil production has weighed on the Nigerian and Angolan economies, with the latter likely to suffer its sixth consecutive annual decline in GDP this year. While output should rise next year, we doubt that either will be able to meet its OPEC+ …
Shortages of construction materials are unlikely to ease for at least another 6-12 months, restraining activity in the renovation sector and among smaller housebuilders . That is likely to cap housing starts for the next year or so at about 40,000 per …
Prime office rental growth in Germany is on track to be stronger than forecast in the near term. However, we think rental growth will slow in the coming years as the supply of modern space is expected to continue to outpace demand, even accounting for a …
20th October 2021
Higher oil and gas revenues are likely to prompt a modest shift to looser fiscal policy in the large Gulf economies, although Bahrain and Oman will still need to stick to austerity. Meanwhile, if OPEC+ were to raise production quotas more quickly in …
Taiwan export orders rose in September, indicating that demand for Asian electronics remains strong. We expect final demand to weaken over the coming months, but shortages are likely to persist for some time to come. Taiwan’s export orders deserve close …
The Loan Prime Rate (LPR) remained on hold for the 18th straight month today. And investors have recently pared back their expectations for monetary easing. But given growing economic strains, especially in the property sector, we still think the PBOC …
Coal prices are likely to remain high over the next six months as high demand weighs on already-low stocks. Prices should drop back next year, though, as demand growth moderates and supply improves . The price of coal has roughly tripled since the start …
19th October 2021
Power rationing in China has raised concerns about metal supply. But perhaps less obvious is that power rationing will also negatively affect demand if manufacturing activity is curtailed. On balance, we think that the supply impact will dominate and …
The pandemic is still depressing the size of the labour force in many developed countries. This probably reflects a mixture of temporary and permanent factors, so some of it may yet be reversed. But even if the bulk of the reduction in the labour force …
Bank Indonesia today left its policy rate unchanged at 3.5% and signalled that it is likely to leave rates on hold for a prolonged period of time. With the economy rebounding but inflation set to stay low, we think interest rates will be left on hold …
National office data suggest that suburban office markets have significantly outperformed downtown offices since the onset of the pandemic. But metro-level data point to a more nuanced picture in which metros reliant on commuting have seen downtown areas …
18th October 2021
There is an outside risk that the UK could face some limited short-term rationing of electricity this winter if weather conditions were to be unfavourable. This risk isn’t yet significant enough to factor into our forecasts. But if the supply of …
We think that Indeed job data are useful and timely indicators of labour demand, and we will continue to monitor them in the months ahead. The latest data support the view that labour shortages are rising, and are most acute in the US, Australia, and …
GDP in the Baltic States has already surpassed pre-pandemic levels and we expect this strength to be sustained, with growth outpacing Central Europe and the euro-zone as a whole over the coming years. This strong recovery will use up spare capacity fairly …
Accelerated adoption of renewable electricity will cause demand and prices of coal and natural gas to fall over the long run. While we think the global economy will handle this transition well, there will be some winners and losers depending on which …
15th October 2021
With workers spending more time away from city centres, some expected that out-of-town offices could swing back into fashion. It is still early, but from the UK data, the evidence suggests that it is suburban retail, not offices, that is benefiting most …
Despite strong demand, we think that high capital values have kept development profitable and have prevented an acceleration in euro-zone prime industrial rental value growth. However, as capital value growth slows there is a risk that some markets will …
The supply constraints that have hit global vehicle output have probably reduced the level of GDP by a modest 0.1-0.2% in most EM auto producers, but some countries like Czechia, Hungary and Mexico have suffered much bigger blows. And the drag from …
We doubt that the direct effects of the tapering of the Fed’s asset purchases will have much of an impact on the US dollar, and think that other factors will be more important in pushing the greenback higher. Since the September FOMC meeting , the latest …
The sharp widening in India’s goods trade deficit in September was driven in part by an unusually large jump in oil imports that we think will prove a one-off. And with the economic recovery entering a slower phase, imports more generally are unlikely to …
The expiry of the CRB this month may help to alleviate the shortages of unskilled labour, but there is little chance that the shortages of skilled labour will ease until immigration picks back up. And with vaccine mandates now being imposed across the …
14th October 2021
The multitude of supply shocks hitting Brazil’s economy are likely to keep inflation at 7-10% well into next year and cause the pace of recovery to slow to a crawl in the next few quarters. Overall, we now expect GDP growth of just 1.3% next year, which …
Although we wouldn’t be surprised if energy prices remained elevated for a while, we still think they will fall back over the next year, weighing on the currencies of net energy exporters. The rally in energy prices, particularly since the end of August, …
The latest MSCI data show that the wider market has moved roughly in line with our prime data since the onset of the pandemic and provide support to our outlook for property values. The recent release of MSCI’s Pan-European Index for Q2 provides a good …
While the yields of long-dated government bonds in the euro-zone, UK and US have dropped back a bit in recent days, we think they will rise between now and the end of 2023. We expect increases in yields to be particularly large in the US given our view …
The surprisingly large 125bp rate hike delivered by Chile’s central bank yesterday, to 2.75%, suggests that it will continue to front-load its tightening cycle to clamp down on high inflation. We now expect a further 225bp of hikes in this cycle, to …
The Monetary Authority of Singapore (MAS) tightened policy today, as it looked past the lacklustre rebound in GDP last quarter and looked to curb further rises in inflation. Core inflation is unlikely to rise substantially next year, even as the recovery …
The August Job Openings and Labor Turnover survey released yesterday added to signs that labour shortages are still getting worse at a time when many of the temporary factors that were supposedly holding back labour supply are easing. We’re getting more …
13th October 2021
Net capital inflows into EMs appear to have dropped over the past few weeks as investors have turned more risk averse. Looking ahead, a further rise in US Treasury yields could lead to larger outflows from EMs over the coming months. The good news is that …
China’s imports of key commodities slumped almost across the board in September. The main exception was imports of coal, which soared in response to recent power shortages. We expect coal imports to remain strong over the next few months, but they too …
Australia’s exports to China are even more vulnerable to a slowdown in the property sector than they were before the trade spat as iron ore has gained in importance. We think that China’s steel demand will fall before long and even if it doesn’t, a shift …
Core inflation in the euro-zone rose to 1.9% in September, its highest level in nearly 13 years, but other measures of underlying inflation are much lower. This supports our view that when the temporary forces pushing up inflation have faded, the core …
12th October 2021
Labour shortages seem to be worse and more widespread than we had expected. Although the end of the furlough scheme in late September may ease some of the shortages, we doubt it will plug all the holes. As such, we now think labour shortages are unlikely …
After leaving rates on hold today, the Bank of Korea gave strong signals of its intent to hike again in November. And given the Bank’s hawkish comments, we are adding another rate hike into our forecast for next year, bringing the total to a further 75bps …
The continued weakness in Japan’s inflation is partly due to the recent plunge in mobile phone tariffs and the long lags between global energy prices and household utility bills. Indeed, inflation is set to rise next year. But more muted cost pressures …
As energy prices hit multi-year highs, we look into the link between energy and non-energy commodity prices. It is clear that industrial metal prices track energy prices the most closely over time, which is mainly because the drivers of demand are …
11th October 2021
While many observers seem to have been surprised by last month’s joint sell-off in US equities and Treasuries, there is no reason in principle why the two assets should be negatively correlated. It all depends on the economic and policy backdrop. Our view …
The retail sector appears to be turning a corner, and we think that convenience-oriented Neighbourhood and Community (N&C) centres, out-of-town retail, “destination”-type malls and retail located in “desirable” southern metros are likely to be the …
8th October 2021
South African Reserve Bank (SARB) Governor Lesetja Kganyago has recently raised the prospect of lowering the inflation target and, in this Update , we answer five key questions on what it would mean. In the near-term, the adoption of a lower target would …
It is a year since we published our “ Economies after COVID ” series, so now seems like a good time to pause and take stock of how our predictions about the legacy of the pandemic are shaping up. There is a still a long way to go until the pandemic’s full …
We think a greater reliance on foreign capital and tighter monetary conditions will leave CEE investment activity lagging the euro-zone in H2. Overall, transactions are set to end the year 5% lower than their already weak 2020 levels, before catching up …
The Reserve Bank kept the repo rate on hold at a record low today and stressed that its latest liquidity-withdrawal measures do not constitute policy tightening. Given our view that the recovery will only be back on more solid footing next year, we …
Although the krone has rallied this year on the back of high energy prices and the expectation of tighter monetary policy, we do not expect this to continue. We think slowing global growth and normalising energy prices will work against the krone over the …
7th October 2021
We think the prices of most commodities will fall over the next couple of years, and that this will prove to be a headwind for many countries’ stock markets. But the strength of that headwind will vary significantly, in our view, even among the most …
The entrenched positions of both sides suggest the deal to suspend the debt ceiling until December may only delay rather than avert a crisis. And in that scenario, we doubt that the Treasury minting a $1trn platinum coin would offer the easy way out. The …
The Bank of Israel revised up its forecast for GDP growth at today’s meeting and struck a more hawkish tone on inflation as it announced that it will end its asset purchase programme later this year. This was in line with expectations, but Governor Yaron …
