Filtered by Region: Europe Use setting Europe
Re-opening boost pushes economy far above pre-pandemic level The larger-than-expected 15.4% annualised expansion in Israeli GDP in Q2 took the economy to more than 3% above its pre-pandemic level. While we expect growth to slow markedly in Q3 as the …
16th August 2021
While the Monetary Policy Committee (MPC) became more hawkish at its August meeting, an increase in interest rates on the scale it expects would not undermine house prices. But more stubborn inflation than anticipated and a hike in Bank Rate to 1.5% by …
We expect prime retail rents in both Lyon and Paris to struggle to make up lost ground this year, and even after a return to growth next year, the pace of increases will be subdued. After falling by 15% y/y last year, prime retail rents in Paris edged …
Strong GDP growth takes economy back to pre-pandemic level The larger-than-expected 10.3% y/y expansion in Russian GDP in Q2 suggests that the economy returned to its pre-pandemic level as growth was driven by broad-based strength across sectors. Growth …
13th August 2021
Wrapping up a week of instability in Poland Poland's political scene was thrust into uncertainty this week after President Duda dismissed Jaroslaw Gowin, the leader of one of the coalition partners, from his duties and his Agreement party pulled out of …
The GDP figures for June, which showed that the economy grew by 1.0% m/m after the 0.6% m/m rise in May, was an impressive result given the surge in COVID-19 cases in that month. (See here .) But we warned a couple of weeks ago that the “pingdemic”, which …
With six weeks left until Germany’s federal elections, on 26 th September, opinion polls suggest that things have got more complicated. In brief, and with apologies for the alphabet soup, they show that support for the CDU/CSU has declined compared to …
All eyes on the north Atlantic The world tends to only take notice of Iceland after spectacular events, be it the implosion of its banking sector or the explosion of a volcano . The country has been thrust into the spotlight once again recently following …
Small rise in inflation will leave the Riksbank unfazed The slight pick-up in Swedish headline inflation in July was primarily driven by a rise in energy inflation. However, the fall in core inflation to its lowest level since 2014, means that the …
Strong GDP growth to give the NBP food for thought The 1.9% q/q expansion in Poland’s GDP in Q2 left the economy 0.5% above its pre-pandemic size and we expect another strong reading for Q3 as activity in consumer-facing sectors continues to recover. …
Turkey’s central bank (CBRT) left interest rates on hold at 19.00% today and, with inflation likely to remain elevated over the coming months and the economy having bounced back quickly from May’s lockdown, an easing cycle is unlikely to commence until …
12th August 2021
The Norges Bank is set to leave interest rates on hold at zero next Thursday (19 th August), but it will almost certainly start to raise them, and tighten macroprudential policy further, in September. Recall that the Norges Bank left the policy interest …
Manufacturing unlikely to boost GDP in coming quarters The second successive monthly fall in euro-zone industrial production in June was largely due to ongoing supply-chain difficulties in Germany. As these will ease only slowly, we don’t expect industry …
Recovery regains some momentum The media headlines have focused on the big 4.8% q/q gain in GDP in Q2, following Q1’s 1.6% q/q fall. But the real news was the unexpectedly strong growth in June which suggested that the recovery maintained a bit more …
Economy bounces back quickly from lockdown Turkey’s industrial production and retail sales figures for June confirm that the economy bounced back quickly from May’s three-week lockdown. This, coming alongside the further jump in inflation in July, means …
With a whopping 1.0 million people on average having been asked by the NHS App or Test & Trace system to self-isolate in July, the “pingdemic” is likely to have stifled the economic recovery in recent months. (See here .) In July, our Capital Economics …
11th August 2021
Following larger-than-expected falls in Q2 and positive near-term developments, we expect prime office and industrial yields to end the year lower than previously forecast. However, we think prime retail yields will trend upwards again as the impact of …
Cities are central to property performance. And the largest are seen as hugely important by investors. But the pandemic has turned many received ideas about real estate on their head and we think that performance in gateway markets will remain relatively …
10th August 2021
Below-target core inflation will not prevent September rate hike The small increase in headline CPI inflation in Norway, and the bigger decrease in the Norges Bank’s target measure, will have no bearing on the near-term outlook for monetary policy given …
The recent downward revision to our GDP growth forecasts and the recent hawkish signs from the Bank of England which prompted us to bring forward our forecast of when monetary policy will be tightened means the economic backdrop is a bit less conducive …
9th August 2021
The strength of mortgage and unsecured consumer lending in Russia has concerned the central bank and raises the threat of a build-up of financial vulnerabilities, but for now we think these risks are low. Since we last looked at Russia’s mortgage boom in …
The latest data show pipeline price pressures continuing to mount in the euro-zone, pointing on the face of it to much higher consumer price inflation. But while there is arguably scope for a small rise in core goods inflation, subdued wage growth will …
Strong core inflation to trigger further rate hikes Although Russian headline inflation came in at a slightly-weaker-than expected 6.5% y/y, that masked a worryingly strong rise in core inflation that’s likely to trigger further monetary tightening. We …
6th August 2021
NBP’s doves losing their nerve… A slew of comments from policymakers at the National Bank of Poland (NBP) this week suggest that the probability of the central bank delivering a rate hike before the end of this year has increased. Flash July CPI data …
We learnt three things from this Thursday’s Bank of England policy decision and were left in the dark on two key issues. As a result, some of our forecasts for money market rates and gilt yields have changed. What we learnt First, the Bank of England …
It was a week of more generally good news for the euro-zone economy. The risk that the Delta variant would halt the recovery in its tracks is receding rapidly. Daily infection numbers are now falling consistently in Spain and the Netherlands, which were …
A macroeconomist’s take on the Olympics Rather than just enjoying the spectacle of Norway’s Karsten Warholm storming to victory in the 400m hurdles this week, we found ourselves frustrated by the emphasis that sports reporters put on nominal rather than …
Following better-than-expected Q2 data, we have revised up our Helsinki office returns forecasts for this year. And given a robust rental outlook, returns are set to outpace the euro-zone over the next few years. After a fall of nearly 4% last year, 2021 …
Recovery in July, but further slowdown still expected Halifax house prices returned to growth on a monthly last month, partly reversing a weak June figure. But the underlying trend, as the stamp duty discount is phased out, is for a modest slowdown. …
Manufacturing hobbling the wider recovery The further decline in German industrial output in June, to 6.8% below its pre-pandemic level, underlines that the problems in the auto sector will hold back an otherwise strong economic recovery. It is now …
The Czech National Bank (CNB) raised its two-week repo rate by 25bp to 0.75% at today’s meeting, and its communications signalled that policymakers will raise rates more quickly than they had previously signalled to tackle above-target inflation. We …
5th August 2021
The Monetary Policy Committee’s (MPC) policy statement sent a clear signal that higher interest rates are on the horizon. But there were few signs that it is preparing to hike rates soon. What’s more, we continue to envisage inflation dropping back more …
Recovery gathers pace, but may prove short-lived The latest RICS survey confirmed that construction activity rose strongly in Q2 and suggests expectations are upbeat about the outlook. But while we think output is likely to remain strong in the coming …
Construction PMI dips, but underlying demand strong July’s construction PMI figure was slightly disappointing compared with the previous month’s highs. But it continued to point to robust activity and we think any dip is most likely a reflection of …
With demand slowly recovering and supply being pushed back, we no longer expect prime office rental falls in the Italian markets this year. However, the outlook is less encouraging, with a slowdown in office-based employment growth, more remote working …
4th August 2021
The surge in spending as coronavirus restrictions have been lifted will bring the euro-zone economy close to its pre-pandemic level in the coming months. After expanding by 2% q/q in Q2, we expect a similar increase in Q3. Both business and consumer …
The rapid spread of the Delta variant of the coronavirus adds to reasons to think that lacklustre economic recoveries lie in store for tourism-dependent economies in Africa, parts of the Middle East and South-East Asia. The weakness of tourism also …
Rebound still in full swing The final PMIs show that the euro-zone’s recovery continued apace at the start of Q3. Price pressures are continuing to mount and point to an increase in inflation in the coming months, but we expect this to be temporary. …
The widening of Romania’s current account deficit to a 10-year high partly reflects a rise in foreign firms’ reinvested earnings which is not a concern. But the trade balance has also worsened and the share of the deficit financed by stable forms of …
3rd August 2021
Inflation jumps again, but CBRT unlikely to respond with rate hike The further jump in Turkey’s headline inflation rate to 19.0% y/y in July is unlikely to trigger an interest rate hike but it will delay the start of an easing cycle until the back end of …
June’s PMIs show that virus outbreaks have weighed on manufacturing in Southeast Asia while supply bottlenecks and weaker demand created headwinds for industry in China. In contrast, Indian industry rebounded sharply and manufacturing recoveries continue …
2nd August 2021
Supply disruption weighing on output in Czechia and Poland The PMIs for July suggest that supply chain disruptions weighed on output in Czechia and Poland and continued to put upward pressure on prices. Meanwhile, the releases suggest that manufacturing …
Overview – There are already signs that the end of the stamp duty holiday will take some heat out of the housing market, with house price inflation set to cool from 10% to 7% by the end of the year. But as we think that the tax break was just one of …
Re-opening inflation peak appears to have passed While inflation in Switzerland is likely to rise further in the coming months, the anticipated bout of re-opening inflation may have already passed, and the SNB will not be fazed. The slight pick-up in …
CBRT conceding the fight against inflation? Turkey’s central bank raised its inflation forecasts in its latest Inflation Report and Governor Kavcioglu’s comments suggest that policymakers are unlikely to step up to the plate in the fight against …
30th July 2021
This week brought further signs that the “pingdemic” weighed on economic activity in July. (See here .) The number of people having been asked by the NHS App or Test & Trace system to self-isolate has almost doubled in the past three weeks, reaching 1.3 …
Data published today revealed that the euro-zone economy grew more rapidly than anticipated in Q2, with GDP rising 2.0% q/q whereas the consensus and our forecast were both for 1.5%. As we pointed out earlier , the upside surprise was due to very strong …
Southern rebound lifts euro-zone GDP After increasing more than expected in Q2, thanks to strong growth in the southern economies, euro-zone GDP should expand rapidly again in Q3 as core economies close in on their pandemic levels. The 2.0% q/q increase …
Inflation to rise above 3% but will fall back next year Euro-zone inflation resumed its upward trend in July and we expect it to rise further in the remainder of the year. But this is largely due to temporary factors, which should fade in 2022. The …
Weaker-than-expected rebound as economy re-opens The disappointing 0.6% q/q expansion of Czech GDP in Q2 suggests that industry may have fared worse than expected as input shortages took a greater toll on output. With virus restrictions easing further …
