Rising interest rates in Japan have raised concerns about whether this will slow investment activity and exert downward pressure on capital values. Our view is that while the risk-free rate will continue to gradually rise, steady GDP growth means the …
16th December 2025
House price downturn not over yet The housing market weakened in November, with sales activity and house prices both recording declines. Even so, the further improvement in the sales-to-new-listing ratio raises our confidence that house price inflation …
15th December 2025
Overview – The outlook for oil is dominated by an abundance of supply, which will continue to weigh on prices over our forecast horizon. Meanwhile, although structural demand factors will keep gold and silver prices at historically-elevated levels over …
Regional GDP growth will slow next year, which combined with softer inflation, should give central banks room to continue to ease monetary policy. But the scale of easing will vary across countries. While we think interest rates will come down a long way …
Overview – The macroeconomic backdrop has turned increasingly favourable and we expect Sub-Saharan Africa to enter its strongest period of growth in the coming years since the early 2010s. Our forecasts for most countries – notably South Africa – are …
Overview – The economic outlook across much of Asia has improved recently, prompting modest upward revisions to our 2026 GDP growth forecasts. Strong demand for AI-related products will continue to lift exports and offset the impact of US tariffs. The …
Sector-specific tariffs hurting their intended targets The fall in manufacturing sales in October appears to have been mostly the result of newly-implemented US tariffs weighing on certain sectors, or at least the threat thereof. We expect trade …
Muted core price pressures should quell rate hike talk The below-target gain in three of the four main core prices measures in November reinforces our view that markets have gotten ahead of themselves by pricing in higher interest rates from the Bank of …
Soft inflation to prompt quick restart to easing cycle The sharp decline in Nigeria’s headline inflation rate to 14.5% y/y last month strengthens our view that the central bank will quickly restart its easing cycle when it next meets in the new year. The …
Overview – Fiscal support and a ramp-up in AI investment will prevent a sharp slowdown in China’s economy, but we expect growth to remain weak in 2026. Deflation and overcapacity will persist and China’s towering goods trade surplus with the world will …
Chilean markets appear to have largely already priced in José Antonio Kast’s victory in the second round of the presidential election yesterday – and the prospect of stronger public finances and more pro-business policymaking. That said, his fiscal plans …
The year’s home stretch is a natural moment to take stock of the major developments of the last twelve months and get some perspective on the likely challenges in 2026. With that in mind – and for those looking for a reading break from any holiday bustle …
Overview – After enduring a higher inflation rate than most of its peers for the bulk of the past five years, we think that 2026 will be the year that inflation in the UK falls back to the 2.0% target. That will have a lot to do with the loosening in the …
Overview – Most economies in Central and Eastern Europe (CEE) will experience stronger GDP growth in 2026 as external demand picks up and fiscal policy is kept loose (or loosened), while Russia’s economy will stagnate amid low oil prices as well as war …
Inflation eases, deflation possible by end-2026 Saudi Arabia’s headline inflation rate dropped to a nine-month low of 1.9% y/y in November and we expect it to ease further, and potentially into deflationary territory, over 2026-27. The outturn was down …
The last full working week of 2025 is a busy one. Half of the G10 central banks announce policy, alongside several key economic data points including delayed US payrolls data. Government bond yields have been trending upwards over the past couple of …
Fiscal pullback weighing on growth November data point to broad-based weakness in domestic activity, largely due to a pullback in fiscal spending. Policy support should help drive a partial recovery in the coming months, but this probably won’t prevent …
The Q4 Tankan Survey struck all the right notes from the Bank of Japan’s perspective. It showed that business conditions are improving, profit margins remain elevated, and that firms are upbeat about their investment intentions. Moreover, with firms …
Net lending by banks to commercial real estate jumped to $13.8bn in November, the strongest monthly outturn since February 2023. That followed a strong month for net lending in October, and as a result outstanding CRE debt held by commercial banks climbed …
12th December 2025
AI boom continues in ICT services sectors Usually the quarterly services survey data is not available before the initial GDP release, but that’s not the case for the shutdown-delayed third quarter. The QSS report, released to little fanfare this …
The Bank of Canada kept its policy rate at 2.25% this week, wrapping up a year in which it has cut interest rates by a cumulative 100bp. The Bank seems content, barring a shock, to leave the policy rate at the bottom of its 2.25% to 3.25% neutral range …
Unlike the rout this spring, the latest sell-off in JGBs seems to have been mainly driven by a more hawkish assessment of Bank of Japan (BoJ) policy across the curve. We forecast the 10-year yield to rise to 2.5% by end-2027, but don’t think this will …
Shilling stability starting to startle Kenya’s central bank cut interest rates by another 25bp this week, to 9.00%, but the extent of further monetary loosening is likely to rest on what happens next with the shilling. The decision itself was not a major …
Colombia’s debt problems back in the spotlight Colombian President Petro was dealt a blow this week as the senate’s economic committee rejected his tax bill that was intended to raise COP16.3trn (c.1% of GDP) via tax hikes to finance the 2026 budget. It’s …
We’ll be discussing the outlook for Bank of England, Fed and ECB policy in a 20-minute online Drop-In at 3pm on 18th December (register here ). At this time of year it is useful to look back at how your forecasts have done and to learn from any mistakes …
In this special episode of The Weekly Briefing podcast, Group Chief Economist Neil Shearing and Chief Global Economist Jennifer McKeown outline Capital Economics' expectations for 2026. They tackle the key drivers and risks in the year ahead, examining …
For all the focus on gold’s record-breaking run this year, silver has outperformed and has risen by 120% year-to-date. Gold’s often-overlooked ‘cousin’ reached an all-time high of ~$64 per oz this week. Some analysts have pinned the rally on structural …
Weaker rupee unlikely to pose a major macro threat This week we published our India Economic Outlook for Q1 2026, which contains all of our latest analysis and forecasts for India’s economy and financial markets. One key call is that the RBI will deliver …
The December IPF consensus survey forecasted all-property total returns of 7.8% p.a. over 2025-29, more-or-less unchanged from September. Indeed, the total return forecast has been stable for all of 2025. By contrast, thanks to an upward revision in our …
Is investor optimism justified? Market moves over the past fortnight show that investors are becoming more optimistic about the euro-zone economy. Interest rate expectations and bond yields have risen, inflation swap rates have increased, and equities …
Public debt is not a cause for worry Prime Minister Sanae Takaichi has cleared the first parliamentary hurdle in passing her stimulus package , with the lower house approving the supplementary budget yesterday. Although the ruling coalition lacks a …
Ukraine’s friends are wavering There has been further wrangling within the EU about how to provide support for Ukraine ahead of the EU leaders’ summit on 18 th December. The “reparations loan”, which leverages immobilised Russian assets, remains the …
Inflation has bottomed out but the rise to 4% will be gradual The November data confirm that headline inflation in India has bottomed out. But we think the rise back up to the RBI’s 4% target will be a gradual one. That leaves scope for the central bank …
Chip supply bottleneck set to ease The boom in AI capex has had a large impact on the trajectory of US economic growth this year. By contrast, it is hard to find evidence of any dramatic impact on the Chinese economy. To be sure, the contribution to GDP …
Bank lending continues to slow Credit data for November showed net new financing more than doubling. But that mostly reflects the usual seasonal pattern. To iron out that seasonality, we prefer to look at growth in outstanding credit growth. On that …
BoT to resume easing cycle The Bank of Thailand kept its policy rate unchanged at its October meeting but appears likely to resume its easing cycle at its meeting next week. The primary concern for policymakers is the weakness in economic activity …
We’re hosting a 20-minute online briefing at 3pm GMT on Thursday 18 th December on the latest central bank decisions and 2026 policy outlook. (Register here .) This page has been updated with additional analysis since first publication. Contraction …
Capacity pressures remain high The RBA made no bones about its tightening bias when it left rates on hold this week . Indeed, Governor Bullock said that the only question for the Board was whether it would leave rates on hold for an extended period or …
Ueda signals December rate hike as uncertainty over US tariffs has diminished Government subsidies will push headline inflation below 2% next year However, persistent strength in underlying inflation will prompt further tightening The Bank of Japan will …
With our 10-year gilt yield forecast unchanged and the impact of changes to business rates broadly revenue neutral over the next five year years, we are not changing are commercial property forecasts following the Budget. That said, with the Chancellor …
11th December 2025
Trade deficit narrows, with net trade providing big boost to Q3 GDP The trade deficit narrowed markedly to $52.8bn in September, from $59.3bn, as exports increased by 3.0% m/m, easily outpacing a 0.6% m/m gain in imports. It now appears that third-quarter …
A close 5-4 vote to cut rates from 4.00% to 3.75% in December MPC may slow the pace of rate cuts in the first half of 2026 But we still think the BoE will cut rates by more than most expect, to 3.00% We think the balance will tip in favour of a 25 basis …
We expect GDP growth to average around 1% annualised over the next four quarters as household spending, investment and exports all remain subdued, while the latest budget won’t provide much short-term stimulus. However, the labour market outlook has …
Overview – The recovery in European commercial property values is slowing and we think this will continue as soft economic growth weighs on rents and elevated interest rates limit yield-driven capital gains. Near-term strength in prime rents will support …
The readout from China’s Central Economic Work Conference suggests that monetary and fiscal policy will remain supportive next year but that any additional easing will be modest. Instead, the focus appears to be on making better use of government spending …
The Riksbank will keep the policy rate at 1.75% next week and will probably leave its forward guidance unchanged, saying that it will maintain the current policy rate for some time to come. Norges Bank will also leave its policy rate unchanged, at 4%, but …
The SNB shrugged off lower-than-expected inflation and kept faith that its zero interest policy rate will be sufficient to boost inflation in the medium term. We think it will be less relaxed next year, when we expect inflation to average just zero, and …
CBRT delivers a bigger cut, but communications hawkish The decision by the Turkish central bank (CBRT) to accelerate the pace of its easing cycle today with a 150bp cut to its one-week repo rate, to 38.00%, was accompanied by relatively hawkish …
Investors’ interest rate expectations have risen… … but ECB will leave rates unchanged next week and reiterate neutral stance. And we think the ECB’s next move is more likely to be a cut. Stronger-than-expected economic data and recent comments by …
