Gaza ceasefire holding, but path ahead looks fragile The ceasefire between Israel and Hamas remained intact this week, but the road to a lasting peace looks fragile. Issues remain over the return of deceased hostages to Israel. Meanwhile, the full …
17th October 2025
Death of Kenya’s political titan threatens instability The passing this week of Raila Odinga, a prominent politician in Kenya, raises important questions about the country’s political environment both now and in the run-up to the elections in 2027. …
US-China trade back in the spotlight It’s been a hectic week for US-China trade relations. To recap, late last week China announced a series of new trade restrictions on the US, including an expansion of its export controls on rare earths . While that was …
Food inflation in the euro-zone has picked up this year but we think that it will fall back in 2026. This would reinforce the disinflation that we expect from lower energy prices and slower wage growth. Food and non-alcoholic drinks have a weight of about …
Where will benefit from fresh China-US tensions Relations between the US and China have deteriorated sharply in recent weeks, with President Trump threatening to impose an additional 100% tariff on Chinese imports in response to Beijing’s move to tighten …
Don’t rush to conclusions on Russian oil purchases President Trump’s comments this week that Prime Minister Modi has pledged to stop buying oil from Russia initially led to a c.1% rise in global oil prices, which was quickly reversed after India’s …
Economy likely to cool, central bank set to loosen policy Malaysia’s economy accelerated in the third quarter but we expect growth to soften in the coming quarters which, alongside low inflation, should add to the case for further monetary easing this …
Case for further easing remains intact The messaging from the RBA this week would suggest that it is in a bit of a hawkish mood. For instance, the minutes of the September meeting put considerable emphasis on upside risks to the inflation outlook. …
Takaichi still set to become Prime Minister In its latest World Economic Outlook released this week, the IMF revised up its estimate of Japan’s budget deficit for 2024 from 2.9% of GDP to 1.5%, which brought it in line with our-long standing estimate . …
We think after a period of sustained outperformance, total returns in high-yielding EM currencies relative to funding currencies will be weaker in the next couple of years. In particular, we forecast for the yen to rebound, and there is a growing risk …
16th October 2025
This interactive dashboard presents all of our CE FX forecasts out to end-2027, including spot and total return forecasts. The dashboard also features historical performance data as well as detailed insights into yield gaps, valuations, correlations and …
The US’s recent pledge of support for Argentina raises the question of whether other EMs facing financial difficulty might receive similar assistance. Pakistan and Jordan are potential candidates, as are some countries in Central America where the US …
Toronto prices will continue to drag down the average The weakness in the MLS House Price Index in September was largely due to a decline in Toronto, where there is little sign of a turnaround in sight. That presents a risk to our view that the nationwide …
Ceasefire holds as spillovers begin to fade The Israel-Hamas ceasefire has, so far, stayed intact as hostages and prisoners have been exchanged and aid has flowed into Gaza and the West Bank. The reaction in the region’s financial markets has been muted, …
While the economy appears to be narrowly avoiding recession, we expect GDP growth to average less than 1% annualised over the second half of the year, with the unemployment rate rising toward 7.3%. Core inflation is likely to remain above target before …
As the US Q3 reporting season gets underway, here’s a sobering observation: the ‘big-tech’ sectors – information technology, communication services, and consumer discretionary – have accounted for nearly 70% of the increase in S&P 500 forward-twelve-month …
Financial repression is not a costless way to deal with public sector debt burdens, but it tends to be more politically palatable than the other options. Indeed, it is already happening and governments will increasingly turn to it. Financial repression …
The impeachment of Peru’s President Dina Boluarte has once again shone the spotlight on the country’s governability problem, and it doesn’t look like next year’s election will resolve this. Peru’s strong balance sheet means the fallout is likely to be …
EM growth has been resilient to US import tariffs, but headwinds from fiscal tightening, softer labour markets and (for some) lower commodity prices will drag growth down over the coming year. Most of our 2026 GDP growth forecasts lie below the consensus. …
The EU’s Carbon Border Adjustment Mechanism (CBAM) extends the EU’s carbon pricing mechanism to the rest of the world through what is essentially a ‘carbon tariff’. Many emerging markets have opposed CBAM given the potential loss of export revenues …
We think the outlook for US diversified banks is sunny, given the prospects for bonds and the economy. Five of the eight diversified banks in the S&P 500 are among the first firms in the index to have reported so far in the third quarter earnings season. …
We think the investment slump that has caused Hungary’s economy to underperform its Central European peers is close to bottoming out, but ongoing delays to EU funds and overcapacity in certain parts of the economy will continue to drag on growth. …
This page has been updated with additional analysis since first publication. We're hosting a special in-person roundtable event at our London office on Wednesday 12th November to discuss if the Chancellor’s second Budget on 26th November will be as big …
If we’re right that the Bank of Japan will lift its policy rate to 1.5% by 2027, its net interest income will turn negative over the next couple of years. However, its overall net income should remain positive as the Bank is still earning sizeable amounts …
Surge in unemployment makes November cut more likely The marked loosening of the labour market last month bolsters the case for the RBA to cut rates by 25bp at its meeting in November. Even so, the decision will probably come down to the wire, given the …
Downside inflation surprise suggests deeper cuts are coming The sharp drop in Nigeria’s headline inflation rate to 18.0% y/y last month is likely to prompt the Central Bank of Nigeria to continue cutting interest rates, and by more than most expect, over …
15th October 2025
Deflation in China has added to disinflationary forces in advanced economies over the past few years, reducing the level of headline CPI by around 0.3-0.5% on average. Tariffs are likely to reverse this trend in the US. But elsewhere, policymakers will …
A tentative manufacturing recovery hasn’t completely stalled The August manufacturing and wholesale sales data were not as bad as feared, and suggest that despite the 1.0% m/m fall, the tentative manufacturing recovery that we’ve seen since June hasn’t …
While talk of US retaliation against China’s new export controls has mostly focused on tariffs and other barriers to goods trade, investment restrictions are another weapon in Washington’s arsenal. If tensions persist, the Trump administration could …
The Saudi economy has been boosted by the unwinding of oil output cuts this year and this will continue over the coming quarters, but a step up in fiscal consolidation efforts means that overall GDP growth is likely to come in weaker than most anticipate …
The South African activity data for August showed that the retail sector is struggling, but it looks like the economy will post reasonable growth in the third quarter on the back of rising output in the manufacturing sector. And we think the tailwinds …
In a period of slow economic growth but stabilising inflation and earnings growth, we expect the residential sector to see the strongest rental growth globally, with industrial close behind thanks to support from the structural driver of online retail …
While market pricing already looks consistent with our view that r* will rise to around 2% in the US over the coming decade, a deeper look suggests that there is still room for investors’ rate expectations to rise. We recently reiterated our view that the …
Ahead of the phase-in of the EU’s Carbon Border Adjustment Mechanism (CBAM) from the start of 2026, and the associated phase-out of free carbon permits for EU producers, this Focus assesses the implications for economic growth, inflation and monetary …
The looming introduction of the EU’s Carbon Border Adjustment Mechanism (CBAM) at the start of 2026 will finally extend the “polluter pays” principle to emissions imported into the bloc. This report – the first of our Economic Impact of CBAM series – …
Economic Impact of CBAM …
14th October 2025
Our proprietary CBAM Exposure Index provides an easy-to-interpret way to compare the relative impact of CBAM across economies and identify where the most acute risks lie. Read related research on our Key Issues page. This dashboard was last updated on …
Credit growth slowdown continues Bank loan growth continued to weaken in September, with little sign of any boost from the consumer loan subsidy scheme. And growth in government bond issuance slowed for a second month, driving a further slowdown in broad …
Indonesia’s President Prabowo Subianto will mark a year in office on Monday (20 th October). After an encouraging start, a series of protests in recent months have pushed his administration in the direction of more populist and interventionist …
Industrial malaise continues The decline in industrial production in August supports our view that the economy as a whole barely grew in Q3, for a second successive quarter. Prospects for industry remain poor for the foreseeable future. The 1.2% m/m …
The war in Gaza has fundamentally re-shaped geopolitics in the Middle East. Iran and Russia (and, indirectly, China) are nursing blows to their power in the region, which has created space for the US to try to pull the likes of Saudi Arabia back into its …
Soft inflation to persist into 2026 Saudi Arabia’s headline inflation rate edged down from 2.3% y/y in August to 2.2% y/y in September, which remains weak by EM standards and, as we outlined in a Focus, we think that inflation will ease further as we head …
We don’t think the political drama in Japan will be a drag on the country’s bond and stock markets and may, in the near term, even give them a boost. So far, markets have taken the country’s renewed political uncertainty – specifically, the breaking-up of …
Deflation likely to linger despite pledges to curb overcapacity Core CPI inflation edged up to a multi-year high last month and PPI deflation eased. But this largely reflects temporary factors and base effects, rather than the impact of the …
The sharp fall in interest rate expectations and long-term government bond yields over recent days in response to renewed US-China tensions has brough the 10-year Treasury yield to around its lowest level since early April. Unless the trade war returns in …
While huge investment in AI has been driving US GDP growth this year, Europe has seen a negligible boost to investment. And it seems unlikely that AI investment in Europe will increase by much in the coming years, let alone match US levels. Admittedly, …
A closer inspection suggests that the scope of China’s new controls on rare earths is narrower than many, including us, had initially feared. But they still give officials plenty of leverage over global supply chains. And they come alongside new controls …
EM inflation has continued to fall and is now close to the rates recorded in the late 2010s, which will be welcomed by policymakers. But there are a few important outliers. Inflation looks set to remain high by past standards in Central and Eastern …
