EM GDP growth generally held up well in H1 but we think it will soften over the second half of the year as US tariffs, tighter fiscal policy and slowing wage growth bite. The inflation outlook is looking more benign and we’ve generally lowered our …
17th September 2025
Weakness to continue The weakness in August housing starts was as expected, especially after July’s hard-to-explain strength. While homebuilders have recently become more optimistic about prospects for housing demand, as mortgage rates have eased, the …
July’s activity data showed that South Africa’s start to Q3 was a bumpy one, with retail sales and mining output surging at the same time that the manufacturing sector hit fresh difficulties. We suspect the economic recovery will continue, though, helped …
Weak inflation reading strengthens case for more repo rate cuts South Africa’s weaker-than-expected headline inflation reading of 3.3% y/y for August reinforces our belief that the Reserve Bank’s monetary easing cycle has longer to run. We expect an …
BI rate cut likely to fuel concerns about central bank independence Bank Indonesia’s decision today to cut its benchmark interest rate by 25bps to 4.75% came as a major surprise and is likely to further fuel concerns about the central bank’s independence. …
Japan will struggle to invest $550bn in foreign direct investment in the US. But we suspect that this sum also includes other forms of capital, which would make it feasible to meet the target and avoid further increases in US tariffs due to non-compliance …
We think China’s equities will make further gains. At the time of writing, China’s stock market was having a good day: the Hang Seng was up over 1% and onshore equities had made some ground too. Signs of progress in the US-China trade negotiations may …
This page has been updated with additional analysis since first publication. Pause in upward march doesn’t clear the path for more interest rate cuts The recent upward march in CPI inflation paused for breath in August, with CPI inflation staying at 3.8% …
Softer external demand will weigh on exports While overall exports are still holding up despite US tariffs, those to the US are plunging and we think that slower external demand will result in falling export volumes next year. The 0.1% annual decline in …
Another set of robust US activity data suggest that the US economy remains in decent shape despite the recent slowdown in employment growth. This suggests to us that the FOMC will stick to a more gradual pace of policy easing than currently discounted and …
16th September 2025
We no longer expect much of a rebound in the US dollar this year as the FOMC is about to resume rate cuts. But given the extent of Fed easing already discounted, our base case remains that the dollar will stabilise from here rather than fall much further. …
Housing market remains tepid The rise in home sales in August was a little better than expected and, while house prices did edge down, there was little in the latest housing data to make us doubt our view that house prices are stabilising. There are …
Growing public concerns about high crime levels and the apparent success of El Salvador in reducing levels of violence are making law and order a key issue in Latin America’s busy electoral calendar. High crime rates exert a heavy social and economic cost …
Manufacturing still mired in mediocrity Manufacturing output continued its long trend of underwhelming growth in August, bucking claims that tariffs would either trigger a downturn or a reshoring renaissance. Instead, the factory sector just appears to be …
Third-quarter GDP still tracking solidly after robust retail numbers The solid 0.6% m/m rise in retail sales in August and similar-sized gains in core (ex. autos) and control group sales indicate that consumers are not pulling back despite the labour …
Nothing to stand in the way of a 25bp cut tomorrow Core goods prices fell in August for the first time this year, which supports our view that the upside risks to inflation have eased considerably in recent months. That suggests the Bank of Canada will …
Low OECD commercial oil inventories have so far provided OPEC+ some cover to raise output, but we suspect that a softening in global demand and increases in OPEC+ supply will lead to commercial oil inventories rising strongly. In the absence of China …
Our updated estimates suggest that trade rerouting is so far doing less to insulate Chinese exports from US tariffs than in the past. That’s largely because rerouting via Mexico hasn’t picked up since US tariffs were first imposed in February. But …
The Riksbank will keep its policy rate at 2% next week as recent economic data has been stronger than expected, reducing the need for further loosening. While the risks are towards are a further cut later this year, we think the Riksbank is most likely to …
Korea’s economy has rebounded strongly in recent months. However, we don’t expect this to last. Weaker exports, fading fiscal support and the continued downturn in the property market are likely to weigh heavily on growth over the coming months. With …
This page has been updated with additional analysis since first publication. Labour market still loosening, but wage growth remains sticky While the further, albeit modest, falls in payroll employment and our seasonally adjusted measure of single-month …
The share of equities in the financial assets of US households and nonprofit institutions serving them (NPISH) hit its highest level in at least 75 years in the second quarter of this year. That should ring alarm bells, even if the buoyant stock market …
15th September 2025
Brazil now faces the highest non-reciprocal US tariff rates in the world – a stark sign of the breakdown in US-Brazil relations. And these tariffs come as Brazil’s balance of payments weakens, as its growth slows and as attention begins to shift to next …
Tentative signs of a recovery in manufacturing The increases in manufacturing and wholesale sales in July suggest tentative signs of a recovery in two of the sectors hardest hit by US tariffs. Less encouragingly, new orders fell by 2.2%, while the S&P …
Another squall in the bond market appears to have blown itself out. The summer lull had been interrupted by a jump in long bond yields, triggering warnings about surging government borrowing costs and fiscal crises across the advanced economies. But roll …
Data published today show that euro-zone exports were little changed in July and that, after a surge due to front-running earlier in the year, they have settled around their average level over the past two years. The latest surveys suggest that exports …
The rebasing of Saudi Arabia’s inflation data, which came alongside August’s data release, has resulted in only minor changes to the headline inflation readings, but it underlines the shifts in consumer spending pattern towards services since the launch …
The recent protests in Indonesia underscore deep-seated economic frustrations. Despite solid headline GDP growth in recent years, wages have been stagnant and the middle class has been shrinking. President Prabowo’s expensive populist policies, including …
Investment slump continues to weigh on growth The activity data point to a further loss of momentum last month. While some of this reflects temporary weather-related disruptions, underlying growth is clearly sliding, raising pressure on policymakers to …
The dollar has weakened a little further this week after US inflation and jobs data again came out on the soft side. This probably cements a 25bp rate cut next week’s FOMC meeting. But we continue to think that money markets are over-estimating the pace …
12th September 2025
The August CPI was the last hurdle to the Fed lowering interest rates next week, and without any marked pickup in inflation, a cut looks certain. Admittedly, consumer prices were a bit hotter. The all-items CPI rose by 0.38% m/m, while core CPI was up by …
TSX glittering The record high for the TSX, which was near 29,400 at the time of writing, has little to do with the AI boom that has sent US stocks soaring. Of the 18% gain in the TSX so far this year (compared to the 12% rise in the S&P 500), the …
Wider SA current account won’t prevent rate cuts The widening of South Africa’s current account deficit has sparked concerns, but the shortfall is still small suggesting that the rand will continue to hold up and the Reserve Bank can cut rates further. …
Mexico: tariffs not just about appeasing Trump The announcement that Mexico will raise import tariffs on more than 1,400 products spanning across sectors including textiles, steel and automotives from countries that Mexico doesn’t have free trade …
Consumers fearful of stagflation Consumer sentiment fell back to a four-month low of 55.4 in September, from 58.2, as fears over both higher inflation and labour market weakness weighed on households. That leaves the University of Michigan’s sentiment …
We’ll be discussing the outlook for Bank of England, Fed and ECB policy in an online Drop-In at 3pm on 18 th September. (Register here .) We explained in our BoE Watch why we no longer think the Bank of England will cut interest rates again this year, …
The news flow and price reaction in the oil market this week, with oil prices rising in the first half of the week as a result of geopolitical risks and falling later on following the assessment of bearish fundamentals, encapsulated the key factors that …
The Fed meets this coming week to decide how much monetary relief the US economy really needs. Group Chief Economist Neil Shearing says that, employment data aside, the evidence argues for fewer rate cuts than markets are pricing in. He talks to David …
Reflation trade in bonds likely to reverse Ten-year yields on Chinese treasury bonds (CGBs) have risen since July and returned to pre-Liberation Day levels this week. This partly reflects investors reallocating funds towards equities amid the stock market …
Economic resilience in the face of US tariffs This week we published our Q4 India Economic Outlook , which contains all of our latest analysis of India’s economy and financial markets. The forecasts and underlying data can also be viewed in our …
BI in a tough spot amid fiscal, independence fears Bank Indonesia will meet next week under the cloud of recent protests and the sacking of respected Finance Minister Sri Mulyani Indrawati. We expect officials to hold fire from further easing, not …
Drones enter Poland, security now a clear priority The incursion of Russian drones into Polish airspace this week has been met with deep concern. At the very least it will support policymakers’ efforts to continue raising spending on defence. The drones …
CBR slows easing, but cuts to continue into 2026 The Central Bank of Russia (CBR) opted for a smaller-than-expected 100bp cut in its policy rate today, to 17.00%, and the communications highlight policymakers’ concerns about pro-inflationary risks. Even …
Inflation has bottomed out, will rise gradually from here India’s headline CPI inflation rose for the first time in ten months in August, but at just 2.1% it remains very low and we think it will only gradually rise back up to the RBI’s 4% target. This …
As expected, the ECB left rates unchanged at its meeting this week and Christine Lagarde gave nothing away about their future path. Post-meeting leaks provided a bit more colour suggesting that the debate over a further rate cut is not over and that one …
Credit growth has passed its peak Weak private credit demand drove a further weakening of bank loan growth in August. And growth in government bond issuance slowed for the first time this year, resulting in a slowdown in broad credit growth. The August …
We don’t think the falls in the yields of very long-dated government bonds will last much longer. Much attention lately has been on next week’s Fed meeting, and what we might learn about the likely future path of rates. But, as far as the recent Treasury …
