Saudi Arabia’s Vision 2030 reform programme has resulted in major societal and cultural changes, but many of the economic reforms are currently not on track to hit their targets. That is not to say Vision 2030 should be dubbed a failure. But officials …
23rd September 2024
Overview – We are expecting another year of below-trend economic growth in 2025 across Asia, as subdued exports, worsening labour markets and tighter fiscal policy weigh on demand. Inflation is back to target nearly everywhere. With growth set to struggle …
Saudi Arabia’s Vision 2030 reform programme is passed its halfway point with clear evidence of major societal and cultural changes. But the authorities are currently on track to miss many of their economic targets, leaving the Kingdom’s long-term economic …
We held an online Drop-In session last week to discuss the likely pace and extent of interest rate cuts and their implications now that the US Fed has joined the party. (See a recording here .) This Update answers some of the questions that we received, …
This page has been updated with additional analysis since first publication. Growth slowing, not collapsing The fall in September’s composite flash PMI is probably not a sign that the economy is on the cusp of another downturn, but instead is further …
The imminent closure of the UK’s last coal power plant is a further reminder that thermal coal’s days in Europe are numbered. In Asia, coal will remain a major source of power for many years to come but global demand will still slow as growth in India …
Growth softening The weaker-than-expected set of Polish activity data for August suggest that GDP growth softened over Q3. That said, we still maintain our forecast for relatively strong growth of 3.0% for this year as a whole, and this batch of data is …
After two disappointing years, recent data suggest Europe’s commercial real estate market is stabilising. But will recovery follow and how strong will it be? Join our 20-minute online session on Wednesday 25th September at 10:00 BST as we discuss the …
This page has been updated with additional analysis since first publication. Flash PMIs point to sharp slowdown The big decline in the euro-zone Composite PMI suggests that the economy is slowing sharply, that Germany is in recession and th at France’s …
After the long-awaited start to the Federal Reserve’s easing cycle, Group Chief Economist Neil Shearing discusses next steps. He answers client questions about the risks of inflation bouncing back and explains why we expect rates to settle at levels much …
20th September 2024
The FOMC’s decision to kick off its easing cycle with a bang has boosted risk sentiment – with the S&P 500 surging to a new all-time high – and put the US dollar on the backfoot again. However, the US economy is still in solid shape and Chair Powell …
Milei’s ‘zero deficit’ budget The cornerstone of Argentine President Milei’s draft 2025 budget is a continuation of his ‘zero deficit’ policy, which implies a primary surplus of 1.3% of GDP in 2025 (versus 1.5% this year). But this looks optimistic, for a …
Offices are still in for a tough few years, with markets like San Francisco, LA and Seattle likely to come out of the downturn with values down 55% or more from their 2019 peaks. However, there are markets, predominantly in the South, where rising office …
SARB predicts higher growth and lower inflation The South African Reserve Bank (SARB) outlined a “goldilocks” scenario of stronger growth and lower inflation at its MPC meeting this week. The actual decision to cut the benchmark repo rate by 25bp, to …
Bank to step up the pace of easing The Summary of Deliberations from September’s policy meeting, published on Wednesday, revealed that the Bank of Canada is placing increasing emphasis on the downside risks to inflation and activity. Some on the Governing …
Fed opts for a 50 despite strong GDP growth Fed goes big The Fed’s decision to start its rate cutting cycle with a bang was not a big surprise after the seemingly coordinated media articles late last week warning that the 25bp vs 50bp debate was closer …
Stronger third quarter consumption The rebound in retail sales volumes in July will be welcome news to the Bank of Canada, which has been concerned about the downside risks to the economy. With the outlook for sales positive, there is a better chance …
The contrast between the Bank of England keeping interest rates on hold at 5.00% this week, along with the accompanying message that it will cut interest rates only gradually, and the US Fed kick-starting its easing cycle with a big 50 basis point (bps) …
After the Fed recently delivered its first rate cut, we look at previous US loosening cycles to analyse how emerging markets assets have performed. This time around we expect the US to skirt a recession, and our view is that most of the easing cycle is …
Note: We’ll be discussing key takeaways from our Europe Economic Outlook, including the scope of Germany’s downturn, in a Drop-In on Tuesday, 24th September . Register here for the 20-minute online briefing. The US Fed’s decision this week to cut interest …
The Fed’s decision to cut interest rates by 50 bp gave most commodity prices a boost this week. We suspect that lower interest rates won’t have a sizeable impact on US commodity demand this quarter and, next year, prices are more likely to be driven by …
Tailwind from Fed’s easing cycle will be small The US easing cycle that got underway with a 50bp cut this week will provide a boost to economic activity in Hong Kong, where a fixed exchange rate means interest rates track those in the US. We expect the …
Storm Boris floods Central Europe The flooding in Central Europe over the past week has been described as the worst in the region in the last two decades and our thoughts are with those affected. The most heavily impacted areas have been in Poland, …
Our proprietary measure of China’s green export volumes continued to rise in August to a new record high. Given that the EU tariffs have so far barely made a dent into China’s electric vehicle exports, and the fact that US and Canada tariffs will only …
RBI will focus on domestic factors rather than Fed Events this week have been dominated by the Fed’s 50bp rate cut to kick off its easing cycle. Clients can read our analysis of the decision here and watch our online briefing on demand here . Some EM …
Takaichi leading in the polls According to a recent poll, Economic Security minister Sanae Takaichi is seen as the most suitable successor for departing Prime Minister Fumio Kushida. However, the LDP’s leadership elections next Friday will probably …
While we do think the Bank of Japan will surprise with another hike this year, we suspect it will coincide with a more gradual strengthening of the yen rather than the sharp rally we saw last time. As was widely expected, the Bank of Japan left policy on …
The Bank of Japan today signalled that it’s in no rush to tighten monetary policy any further and we’re pushing back our forecast for a final rate hike to 0.5% from October to December. As widely anticipated, the Bank kept its policy rate unchanged at …
Retail sector on track to support consumer spending in Q3 The unexpected large rise in retail sales volumes in August came on the back of a 0.7% m/m increase in July (revised up from 0.5% m/m) and lends some support to our view that the recent stagnation …
This page has been updated with additional analysis since first publication. Borrowing disappoints but backdrop not as dire as Chancellor suggests August’s public finances figures continued the recent run of bad news on the fiscal position, with public …
Election risk to Sri Lanka’s recovery Sri Lanka has enjoyed a steady, if unspectacular recovery from the 2022 crisis which saw the country default on its debts and the president ejected from power in the face of huge popular protests. Data released late …
O labour market slack, where art thou? In the wake of the Fed’s hawkish 50bp cut and another set of strong Australian labour market data , the financial markets now see a lower 60% chance of an RBA rate cut by the end of the year, down from 85% when we …
The Bank of Japan kept policy unchanged today as widely anticipated and we’re sticking to our forecast that it will deliver another 25bp rate hike at its October meeting. As correctly anticipated by all analysts polled by Reuters, including ourselves, the …
The PBOC fails to deliver cuts The lack of any reduction to policy rates today, despite the clear economic case for doing so, underscores the extent to which the PBOC remains constrained by concerns about bank profitability and declining long-term bond …
Underlying inflation will hover around 2% until early-2025 Underlying inflation rebounded in August and will remain close to the BoJ’s 2% target until early-2025, triggering another rate hike by the Bank at its October meeting. The 2.8% annual rise in …
We think SNB Chairman Thomas Jordan will probably use his last meeting to once again surprise markets by cutting the policy rate by 50bp to 0.75%. Policymakers will be unhappy with the franc’s recent appreciation and will use rate cuts to try and stifle …
19th September 2024
In the months ahead, there are five themes to watch for in the world of trade and shipping, the most immediate of which is the risk of strikes at US East and Gulf coast ports in October. The upshot is that, after a nascent recovery in the first half of …
The South African Reserve Bank finally joined the EM easing cycle today, lowering its repo rate by 25bp to 8.00%. While the MPC clearly has some lingering concerns about the inflation outlook, we think sluggish growth and at-target inflation will provide …
Overview – Tight policy and deteriorating terms of trade will keep growth across Latin America subdued and we think that the region will underperform other parts of the emerging world – as well as consensus expectations – over the next couple of years. …
While UK Gilt yields might rise a bit further in the near term, we think that they will fall back before long, as the Bank of England eventually delivers more rate cuts than most anticipate. After delivering a first cut in August, the Bank of England left …
PIF investment in Egypt: the first of many? Saudi Arabia’s Public Investment Fund (PIF) has pledged to invest $5bn into Egypt in a further sign that March’s policy shift is attracting international attention. At the same time, this will help to put …
Sales slump, but signs of life emerging The slump in existing home sales in August shows that the sharp fall in mortgage rates since late-July is yet to stimulate the market, although the signs of life in last week’s purchase mortgage applications data …
SARB cautiously cuts by 25bp The South African Reserve Bank finally joined other EM economies in starting its monetary policy easing cycle, lowering its repo rate by 25bp to 8.00%. While the decision to cut was unanimous, the MPC did consider both holding …
Overview – Headline GDP growth in the Gulf economies will strengthen sharply in 2025 as oil output cuts are unwound. But lower oil prices will prompt a turn to fiscal consolidation in most of the Gulf, causing growth in non-oil sectors to slow. Elsewhere, …
Our US Chart Pack has been updated with the latest data and our analysis of recent developments. After kicking off its loosening cycle with a 50bp cut, we suspect the Fed will now revert to 25bp moves until the fed funds target range reaches 3.00% to …
Yields have now peaked in most sectors and capital values are close to bottoming out. However, with not much prospect for yield compression the recovery will be weak by past standards. Thanks to stronger rental growth the residential sector will …
