GDP breakdown points to rebound in tech & retail Officially, GDP growth slowed last quarter in q/q terms. But as we noted in our response to the data, this does not seem consistent with wider evidence of a slight improvement in momentum recently. On …
19th January 2024
Disinflation unlikely to stall Earlier this week, we learnt that new dwellings commencements continued in a tailspin, with housing starts falling to a 11-year low of 37,000 in Q3. That led some commentators to sound the alarm on how the resulting …
Note: Join us on our upcoming Asia Drop-in on 25th January. We’re discussing China’s missing stimulus, the Asian monetary policy outlook and much more. Register here for the 20-minute online briefing. Inflationary pressures moderating Inflation fell to an …
Egypt needs enhanced IMF deal urgently Egypt’s foreign currency woes remained in the spotlight this week, highlighting the importance of getting an enhanced IMF deal over the line in order to avoid a disorderly balance of payments crisis. This week …
18th January 2024
South Africa climate efforts at risk from power plan South Africa’s draft energy plan presented bad news to those concerned about loadshedding and the commitment to reducing greenhouse gas emissions. South Africa’s Integrated Resource Plan (IRP) set out …
12th January 2024
The latest Trans Mountain regulatory hearing will determine whether the pipeline expansion is once again delayed. That would weigh further on the outlook for exports, with external demand already very weak. Another year, another year’s delay? Admittedly, …
Inflation data surprise to the downside The softer-than-expected December inflation data released across Central and Eastern Europe (CEE) this week suggest that further interest rate cuts will be delivered across the region over the coming months and, in …
Trump faces first test in Iowa Iowa marks the start of the primary race Donald Trump is still the prohibitive favourite to win the Republican presidential nomination. But the Iowa caucuses, which kick off the primary season this coming Monday, should …
After a strong start to the year, the US dollar seems set to end the week broadly unchanged against most currencies, as inflation data releases out of the US this week failed to generate much of a reaction. This stalemate in currency markets has been a …
Ecuador erupts The dramatic escalation of violence in Ecuador this week after President Noboa announced plans to crack down on organised crime has shone the spotlight onto the country’s growing problem with drug trade related crime. Ecuador has …
The rebounds in CPI inflation in both the US and the euro-zone in December (from 3.1% to 3.4% and from 2.4% to 2.9% respectively) raise the question of whether the downward trend in the UK will also stall. After all, inflation in the UK has been following …
Rise in female participation rate is encouraging Korea’s December labour market report published earlier this week show the country is making welcome progress in bringing more women into the formal labour force – the female participation rate has risen to …
At the ECB’s last meeting in December, President Christine Lagarde insisted that it was too early to discuss rate cuts. But the first comments of 2024 from policymakers, including Ms Lagarde herself, suggest that policy loosening may not be too far away. …
Growth pick-up to extend into Q1, fade by year-end The Q4 GDP data due on Wednesday are likely to show that China’s economy ended 2023 on a more positive note. Our GDP tracker points to y/y growth of 5.5%, up from 4.9% in Q3. That partly reflects a weaker …
Inflation could start with a 3 in December We explained last week why we expect the RBA to cut interest rates earlier than most anticipate and the sharp fall in inflation in November supports our view. The available data suggest that the Q4 inflation …
Air pollution a modest headwind Air pollution in India has been a growing problem for several decades – on some measures air pollution has almost doubled from the levels at the start of the century. (See Chart 1.) Chart 1: India Annual Average PM 2.5 …
Inflationary pressures moderating The economic data released this week all suggest that the case for tighter monetary policy is diminishing. For a start, the Tokyo CPI showed that inflation excluding fresh food fell to just 2.1% in December, within …
Egypt’s policy shift and IMF deal edging closer Meetings this week between Egypt, the IMF, and the US took place following the release of a draft economic plan, which points to the expansion of the current IMF deal and a renewed shift towards economic …
11th January 2024
The dollar’s strong start to 2024 has partly reversed today as the surprisingly weak US ISM non-manufacturing survey has more than offset another robust US non-farm payrolls report . Even so, the greenback remains up on the week as interest rate …
5th January 2024
Nigeria spending up, but no more deficit financing This week, Nigeria signed its 2024 budget into law. Spending is projected to be higher than originally anticipated, although officials are signalling that it will be financed by higher revenues rather …
This week was a mixed bag for commodities . Gold and silver prices fell as US interest rate expectations rose and the dollar strengthened. By contrast, natural gas prices in the US and Europe edged higher on the back of forecasts for colder weather in the …
Conditions in the housing market seem to be improving, with the local real estate board data pointing to a big improvement in the home sales-to-new listing ratio in December. While the unseasonably warm weather may have played a role and house prices …
Fed still coy about QT end-game FOMC minutes put focus on inflation data The minutes of the mid-December FOMC meeting did not dissuade us that the Fed will start to cut interest rates from this March onwards. Admittedly, officials warned that “they would …
BoI starts easing cycle, but uncertainty remains high Israel’s central bank started its monetary easing cycle this week with a 25bp interest rate cut – a move that came a bit sooner than we’d expected. But inflation risks are greater than most anticipate, …
There are still plenty of downside risks to our below-consensus forecast that the economy will stagnate in 2024 with GDP growth of 0.0%. (See here .) But the news over the past week has highlighted three upsides. First, the slide in 2-year and 5-year …
Will the BoK turn dovish? The Bank of Korea looks almost certain to leave interest rates unchanged at its meeting on Thursday. But with inflation falling and concerns about the economy mounting, we expect the central bank to strike a more dovish tone …
Data released this week support our key calls on the euro-zone for the upcoming year. First, the economy looks likely to be weaker than most anticipate. Although the final euro-zone Composite PMI for December, released on Thursday, was revised up from the …
Argentina and the IMF to tango again? An IMF delegation is set to meet with Argentine officials in Buenos Aires today to discuss the country’s $44bn program that – in the Fund’s words – had “ gone off track ” in August under the previous Peronist …
PSL injection to provide modest lending boost While bond yields in developed economies have regained some ground this week, the opposite has been the case in China, with the 10Y CGB yield dropping to a near four-year low of 2.52% today. This suggests …
Remittance inflows to remain robust The World Bank reported in its latest Migration and Development Brief that India remained the world’s largest recipient of remittances in 2023. Remittances jumped to US$125bn (3.4% of GDP) last year, from US$111bn in …
Manufacturers keep losing market share overseas Just as we predicted a few months ago, the outperformance of Japan’s stock market relative to US stocks has unwound as the yen has strengthened in recent weeks. (See Chart 1.) Chart 1: Yen/Dollar vs. …
A cooling economy will give the RBA cover Earlier this week, the Australian Financial Review published its quarterly survey of economists. By and large, the perception amongst forecasters seems to be that the RBA will retain its hawkish bias for the …
Egypt tightening the purse strings as IMF deal nears In Egypt, 2024 started off with a raft of price hikes as officials seek to tighten fiscal policy and warm relations with the IMF ahead of an anticipated enhancement of the current deal. The increases …
4th January 2024
Zambia secures latest IMF tranche as debt talks drag Zambia received the latest $187m tranche of its IMF deal this week as it continues to make progress with its fiscal performance despite a tough external backdrop. This may help to push long-running debt …
22nd December 2023
Data this week showed that the population jumped by 430,000 in the third quarter alone, almost as much as the official full-year permanent resident target of 465,000. Nonetheless, the November CPI data showed a much-needed slowdown in rent inflation, …
This week saw a renewed attempt from some Fed officials to push back against market expectations for interest rate cuts but, with core PCE inflation running at an annualised pace of below 2% over the past six months, this final flurry of hawkishness isn’t …
The final week ahead of the holiday period is drawing to an end with the US dollar somewhat weaker across the board. Unlike last year, the BoJ’s final policy meeting proved a(nother) damp squib, with policymakers equivocating somewhat on the timing of …
Argentina: Milei takes a chainsaw to the state Having announced large cuts to public spending as well as a steep devaluation of the peso last week, this week President Milei took a first big step towards fulfilling his campaign promise of reducing the …
Below-consensus growth Most countries in Asia will record faster economic growth next year, but 2024 still promises to be a difficult year for the region. Exports from the region have rebounded in recent months, but this is unlikely to last, if as we …
Fiscal rules no game changer for CEE public finances EU finance ministers agreed on a new set of fiscal rules this week, but this doesn’t change our view that concerns about public debt dynamics will grow in parts of Central and Eastern Europe (CEE) over …
PBOC moving cautiously to ease further The Loan Prime Rates (LPR) were left unchanged for a fourth consecutive month on Wednesday. But today’s coordinated reductions in commercial bank deposit rates suggest that the PBOC is still on an easing path. Lower …
Revised data showing that real GDP contracted by 0.1% in Q3 has fuelled the debate as to whether the UK entered a technical recession over the second half of this year. But focussing on small falls (or increases) in GDP misses the point: the bigger …
Will the RBI follow the lead of other central banks? India’s economy has held up exceptionally well in 2023 due to strong government spending and investment. Meanwhile, timely data show a renewed surge in food prices. This is a worry for the RBI as the …
Wage growth poised to lose momentum Earlier this week, we found out that Westpac’s leading index edged up once again in November and is consistent with a pickup in economic growth over the next six months. That raises the risk that labour demand will be …
Policy rate hike in January now looking unlikely It came as a surprise to no one that the Bank of Japan left policy settings unchanged at this week’s meeting . Even so, yields on 10-year JGBs plunged by nearly 10bp since then, whereas 10-year Treasury …
Red Sea crisis adds to Egypt’s external strains Attacks on cargo ships in the Red Sea have prompted major shipping companies to reduce their traffic through the Suez Canal. This deals a blow to Egypt’s hard currency revenues when it desperately needs …
21st December 2023
ECB is talking but investors aren’t listening This week brought more pushback from ECB policymakers against expectations for rates to start falling in the first half of next year. But investors have largely ignored them, and arguably for good reason. …
Household net worth fell in the third quarter, although the recent resurgence in bond and equity prices means that should soon be reversed. It is too soon to sound the all-clear for households’ finances, however, given that the debt service ratio is set …
15th December 2023
The Fed’s shift away from its “higher for longer” messaging (and European central banks attempts at maintaining a hawkish stance) pushed relative interest rate expectations against the US dollar, leaving it weaker against nearly all major currencies this …
Argentina’s fiscal measures: mission impossible? With Argentina’s economy deep in crisis territory, the new Milei administration wasted no time in announcing a stabilisation plan for the economy this week. This included a steep devaluation of the peso and …