This page has been updated with additional analysis since first publication. Extended pause likely until 2025 The National Bank of Poland (NBP) left its policy rate on hold at 5.75% today as it looked through the recent sharp drop in inflation in March. …
4th April 2024
The continued surge in the stock market that we forecast is likely to drive household net wealth to a record high as a share of incomes and provide a tailwind to consumption growth. But that shouldn’t stop the Fed from gradually lowering interest rates if …
The CEE industrial market cooled in 2023 as economic activity stagnated. This year will herald an economic recovery but we don’t think it will be stop the rent growth slowdown. Demand is anticipated to rebound only tentatively and supply is still strong, …
Exports and imports both surged A surge in gold exports and the end of earlier weather-related disruptions flattered the figures in February, but the trade data nonetheless point to a strengthening economy and suggest that net trade made a large …
Exports and imports surge in first quarter The strong gains in exports and imports in February imply that net trade will be a negative for first-quarter GDP growth, but that appears to mostly reflect the support to import demand from strong consumer …
Easing cycle just around the corner Romania’s central bank left its policy rate on hold at 7.00% as expected again today but with inflation likely to fall further, a monetary easing cycle is probably just around the corner. We maintain our view that the …
Vietnam’s banks are likely to remain cautious this year and both credit and GDP growth are likely to come in below trend. The central bank will have to cut rates further to stimulate demand. The health of Vietnam’s banking sector worsened last year due to …
The threat of an outright conflict between Iran and Israel is at its highest point since the war in Gaza began. A full-blown war would not only have major repercussions for Iran’s own economy, but the spillovers into oil markets could have a significant …
Overview – We expect most commodity prices to fall over the next couple of years as greater supply enters the market. Industrial metals are the exception, China’s policymakers have stepped up stimulus in recent months and this should continue to support …
Surprise fall in Swiss inflation raises odds of further SNB rate cuts The further fall in Swiss inflation in March reinforces our view that the SNB will cut rates by a further 50bp this year. We have pencilled in the next rate cut for September, but there …
We believe that the “narrow path” of returning inflation to target while keeping unemployment below pre-pandemic levels is wishful thinking. The Reserve Bank of Australia won’t bring domestic cost pressures under control unless the unemployment rate rises …
Clearer downward trend in underlying inflation But stronger GDP growth reduces the urgency to loosen policy New immigration policy could prompt big forecast changes While the recent inflation data have strengthened the case for interest rate cuts, we …
3rd April 2024
Taiwan’s chip industry has invested heavily in making its facilities resilient to earthquakes. Disruption to production is unavoidable when a large earthquake strikes, but firms are usually able to return to close to full operating capacity within days if …
China’s economy continued to recover in the first months of the new year. And we think fiscal support will keep supporting growth in the near-term. That said, the property sector remains a drag on the economy, and we expect a sharp downward adjustment in …
We think China’s equities could fare better than those in India in the near term. For a while now India’s equity market has reportedly been a popular target for investors seeking emerging market exposure with less of the risks that come with investing in …
Plunge in prices paid index should soothe inflation concerns The renewed fall in the ISM services index in March is consistent with the message from the hard data that economic growth is slowing from the unsustainably strong pace in the second half of …
The more cautious tone of the Monetary Policy Report released by Chile’s central bank today confirms that policymakers have been spooked by the inflation surprises at the start of the year and has prompted us to nudge up our year-end rate forecast to …
ECB officials have stressed that evidence of easing wage growth will be key in determining the timing of the first rate cut. Accordingly, this Update assesses which of the euro-zone’s numerous wage measures investors should keep their eyes on. The main …
Positivity surrounding India’s near and long-term economic outlook is arguably at its highest in a decade, with good reason. But amid the optimism, it is easy to become complacent to the downside risks. This Focus highlights five key risks that we think …
We think that it is now time for the curtains to close on the so-called ‘excess savings’ debate. While unusually high savings accumulated by households during the pandemic helped prevent recessions in advanced economies in 2023, they are likely to have …
Table of Key Forecasts Overview – GDP growth across most of the emerging world will fall short of consensus expectations this year. But there will be key bright spots such as India and Taiwan. While disinflation is likely to proceed more slowly from here …
The recent easing in price pressures and the Bank of England's new-found dovish slant has convinced investors that interest rates will be cut a bit further over the next two years. But we still think investors are underestimating how far rates will fall. …
Mortgage rates temporarily drop below 7%, helping demand recover Mortgage rates dipping back below 7% helped mortgage applications for home purchase edge slightly higher in March. But recent increases in the 10-year Treasury yield point to mortgage rates …
After a very weak 2023, Saudi Arabia’s economy should see a modest recovery this year as the Kingdom’s non-oil economy sustains its strong momentum and more than offsets the drag from the extended oil output cuts. Last month, the General Authority for …
This page has been updated with additional analysis since first publication. Falling inflation points to June rate cut The fall in both headline and core inflation in March suggests that the ECB is very likely to begin cutting interest rates in June. The …
A soft end to Q1, but the Gulf economies still going strong March’s batch of PMIs for the region showed that, despite a minor tick down in the survey readings, the Gulf states enjoyed a strong start to 2024. Saudi Arabia’s survey edged down from 57.2 in …
Further rise in inflation will keep pressure on the CBRT to hike The increase in Turkish inflation, to 68.5% y/y in March, will keep pressure on the central bank (CBRT) to hike interest rates further at its meeting later this month. We maintain our …
We expect the RBNZ to hold rates steady at its meeting next Wednesday. But with the economy in a deep slump and inflation clearly on the way down, the Committee is likely to tone down its tightening bias. As inflation risks continue to recede, we expect …
The sharp rise in Treasury yields this week has probably contributed to the sell-off in US equities, but it isn’t the only factor. And even if Treasury yields remain high, we doubt that would prevent the US stock market from rising further this year. The …
2nd April 2024
The rise in the aggregate EM manufacturing PMI to a three-year high in March was largely driven by strength in Asian industry, with activity elsewhere weaker. While slower growth in DMs should weigh on activity in the months ahead, strength in domestic …
The economy made a strong start to the year, but that was largely due to temporary factors that will soon fade. With spare capacity emerging, particularly in the labour market, downward progress on inflation is becoming clearer. Changes to immigration …
The February JOLTS data suggest that labour market conditions are now easing at a more gradual pace, but that isn’t a surprise when most indicators of slack have already returned to pre-pandemic norms. At 5.3% in February, the job openings rate has been …
March’s manufacturing PMIs provided further evidence that global industry is past the worst. And although higher industrial output has caused price pressures to increase in some advanced economies, it won’t prevent central banks from cutting interest …
The universal tariff which Donald Trump has proposed, along with other likely spillovers from his trade policies, may result in a hit to the euro-zone economy of up to half a percent of GDP. The damage would be bigger if this triggered a transatlantic or …
The strong showing for the opposition in Turkey’s local elections on Sunday highlights the extent of voter frustration with high inflation and we think that it should be interpreted as a positive for investors by strengthening policymakers’ commitment to …
China’s PMI surveys in March are consistent with some improvement in economic activity and solid commodities demand. We think that government stimulus will continue to boost economic activity in the coming months and in turn support the prices of most …
While the number of “green” jobs in the UK rose strongly in 2022, it’s worth noting that green workers were still outnumbered by estate agents! Market forces are facilitating the transition to a greener workforce, but policies to make the labour market …
Net lending declines for first time in a year Net lending to commercial property edged back for the first time in a year in February, with declines in both standing and development lending. But the falls were marginal and on a three month average basis …
National data point to fall in euro-zone inflation The fall in CPI inflation in the major German states in March all but confirms that both German and euro-zone HICP inflation will come in lower than expected in March. This will please ECB policymakers, …
This page has been updated with additional analysis since first publication. Drag on activity from high interest rates continues to fade February’s money and credit figures show the dip in mortgage rates at the start of the year boosted mortgage approvals …
Small improvement in CEE, Russia continues to run hot The manufacturing PMIs rose across Central and Eastern Europe (CEE) in March but they remain consistent with a relatively weak recovery. Poland’s PMI inched up from 47.9 in February to 48.0, Czechia’s …
Rising mortgage rates cause house prices to stall The 0.2% m/m fall in the Nationwide house price index in March (consensus: +0.3%, CE: +0.2%) suggested that the rise in mortgage rates since the turn of the year has caused house prices to stall. That …
Slowdown in house price growth has further to run Australian house prices continued to pare their gains last month. And a further loss of momentum appears likely in the near term, especially given that the RBA is unlikely to come to the housing market’s …
Once the Bank of Japan starts to reduce its huge holdings of Japanese Government Bonds (JGBs) in earnest, we think that commercial banks will once again become major holders of JGBs. Insurance firms may lift their holdings a touch further as well, but we …
RBA abandons tightening bias but rate cuts still a long way off While the RBA no longer considered raising interest rates at its March meeting, we think it will take until November for the Bank to start easing monetary policy. The Bank noted that …
The Bank of Canada’s quarterly business and consumer surveys remain consistent with weak GDP growth and generally show that inflation expectations are normalising, but the latter are still too high and raise the risk that the Bank will wait to see …
1st April 2024
Above 50.0 for the first time since September 2022 The jump in the ISM manufacturing index in March, leaving it above the theoretical 50.0 no-change level for the first time since September 2022, suggests that the sector has finally turned a corner. While …
