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While the Credit Suisse rescue might draw a line under that particular institution’s problems, it is clear that confidence in the financial sector overall is still extremely fragile. So regardless of whether more financial institutions run into trouble, …
20th March 2023
Even before SVB’s collapse prompted a reassessment of the health of the global banking system, bank credit conditions were already tightening in response to higher interest rates. (See Chart 1.) We have written many notes to help navigate the …
17th March 2023
The ghosts of 2008 have made a sudden reappearance. Many metrics of core market functioning have worsened worryingly fast, but the overall situation is still long way short of the type of strains seen during the worst parts of the Global Financial …
16th March 2023
We have already outlined some different scenarios of how things might evolve from here and it is still possible that the situation calms down quickly. But in this Update , we think through how the more adverse of our scenarios might evolve. There are …
Given the large amount of uncertainty about how the fallout from SVB’s collapse will evolve, we have grouped possible outcomes into three broadbrush scenarios. Only in the worst scenario of financial problems spreading overseas will the global effects …
14th March 2023
This Global Economics Update answers 5 key questions about the fallout from SVB’s collapse. While the situation remains in flux, there are good reasons to think that it does not call into question the solvency of the US or wider global financial system …
13th March 2023
We think that most – perhaps two thirds – of the drag on activity from tighter monetary policy in advanced economies is still to come through in 2023. So, despite some surprisingly resilient data recently, we are sticking to our forecasts for advanced …
7th March 2023
With much of the global economy holding up surprisingly well and inflation not coming down as quickly as expected, investors are weighing up the risk that policy rates remain elevated for much longer than previously thought. This Update discusses what …
3rd March 2023
The broad-based improvement in the output components of February’s manufacturing PMIs suggests that the worst of the global industrial downturn is already in the rear-view mirror. That said, it is too early to call a durable turnaround in industrial …
1st March 2023
One development that would help to ease wage pressures would be an increase in the labour supply; there is still a significant group of countries where the pandemic is having lingering effects. The good news is that the size of the workforce is now …
28th February 2023
While a slew of recent data from advanced economies have surprised to the upside, world trade data are still very much consistent with economic weakness in the near term. Not only did Q4 see one of the biggest drops in world goods trade since the 1980s, …
The flash PMIs for February provided more evidence that advanced economies have remained more resilient than expected so far this year. Both the manufacturing and services sectors contributed to this strength, with improved sentiment and easing supply …
21st February 2023
A raft of strong data out of the US have poured cold water on the idea that its economy has tumbled into recession at the start of 2023. And this comes after GDP data revealed that the euro-zone and UK economies (narrowly) avoided outright contraction …
16th February 2023
As things stand, we think it is unlikely that non-bank financial intermediaries (NBFIs) would trigger a major financial crisis comparable to the Global Financial Crisis (GFC) . The biggest risks relate to potential liquidity mismatches in open-ended …
15th February 2023
Central banks need wage growth to slow significantly before they can judge that inflation is firmly under control. The least painful way for this to happen is for the recent rise in “mismatch” between workers and vacancies to reverse. However, we think …
13th February 2023
Markets’ focus shifting to forward guidance as pace of rate hikes slows Any hints of an end to tightening cycles are still strongly data-dependent But the data will allow for rate cuts sooner than many central banks now imply Now that inflation has …
8th February 2023
The latest manufacturing PMIs suggest that output has continued to weaken, although the pace of contraction is slowing in several economies. Product shortages have diminished further at the global scale, and weakening demand is also allowing price …
1st February 2023
World trade has fallen in recent months on the back of slowing global growth. COVID-related weakness in Chinese activity in Q4 weighed notably on China’s exports, and while its seemingly rapid recovery has somewhat improved the global picture, weak …
26th January 2023
The losses which central banks are now incurring on the bonds they bought via their quantitative easing (QE) programmes are not a big cause for concern. These losses will not compromise central banks’ ability to operate monetary policy. And while …
25th January 2023
The flash PMIs for January provide further evidence that the euro-zone economy has so far avoided the deep downturn that most economists anticipated, whereas the US and UK surveys still point to recessions in both cases. Supply shortages have become less …
24th January 2023
Recent data have shown that activity in the US is weakening as we had expected while that in the euro-zone has been surprisingly resilient. The resilience seems to reflect a combination of supply and demand factors, including easing shortages, lower gas …
The theme of global economic fracturing, which was the focus of our Spotlight Series of research last September, is at the centre of economic discussion in 2023, including at Davos. We held an online drop-in session yesterday to update clients on our …
19th January 2023
Housing downturns are well underway in many countries and house prices and activity generally have further to fall. Construction activity is already suffering as a result. While it is hard to detect any major adverse effect on household spending, this …
16th January 2023
The past month has brought a string of positive developments on the activity and inflation side. The biggest news has been China’s decision to throw in the towel on its zero-COVID policy, which brightened the prospects for the world’s largest economy …
13th January 2023
Disruption from China’s reopening is fading faster than we had expected and we have revised up our forecast for growth there from 2.0% to 5.5%. This means that global GDP growth will be stronger than we had expected this year and energy inflation will …
12th January 2023
The shift toward living with COVID will put some upward pressure on prices in China. But the uptick in inflation will not be as large as that seen in many other countries as they emerged from COVID controls over the past couple of years. While the initial …
9th January 2023
Developments of the past two weeks reinforce the message that the world economy is headed for recession and disinflation in 2023. With the full effects of policy tightening yet to be felt, and re-opening disruption to China’s economy set to linger, things …
4th January 2023
Table of Key Forecasts Overview – Inflation is finally falling and we envisage further sharp declines in almost all economies during 2023. (See Chart 1.) In most cases, this disinflation will be more dramatic than either the consensus of economists or …
3rd January 2023
Economists from our Global Economics service held a special discussion about the trajectory of inflation across advanced and emerging economies in 2023. During this 20-minute briefing, the team addressed key issues from their latest Global Inflation Watch …
Click here to read the full report. Table of Key Forecasts Global Overview – We continue to expect the world to slip into recession in 2023 as the effects of high inflation and rising interest rates are felt. Our forecasts are below the consensus across …
19th December 2022
December’s flash PMIs suggest that the economic downturn in Q4 in Europe might not be as bad as previously feared. But the PMI fell sharply again in the US. And the surveys are still consistent with GDP in advanced economies contracting in Q4. But at …
16th December 2022
This is part of a series of reports outlining our key macro and market calls for 2023. Click here to view the full series. Our latest Global Economic Outlook can be found here . Our 2023 prognosis may be a gloomy one, but there are reasons to expect …
15th December 2022
Data over the past month have brought the clearest signs yet that inflation is starting to ease. Our estimate of world CPI inflation fell for the first time in 15 months in October, from 7.9% to 7.7%. Of course, that is still a very high rate, but there …
7th December 2022
While food inflation has surprised to the upside in major DMs, it seems to be at or near a peak. We expect a combination of base effects and an easing of underlying price pressures to drag on food inflation in 2023. Food inflation soared in the past …
2nd December 2022
The latest manufacturing PMIs suggest that global industrial production is contracting, albeit with some signs of a slowdown in the pace of contraction in Europe. Product shortages have diminished almost everywhere, with any disruption related to China …
1st December 2022
We hosted an online Drop-In yesterday to discuss China’s COVID outbreak and its domestic and global implications. This Update answers several of the questions that we received, some of which we couldn’t fit in during the event and some that we are …
30th November 2022
Trade is beginning to slow as the world heads into a recession. In real terms, world trade barely rose in September, and timelier data from Asian economies suggest outright falls are imminent. Falling export orders and shipping costs point to a further …
28th November 2022
Over a year ago, we warned that surging shipping costs posed an upside risk to inflation going into 2022, and it looks like these risks did indeed materialise. But now that global shipping costs have collapsed, we expect them to drag down on inflation …
25th November 2022
November’s flash PMIs were a mixed bag, with unexpected increases in Europe and a sharp fall in the US. However, the headline indices are now at levels consistent with falling activity in all major advanced economies. And the surveys continue to suggest …
23rd November 2022
Recent monthly data from the advanced economies have tended to exceed analysts’ gloomy expectations. This is partly due to an easing of supply shortages, which could offer some further support to output and spending in the near term. However, this …
The Ukraine war has sent the risk of Russian cyberattacks on the West soaring up the agenda, with an attack on critical infrastructure potentially bringing whole economies to a halt. In most cases, a few days of disruption would not actually put much of …
22nd November 2022
The October inflation data highlighted a contrast between the US and Europe, with core price pressures easing materially in the US but staying stronger in the euro-zone and UK. We think this will be an enduring feature of relative inflation prospects in …
18th November 2022
This week’s G20 summit in Bali, Indonesia, has so far exceeded low expectations. There is broad condemnation of the war in Ukraine and bilateral talks between China and the US seem to have been amicable. But with the meeting dominated by geopolitical …
15th November 2022
Although credit growth in advanced economies remained strong in September, it has largely been used to help economies cope with the effects from rising costs and inflation. But lending criteria is now tightening and demand for loans – particularly …
Many of the Q3 GDP releases of early-reporting economies have beaten consensus expectations in the past few weeks, especially in Europe. Not only did energy-crisis-laden Germany grow in Q3, rather than contract as expected, but the economy managed to …
11th November 2022
The pace of global monetary policy tightening is slowing But neither history nor central bank guidance give a reliable steer of the future profile Early signs are that the Bank of Canada and US Fed will lead the retreat next year In recent weeks, …
10th November 2022
The impending global recession will see sluggish growth or outright contractions in GDP in most major economies, with Europe faring the worst. Accounting for changes in trend growth over time, we think that the depth of the global downturns in the 1990s …
7th November 2022
The latest manufacturing PMIs are consistent with a significant downturn in global industry. As higher interest rates take a further toll on demand, shortages should continue to alleviate, helping to ease price pressures. However, as the PMIs suggest, …
2nd November 2022
The dovish tilt among central banks has led to more talk of “pivots”, but this will mean different things for different banks. The ECB may be shifting to a slower pace of tightening, but the peak in rates is still some way off. That peak is closer for …
1st November 2022
Russia’s decision to withdraw from the Black Sea Grain Initiative will exacerbate sky-high prices and tight global supply, and adds to the likelihood that prices hover around historical highs for the next few months. To recap, the Kremlin announced at the …
