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March’s advanced economy PMIs painted a positive picture, with headline indices typically now well into expansionary territory. Supply shortages are boosting prices and constraining output to some extent, especially in the US. And the euro-zone PMI is …
24th March 2021
Our Mobility Trackers suggest that the recent rise in coronavirus infections and associated restrictions are weighing on activity in Latin America, emerging Europe and the euro-zone. In contrast, mobility in the US has continued to recover as restrictions …
23rd March 2021
The recent pick-up in consumer spending in DMs has been characterised by a sharp rise in spending on goods. The next leg of the recovery will be focused on services as restrictions are removed. Spending on consumer goods is likely to slow, implying weaker …
17th March 2021
The global semiconductor shortage appears to be largely the result of a strong revival in demand for goods including consumer electronics rather than pandemic-related supply disruptions. It should generally have limited implications for GDP, but it could …
9th March 2021
While it is still early days, the ingredients for a sustained pick-up in inflation over the next few years seem to be falling into place in the US. It is a different picture in other developed economies; indeed, we still think that medium-term inflation …
2nd March 2021
February’s global manufacturing PMI survey painted a positive picture, implying that output growth has continued to accelerate outside China and that employment is picking up. Supply shortages are boosting input prices, especially in DMs, but this …
1st March 2021
If passed in full, President Biden’s $1.9tn American Rescue Plan would constitute a fiscal stimulus worth 1.4% of global GDP, coming hot off the heels of the $900bn deal struck in December. While a boon for the US economy, we think that the economic …
24th February 2021
With vaccines improving the economic outlook and labour market data surprising to the upside, we have revised down our unemployment forecasts for almost all major economies. But wider measures of labour market slack imply a growing divergence by region. …
23rd February 2021
The batch of flash PMIs for February suggest that shipping constraints and some goods shortages are raising costs for manufacturers. There are some signs that these cost pressures are being passed on to consumers. Outside of the US, price pressures in …
19th February 2021
Taken alone, prolonged restrictions on international travel would do little to hinder the global recovery since overseas tourism is a small share of world GDP and some of the lost spending would be made up. But the aggregate masks a wide range of effects. …
18th February 2021
While new COVID-19 infections have dropped, our Mobility Trackers have shown only a slight pick-up in activity as tight restrictions remain in place in many economies. Vaccine rollouts have been slow in the euro-zone and most EMs, but much faster in the …
When analysing the effect of COVID-19 on business balance sheets, most attention is given to the surge in debt. But this ignores the fact that non-financial firms in DMs have built up a pile of excess cash worth $1.6tn (4% of GDP), so their balance sheets …
10th February 2021
One threat to economic recoveries this year is that governments withdraw their generous fiscal support too quickly. So far, that threat does not seem to be an imminent one. That said, the level of fiscal support is set to remain more generous in the US …
9th February 2021
Despite some dire public health situations, GDP outturns from the raft of recently released data have surprised on the upside in Q4. While some of the strength was due to industrial and construction sectors, the surprise lay in the resilience of some …
3rd February 2021
The volatility caused by retail investors co-ordinated on the r/Wallstreetbets forum does not pose a direct threat to the global economy, but it does illustrate some of the financial vulnerabilities that can stem from ultra-loose monetary and fiscal …
1st February 2021
The global manufacturing PMI survey for January suggests that the industrial recovery lost a bit of steam at the start of the year. It also provided some evidence that, in addition to lengthening supplier delivery times, supply-chain disruptions and …
In this Update , we take stock of the key elections that are scheduled around the world in the coming year and discuss the implications for economic policy. While elections in advanced economies are unlikely to produce any decisive changes in direction, …
We expect household incomes to rise in most countries this year as easing restrictions allow people to get back to work. The outlook for incomes is brightest in North America, particularly given the likelihood of further fiscal transfers in the US. But …
28th January 2021
The flash PMIs for January suggest that the US economy shrugged off containment measures at the start of 2021, but that restrictions did indeed weigh on activity elsewhere in DMs. The surveys also provide some evidence that supply shortages are exerting …
22nd January 2021
The surge in global shipping costs over the past six months is likely to be short-lived and several factors will dampen the full pass-through to consumer prices. Even so, it adds to a growing list of developments that point to a rise in inflation over the …
19th January 2021
Our COVID Mobility Trackers indicate that activity weakened towards the end of Q4, and data up to mid-January suggest that it took another leg down at the start of 2021. With countries still in the early stages of their vaccination rollouts, we are …
18th January 2021
Advanced economy headline inflation rates are set to jump by an average of nearly 2%-pts in the coming months as energy inflation picks up and, in some cases, the effects of last year’s temporary cuts in VAT cuts go into reverse. But with core inflation …
15th January 2021
Our GDP forecasts for this year sit some way above the rest of the market. The greatest risks to this upbeat view stem from unanticipated shifts in the virus and the fight against it, rather than the more orthodox macro events that typically derail …
13th January 2021
The risks to vaccination programmes fall into three groups: procurement, deployment, and effectiveness. In the coming few months, deployment issues will be a key limiting factor in most countries. These should be overcome relatively quickly in DMs, but …
8th January 2021
The pandemic – and the associated increase in working from home – may cause a fundamental shift in the way that cities function in future. But this shift will not necessarily trigger a more fundamental economic decline in the world’s largest urban …
5th January 2021
Developments from the past two weeks reinforce the message that 2021 will be a year of two halves for the world economy. In the near term, high/rising infections in most major economies mean that restrictions will be tightened or kept in place for longer, …
4th January 2021
We expect 2021 to be a better year for the global economy than most envisage. GDP growth in many major economies will surprise on the upside, with those that suffered the sharpest downturns this year generally rebounding fastest. Nonetheless, policy …
17th December 2020
December’s flash PMIs revealed that restrictions in the euro-zone and the UK continue to weigh on services activity and that advanced economy manufacturing is still faring well. Meanwhile, building price pressures in the US point to inflation there rising …
16th December 2020
One of the biggest upside risks to our forecasts is that households spend the extra savings that they have accumulated during the past few months. If they do, North America and the UK look likely to benefit more than the euro-zone. Chart 1 shows that …
11th December 2020
In Q3, the balance sheets of developed market banks were in good shape and credit losses stayed ultra-low. Defaults are likely to rise as policy support recedes, but we think the banks are well-placed to cope. Most banks in the US, Japan, and developed …
3rd December 2020
The global manufacturing PMI rose for the seventh consecutive month in November. Restrictions seem to have weighed on industry in parts of Europe, but nowhere near as much as in March and April. And with recoveries elsewhere still strong, global …
1st December 2020
While a difficult few months lie ahead for many economies, the news of effective vaccines has led us to revise up our world GDP growth forecast by 0.8%-pt and 0.5%-pt, to 6.8% and 4.6%, in 2021 and 2022. The positive effects will be biggest in DMs, while …
27th November 2020
As expected, today’s batch of flash PMIs confirmed that manufacturing has fared better than services in the face of the renewed virus wave. The strength of the US surveys was surprising and indicates that the economy has shrugged off the latest …
23rd November 2020
A striking development in the past few months is how well housing markets in developed markets have generally been doing. We expect this to peter out next year, although in most cases house price falls will be avoided. In the meantime, the strength of …
19th November 2020
The news about effective vaccines has improved the global economic outlook and we think that most restrictions on activity in advanced economies will be removed by around Q2 next year. But distribution to many EMs including large parts of Latin America, …
17th November 2020
The COVID pandemic will leave a profound economic legacy. But unlike previous crises, this will not necessarily manifest itself in much weaker rates of long-term economic growth. Instead, the economic legacy of the pandemic will be felt in changes to …
Recent extensions to job retention schemes and hopes of a vaccine appear to have improved the outlook for labour markets. But there is still a risk that governments scale back support too quickly and it is almost inevitable that further job losses are to …
16th November 2020
Mobility data up to 8 th November suggest that the recovery in developed and emerging Europe has already gone into reverse and that recoveries in other parts of the world are losing steam. To recap, our proprietary Mobility Trackers* gauge economic …
13th November 2020
A vaccine with a 90% efficacy rate would clearly represent a major boost for both public health and the economy. While there remain issues around the likely speed of production and distribution of the Pfizer vaccine, today’s news raises the chances that …
9th November 2020
High-frequency mobility data have their flaws but have offered some guide to how economies have responded to government restrictions. As Europe enters a fresh set of lockdowns, careful interpretation of these data will again allow us to shine some light …
While the US election has dominated the news cycle across the world, the outcome is unlikely to have a significant impact on the world economy. Short-term global prospects will continue to be overwhelmingly driven by the evolution of the virus and the …
6th November 2020
Lockdowns in Q2 this year caused global GDP to drop by 7% q/q, with the hospitality, recreation, and transport sectors suffering most. The hit from second lockdowns should be much smaller since activity is below normal levels to start with, restrictions …
3rd November 2020
Manufacturing PMIs generally held their ground in October, suggesting that the industrial recovery made further headway, despite a resurgence of infections taking hold in the US and Europe. Manufacturing will succumb to weaker demand as restrictions …
2nd November 2020
Out of all the banking sectors in major economies, India’s warrants the most concern. It came into the crisis in the worst shape, and the scale of damage to private balance sheets means it will be one of the hardest hit from rising defaults. Policymakers …
29th October 2020
With headline labour market figures affected by the various government support schemes, survey measures may provide a better indication of the true amount of slack in the labour market. These suggest that wage growth in the coming months is likely to be …
28th October 2020
While the COVID crisis has prompted an unprecedented fiscal response worldwide, there have been major differences between economies. The US saw large and immediate support, which has already expired without disastrous consequences. China’s infrastructure …
27th October 2020
October’s batch of flash PMIs supports our view that divergences have emerged in advanced economies, both between sectors and between countries. With Europe dealing with second waves of infections and a new round of restrictions, their recoveries are set …
23rd October 2020
While there has been some good news on virus numbers in India and Latin America, Europe and parts of the US are grappling with a big resurgence in infections. Restrictions have already been tightened in several European countries, and more measures are …
19th October 2020
On the face of it, the rebound in retail sales in advanced economies suggests that the consumer sector is leading a V-shaped economic recovery. But other types of spending, including on consumer services, has been far weaker, and the import-intensity of …
16th October 2020
The latest data have revealed a marked divergence in inflation among advanced economies, with the core rate rising in the US but falling in the euro-zone and the UK. This largely relates to temporary factors, particularly the impact of government policies …
7th October 2020