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With the US election result likely to have limited near-term implications for world GDP, the main issue for the global economy is how it affects US trade policy. Joe Biden would take a less aggressive approach, but he would not prevent a further …
5th October 2020
The output breakdown of Q2 GDP showed that virus containment measures hit the hospitality, recreation, and transport sectors hardest, while financial services were relatively unaffected. The more targeted nature of second wave restrictions suggests that …
2nd October 2020
Today’s batch of manufacturing PMIs suggest that production continued to rebound in September, albeit at a slower pace than earlier in the quarter. The big picture, though, is that the state of the recovery in manufacturing is unlikely to be a good guide …
1st October 2020
The experience from second virus waves in Australia, New Zealand and Japan is that consumer spending falls even if governments don’t impose major restrictions. However, there are three key reasons why second waves may be less damaging to economic activity …
25th September 2020
September’s weak batch of flash PMIs suggest that the rebound in activity in DMs seen over the past few months is losing steam, even in the countries where virus numbers are falling. The risk now is that renewed containment measures in the UK and the …
23rd September 2020
The fact that most governments were caught on the backfoot in the early stages of the pandemic meant that they had little alternative but to respond with widespread lockdowns. Six months on, a combination of a better understanding of the virus and …
22nd September 2020
China’s economic rebound has been about as v-shaped as one could reasonably hope for – but it isn’t boosting growth elsewhere. One important point that gets missed in the debate over the likely shape of the post-virus recovery is that different economies …
18th September 2020
Inflation has been close to the midpoint of the RBA’s 2-3% inflation target since its launch in the 1990s, but this has come at the expense of soaring house prices and household debt. Australia’s experience underlines that central banks need better tools …
15th September 2020
Our Global Covid Mobility Tracker* has risen in recent weeks, suggesting that the world economy has continued to recover despite rising virus numbers. But the national trackers reveal that renewed containment measures are having adverse effects in Spain …
14th September 2020
August’s rise in the global manufacturing PMI was good news with improvements in economies hit hardest by the virus offering particular relief. But the index points to fairly modest growth and it is somewhat disappointing that the recovery has not gained …
1st September 2020
On the face of it, the rise in core inflation in several advanced economies in July seems to challenge the idea that lower demand will dominate lower supply in the tug of war over consumer prices. But we continue to think that spare capacity will keep a …
28th August 2020
At first sight, the latest batch of flash PMIs suggests that recoveries in advanced economies are heading in different directions. However, this has a lot to do with individual economies being in different stages of fighting the virus and easing …
21st August 2020
In the advanced economies, the post-lockdown rebound in retail sales has been considerably faster than that in industrial production. But in China, the opposite has been true. This partly reflects the differing focus of policy and highlights the role of …
17th August 2020
The development of a vaccine would represent a breakthrough in the public health battle against Covid-19, but it would not necessarily transform the immediate economic outlook. President Putin yesterday announced that Russia had become the first country …
12th August 2020
Data for Q2 revealed widespread drops in GDP, but the extent of the damage varied markedly depending on the length and severity of lockdowns. Recoveries since then have followed the same pattern. Looking ahead, Asian economies including China and Korea …
6th August 2020
While high-frequency mobility data should be interpreted with caution, they are now consistent with a marked slowdown in the pace of recovery, dashing hopes of a V-shaped rebound in the world economy. July saw a pronounced acceleration in the spread of …
5th August 2020
While the future of the virus is very uncertain, three things seem clear from recent developments: the pandemic has entered its fifth phase; the Americas are still the global hotspots; and containment measures are more likely to be extended or tightened …
4th August 2020
While the global manufacturing PMI rose again in July, it masked a divergence in the strength of recoveries among major economies. With growing concerns in recent weeks over a resurgence in the virus in many parts of the world, the recovery of global …
3rd August 2020
While the auto sector was hit particularly hard by the virus lockdowns, sales and production now seem to be recovering. In the near term, this bodes well for economies which rely heavily on vehicle production including Germany, Japan and Czechia. However, …
Jumps in the European PMIs and further increases elsewhere were another sign that activity in advanced economies continued to improve in July. However, the pace of the recovery is now likely to ease. We estimate that the developed markets composite PMI …
24th July 2020
There has been an encouraging rebound in retail sales across advanced economies as lockdowns have eased, driven by a pick-up in sales of discretionary items such as clothing and furniture and a shift towards online sales. While the recovery should …
16th July 2020
In general, our Covid Recovery Trackers continued to improve at the end of Q2 and in the first ten days of July. Things are even looking up a bit in Latin America. But the US recovery risks going into reverse. Our global average tracker maintained its …
14th July 2020
On the face of it, history doesn’t offer much reassurance that the world economy will be able to return to the path it would have been on had it not been for COVID-19. Indeed, looking back at all the downturns that have taken place in the OECD since 1965, …
13th July 2020
Renewed coronavirus outbreaks in some parts of the world have not caused us to rip up our economic forecasts. The initial stages of the recovery have been faster than we feared and we had always assumed that a limited recurrence of the virus would cause …
7th July 2020
Our Recovery Trackers suggest that activity generally continued to rebound heading into Q3. But higher infections seem to have taken a toll in some US states, while Latam is the weakest link in the global recovery. Our proprietary Covid Recovery Trackers …
2nd July 2020
With lockdowns continuing to ease across the globe, it was of little surprise that the manufacturing PMIs rose in June. While the PMIs are still considerably below their pre-crisis levels, they have rebounded more swiftly than they did during the …
1st July 2020
The latest batch of DM flash PMIs generally came out below 50, which might suggest that output fell a bit further in June compared to May. But we should not read too much into the precise level of the PMIs. The point is that they have come back a long way …
23rd June 2020
To help clients get a better sense of the state of recoveries around the world, we have collated some daily indicators that are available in almost all major economies to construct composite Covid Recovery Trackers . The trackers are now published on our …
12th June 2020
This Update draws together the conclusions from the various pieces of research that we have published in recent weeks on how the fiscal costs of the crisis will be dealt with. In short, we are generally sanguine about the rise in government debt, which we …
10th June 2020
Data so far have shown a significant variation in how the virus has affected activity, with economies in Southern Europe hit very hard, the US suffering somewhat less and some Asian economies relatively unscathed. Differences are related to the timing and …
9th June 2020
Public sector debt to GDP ratios are going to rise sharply and, in most cases, governments can tolerate this. But to retain the faith of financial markets, they might still need to make sure that debt is on a stable trajectory. For most, this is not a …
5th June 2020
On the face of it, the surge in unemployment in the US implies that households are being hit harder by the crisis than those in Europe. But much of this reflects differences in the way that furloughed workers are being treated in the data. Taking this and …
3rd June 2020
May’s PMIs offer evidence that the global industrial sector is now on the slow road to recovery. But with demand extremely weak, activity is still far below normal levels and price pressures have eased. While the global manufacturing PMI partially …
1st June 2020
Unlike the period after the global financial crisis, we doubt that we will see a widespread trend of austerity to reduce public sector debt ratios. Nonetheless, austerity will still be undertaken in a few isolated cases, primarily in emerging markets. And …
26th May 2020
On the face of it, it might look like major economies have not yet reached the stage of debt monetisation. Where central banks are buying government bonds, it is on the secondary market, is supposed to be only temporary and the primary aim is not to fund …
22nd May 2020
May’s Flash PMIs revealed a partial rebound, suggesting that the global economy is past the nadir. But, the recovery in advanced economies appeared slower than that in China, and the services sector remains particularly weak. With lockdown measures …
21st May 2020
The future of the coronavirus and measures to contain it are highly uncertain and beyond economists’ expertise. Nonetheless, both will be important in determining the outlook for the global economy and we have therefore made assumptions based on what is …
15th May 2020
Our best guess is that business surveys, such as the PMIs, understated falls in activity in April and we suspect that the next batch of surveys, released as early as next week, will do so again in May. Despite the risk that the surveys are misrepresenting …
14th May 2020
The impact of the lockdowns on the ability of statisticians to collect price data means that measures of inflation will be less accurate than normal. However, this will probably have little impact on economic policy because these problems are dwarfed by …
6th May 2020
Manufacturing PMIs for April fell sharply, but the way the surveys are constructed means that conditions may be even worse than the headline figures suggest. Indeed, the sub-components of the surveys are consistent with global industrial output …
4th May 2020
Unlike in previous downturns, residential property has not been the root cause this time. Even so, house prices will not escape this recession unscathed. If policy support proves effective, if lockdowns hamper property sales, and if demand rebounds later …
29th April 2020
While we expect to see a sharp rebound in global activity once coronavirus-related restrictions are eased, GDP in most economies will still be below its pre-crisis path even after two or three years. (See here .) In this Update , we discuss which …
As expected, after a dreadful month in March, the Flash PMIs for advanced economies got a whole lot uglier in April. While we suspect that they are not picking up the full scale of the declines in activity, the PMIs should become more useful when it comes …
23rd April 2020
Plans to ease containment measures have raised fears of a second wave of coronavirus to come. In some ways, the world economy would be better prepared to deal with it. But the development of testing and tracking will be crucial in determining the extent …
22nd April 2020
Many countries have now announced wage-subsidy programmes to prevent widespread layoffs. Household incomes will still be severely squeezed by pay cuts. Nonetheless, limiting the rise in unemployment will help countries to get up and running again once the …
20th April 2020
The early evidence suggests that household consumption in OECD economies may not have collapsed by as much as many fear in March. But as the boost from food stockpiling fades, overall consumer spending will plummet in Q2. Using our new (downloadable) …
17th April 2020
The IMF published the first chapter of its Global Financial Stability Report on Tuesday, in which it argued that the COVID-19 crisis poses “a very serious threat to the stability of the global financial system”. In this Update , we outline five …
16th April 2020
Different countries will adopt different approaches to ending shutdowns but a common theme is likely to be that restrictions are phased out gradually by sector and, perhaps, region. The extent to which this is accompanied by new mass testing programmes …
15th April 2020
There is no doubting that governments have generally pulled out all the stops in announcing big fiscal stimulus programmes. But announcing them is one thing; quickly getting the money to where it is needed is quite another. There is a risk that logistical …
14th April 2020
The upcoming GDP figures for developed markets will give an indication of the damage the coronavirus was already doing by the end of the first quarter. However, even at the best of times, there are question marks over how well GDP measures activity and …
7th April 2020