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It’s always darkest before the dawn The prospect of a vaccine offers hope of faster growth next year than we have factored into our current forecasts. That said, there is less scope for a “vaccine bounce” in Switzerland and the Nordic economies in 2021 …
13th November 2020
The announcement on Monday of Pfizer & BioNTech’s successful trial of their COVID-19 vaccine was unambiguously good news that sent European stock markets earlier this week to their highest levels since early March. The widespread distribution of a highly …
Recoveries are on borrowed time In case you missed it, we cut our near-term GDP forecasts this week following the imposition of new national lockdowns in parts of Europe. (See here .) The virus was spreading rapidly in Switzerland when we published our …
6th November 2020
Downside risks become central forecast This week, the downside risks to our forecasts continued to crystalise. First, the economic data added to the evidence that activity was slowing even before the new lockdowns in Germany and France were implemented. …
Smaller, but perhaps longer, hit to the economy This week has seen governments in France and Germany impose new national lockdowns in an effort to bring the virus under control. In both cases, all restaurants, bars, sports and entertainment venues will be …
30th October 2020
Time running out on Swiss recovery Data published on Friday showed a smaller-than-expected fall in the Swiss KOF Economic Barometer in October, from a downwardly-revised 110.1 in September to 106.6. This left it above its February level and suggests that …
Risks to the outlook tilted to the downside This week has brought more gloomy news on COVID-19, with virus cases in the euro-zone continuing to rise at a rapid rate and, as we expected, governments responding by ramping up restrictions. In Ireland, for …
23rd October 2020
Nordics not immune, but comparatively resilient In case you missed it, we released our latest Nordic & Swiss Economics Outlook this week. Of course, virus developments are the key uncertainty. However, assuming that the Nordics continue to avoid the scale …
Growth to slow sharply in Q4 COVID-19 infections continue to rise and the authorities have tightened their restrictions further. (See here .) In a few countries (e.g. Ireland and the UK), public health officials have recently advocated so-called “circuit …
16th October 2020
Switzerland in the grip of a second wave The share of virus tests returning positive results in Switzerland doubled in the first two weeks of October and mirrored similar rises seen in Italy and the UK over the same period. At about 7%, the positivity …
Strong retail sales the outlier, not the norm On the face of it, normality appears to have returned to at least one part of the euro-zone economy. Data this week showed a strong rise in retail sales volumes in August, to 3% above their pre-virus level. …
9th October 2020
Who’s afraid of the Big, Bad US Treasury? Thomas Jordan banged a familiar drum in a speech this week, yet again justifying the SNB’s FX interventions that have seen its balance sheet balloon over the past decade. He also stressed that the Bank’s must have …
Second wave peaking in France and Spain The new wave of COVID-19 poses a big risk to the recovery and may cause GDP to contract again in Q4. The worst hit area is the Madrid region of Spain, where the number of intensive care beds occupied by coronavirus …
2nd October 2020
Brighter outlook for the NOK next year Having fallen to four-month lows against the euro in late-September, the Norwegian krone and Swedish krona bounced back this week. While the NOK is vulnerable to falling further in the near term, we think that a …
The Swiss head to the polls After a virus-imposed hiatus, the Swiss are set to resume doing what they love best this Sunday: voting. Five separate referenda will be held, covering a range of topics including whether the government should buy some new …
25th September 2020
Risk of W-shaped recovery rising This week brought evidence that the economic recovery is grinding to a halt and that activity in the services sector is falling. And with the stringency of virus containment measures only going in one direction, there is a …
“No change” three ways on the policy menu Central bankers will take centre stage next week, with the Riksbank kicking things off on Tuesday, and the SNB and the Norges Bank both set to make scheduled policy announcements within 30 minutes of each other on …
18th September 2020
A key assumption in our forecasts has been that there will not be a repeat of the spring’s strict nationwide lockdowns that would cause the recovery in economic activity to go into reverse. That assumption is looking a bit shakier in light of headlines …
Sweden’s virus approach may be bearing fruit Interpreting Covid data is of course part science, part art, but the fact that confirmed virus cases per capita in Sweden fell below those in its Nordic peers in early-September appears to vindicate Sweden’s …
11th September 2020
Exaggerated worries about the euro After more than two years when the exchange rate barely featured in ECB policy debates, the euro has been in the limelight this week. Prior to the ECB policy meeting, there was a growing expectation that the Bank would …
Recovery losing pace and inflation falling Data published this week add to the evidence that the economic recovery is losing momentum, particularly in the periphery. Online retail sales fell in July for the second consecutive month, but this time this …
4th September 2020
Riksbank still biding its time Policymakers at the Riksbank won’t admit it, but they will be feeling pretty comfortable with their position, all things considered. After all, the further increase in the services PMI in August suggests that activity in the …
Euro-zone governments have been understandably keen to avoid repeating the blanket lockdowns of earlier this year in response to the resurgence in coronavirus cases over the past month or so. Low hospitalisation rates have allowed policymakers to focus on …
28th August 2020
Nordics top of the league in H1… The Nordic economies emerged at the top of the economic league in Europe in H1, with comparatively small declines in output. (See here .) The second reading of Swedish Q2 GDP, released this morning, shows that the …
Are virus ripples turning into waves? The upward trend in daily virus infections in the euro-zone is partly due to increased testing, but the proportion of tests coming back positive is also on the rise. It seems likely that there will be further …
21st August 2020
“Two-speed” Swiss industry finds reverse gear The belated release of Q2 industrial production data from Switzerland on Thursday laid bare the stark divergence in fortunes within the sector. Total manufacturing output dropped by 8.3% q/q in Q2, which was …
Denmark’s lockdown pays off … According to the GDP indicator released on Friday, the Danish economy contracted by 7.4% q/q in Q2, broadly in line with our forecast. While this was its biggest decline since data began in the 1990s, it was a far cry from …
14th August 2020
Two-speed recovery This week saw more evidence of the extent of the rebound as euro-zone industrial output rose by 9.1% in June. However, this left it 11.4% below its pre-coronavirus level in February – a situation which was similar in all the major …
Services activity takes a hit, despite no lockdown Given the wider interest in how Sweden’s economy performed under its light-touch lockdown, its preliminary estimate of Q2 GDP growth, released on Wednesday, was perhaps watched more closely-than usual. …
7th August 2020
Taking stock of the latest coronavirus numbers With worries about a major second coronavirus wave in Europe intensifying this week, it is worth taking a step back and putting the current cases numbers in a bit of context. Three trends stand out. First, …
Huge variations in scale of Q2 contraction The Q2 GDP data published this week highlight that euro-zone member states have had very different experiences of the coronavirus crisis so far, reflecting the variation in the number of virus cases and …
31st July 2020
Mixed messages from the retail data Retail sales data from Switzerland for June, released this morning, show that consumer spending lost a bit of steam at the end of Q2 following the initial sugar-rush as restrictions were eased. Having surged by almost …
The historic agreement reached this week over the EU’s €750bn Recovery Fund has given euro-zone assets a lift. The euro rose from just over $1.14 last Friday to $1.16 at the time of writing, and ten-year Italian bonds yields have fallen from 1.28% last …
24th July 2020
Nordic economies comparatively well placed In case you missed it, we published our Nordic & Swiss Economics Outlook this week. (See here .) The key message is that we forecast the Nordic economies to experience the shallowest recessions in Europe, and our …
This week, governments in France and Italy suggested more stimulus was in the offing to support their economies’ recoveries, consistent with our view that the fiscal cost of the crisis would end up being much bigger than early estimates suggested. Italy …
17th July 2020
“SNB 101” speech targeted at the US Treasury Thomas Jordan delivered the first-ever virtual IMF Central Banking Lecture on Tuesday, which is named in honour of Michel Camdessus, the longest- serving past IMF Managing Director. The video production had a …
Nordic economies have weathered Covid well May’s 2.4% m/m rise in mainland GDP in Norway would normally be enough to make you fall of your chair, but it was actually a bit underwhelming given the rapid rebound in our Recovery Tracker since lockdown …
10th July 2020
This week brought further evidence that the early stages of the euro-zone’s economic recovery looked remarkably V-shaped. Admittedly, industrial production data for Germany published on Monday showed a weaker-than-expected rebound in May. But industrial …
Nordics gathered momentum into H2 The June PMI surveys from the Nordics, released this week, add to the evidence that the region’s economies are further down the road to recovery than others in Europe. In Sweden, there was plenty to be encouraged by in …
3rd July 2020
News that German consumers went on a spending spree in May has raised hopes that the recovery will be V-shaped after all and that things will soon be back to normal. We think that only the first part of this is true. The rebound will look like a V, at …
Nordic consumers splash the ‘cash’ Retail sales data for May released this week show that consumers in the Nordics have splashed the cash since lockdowns have been eased (figuratively speaking, of course, given that cash usage is increasingly rare in …
26th June 2020
This week kicked off with growing fears of a second wave in Germany, as the all-important R number jumped from around 1 to almost 3 last weekend. But as we argued here , the localised nature of the outbreaks and better monitoring mean that there is …
Shallower downturns forecast in the Nordics Amid increasing signs that the Nordic economies have weathered the Covid crisis better than most (see here ) we have upgraded our forecasts for GDP growth over the coming years. (See Table ) As flagged in an …
19th June 2020
TLTROs raise concerns about the doom loop There was record demand for the ECB’s ultra-cheap Targeted Longer-Term Refinancing Operations this week, at €1.3 trillion. (See here .) This is not surprising given that the interest rate on these loans will be …
Economic activity fell by about a quarter This week brought yet more evidence of the severity of the collapse in output, as well as the variation between countries. The third estimate of euro-zone GDP in Q1 showed that the economy contracted by 3.6% q/q. …
12th June 2020
Sweden is getting off comparatively lightly The 11% peak-to-trough drop in Swedish household consumption between February and April puts paid to any notion that Sweden has escaped unscathed following its light-touch lockdown. Nonetheless, as grim as they …
SNB breathes a sigh of relief as the franc slides The positive policy moves out of Europe – including the ECB’s decision yesterday to increase the size and duration of its Pandemic Emergency Purchase Programme – have reinforced the sense that policymakers …
5th June 2020
The economic data released this week have simply confirmed what we already knew: that April was completely catastrophic for the euro-zone economy but that there has since been a gradual resumption in activity throughout the region. Euro-zone retail sales …
A Hamilton moment? The main event this week was the publication of the EC’s blueprint for joint borrowing, building on last week’s Franco-German proposal. (See here .) This has been hailed by some as a “Hamilton moment”, referring to the 1790 decision by …
29th May 2020
Skingsley leaves the door open to a repo rate cut This morning’s upward revision to Swedish Q1 GDP, from the initial estimate of -0.3% to +0.1%, adds to the evidence that the country has enjoyed some economic benefit from its light-touch lockdown. That …