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Research Briefing | Nov 9, 2021

RBA yield target capitulation signals tighter policy

Copy of Ipad Frame (48)The RBA’s yield curve targeting experiment ended this week not with a bang but a whimper. Market expectations for a cash rate hike, fuelled by stronger than- expected inflation data, pushed yields well beyond the RBA’s 0.1% target for the April 2024 bond. In a relatively thin market, the RBA had little choice but to let the target fold, at the cost of some credibility in financial markets.

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Research Briefing | Nov 9, 2021

RBA yield target capitulation signals tighter policy

Copy of Ipad Frame (48)The RBA’s yield curve targeting experiment ended this week not with a bang but a whimper. Market expectations for a cash rate hike, fuelled by stronger than- expected inflation data, pushed yields well beyond the RBA’s 0.1% target for the April 2024 bond. In a relatively thin market, the RBA had little choice but to let the target fold, at the cost of some credibility in financial markets.

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Research Briefing | Nov 8, 2021

Spain | Strong wage gains but limited risk of inflationary cycle

Strong wage gains but limited risk of inflationary cycle

With inflation in Spain hitting a 30-year high, fears of an inflationary cycle are rising. However, the transition from the present energy-driven inflation push to a broad rise in consumer prices will likely require a sustained increase in wages. And while we expect wages in 2022 will grow at their fastest pace in a decade, the projected 2.5% advance remains well below the rises seen in the 2000s, the last time Spain experienced sustained above-target inflation, thus limiting the chances of another sustained inflationary cycle.

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Research Briefing | Nov 8, 2021

Spain | Strong wage gains but limited risk of inflationary cycle

Strong wage gains but limited risk of inflationary cycle

With inflation in Spain hitting a 30-year high, fears of an inflationary cycle are rising. However, the transition from the present energy-driven inflation push to a broad rise in consumer prices will likely require a sustained increase in wages. And while we expect wages in 2022 will grow at their fastest pace in a decade, the projected 2.5% advance remains well below the rises seen in the 2000s, the last time Spain experienced sustained above-target inflation, thus limiting the chances of another sustained inflationary cycle.

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Our study analyses the strengths and weaknesses, opportunities, and threats for the German chemical industry in light of future transformation trends. A focus lies on the conditions for the successful decarbonisation of the industry.

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Research Briefing | Nov 5, 2021

US | October brings no relief to US supply chain strains

October_brings_no_relief_to_supply_chain_strains_first_page

Our US supply chain stress tracker indicates that supply chain pressures worsened in October, after having eased in September. Preliminary data show that logistics difficulties remained the most acute source of stress while prices, activity, and labor challenges increased.

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Research Briefing | Nov 5, 2021

US | October brings no relief to US supply chain strains

October_brings_no_relief_to_supply_chain_strains_first_page

Our US supply chain stress tracker indicates that supply chain pressures worsened in October, after having eased in September. Preliminary data show that logistics difficulties remained the most acute source of stress while prices, activity, and labor challenges increased.

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Research Briefing | Nov 5, 2021

Eurozone weekly economic briefing | Strong eurozone economy faces winter headwinds

Ipad Frame - EZ-weekly-Strong-eurozone-economy-faces-winter-headwinds

Monthly data continues to show a gradual but persistent slowdown in economic activity moving deeper into Q4. While we still expect the eurozone economy to experience above-average growth over the coming quarters, it is clear that growth rates have already peaked.

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Research Briefing | Nov 5, 2021

Eurozone weekly economic briefing | Strong eurozone economy faces winter headwinds

Ipad Frame - EZ-weekly-Strong-eurozone-economy-faces-winter-headwinds

Monthly data continues to show a gradual but persistent slowdown in economic activity moving deeper into Q4. While we still expect the eurozone economy to experience above-average growth over the coming quarters, it is clear that growth rates have already peaked.

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Research Briefing

Italy | Draghi effect cannot last forever

Ipad Frame - Italy-Draghi-effect-cannot-last-forever

We remain sceptical that Draghi’s reform agenda will be fully delivered and consider a long-term improvement in Italy’s economic prospects as an upside scenario rather than a base case. Italy’s chance of reforming its ill-structured economy has increased with the current government and the boost from NGEU.

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Research Briefing

Italy | Draghi effect cannot last forever

Ipad Frame - Italy-Draghi-effect-cannot-last-forever

We remain sceptical that Draghi’s reform agenda will be fully delivered and consider a long-term improvement in Italy’s economic prospects as an upside scenario rather than a base case. Italy’s chance of reforming its ill-structured economy has increased with the current government and the boost from NGEU.

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Research Briefing | Nov 5, 2021

Portugal | Messy politics will dent 2022 growth

Portugal Messy politics will dent 2022 growth

Political turmoil in Portugal will delay the execution of some EU recovery funding and freeze key stimulus measures planned for next year. Consequently, we will lower our 2022 growth outlook to around 4.5% from 5.2%. A large slice of the lost output should be recouped in 2023-2024 after a new government resumes spending the EU money.

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Research Briefing | Nov 5, 2021

Portugal | Messy politics will dent 2022 growth

Portugal Messy politics will dent 2022 growth

Political turmoil in Portugal will delay the execution of some EU recovery funding and freeze key stimulus measures planned for next year. Consequently, we will lower our 2022 growth outlook to around 4.5% from 5.2%. A large slice of the lost output should be recouped in 2023-2024 after a new government resumes spending the EU money.

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Research Briefing

London Monitor | Growth held back by national factors and low visitor numbers

The outlook for the world’s leading urban economies amid the global slowdown (2)-3

The easy gains from re opening the London economy have now mostly been realised, and the visitor economy is still weak. Meanwhile, mounting pressures are dampening the UK’s recovery, affecting London. But employment in the capital is rising, even if the full year total will be lower than in 2020, and businesses remain confident. The Purchasing Managers’ Index suggests that London’s output growth remained stable in September, contrasting with the previous two months when growth appeared to slow from record highs.

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Research Briefing

London Monitor | Growth held back by national factors and low visitor numbers

The outlook for the world’s leading urban economies amid the global slowdown (2)-3

The easy gains from re opening the London economy have now mostly been realised, and the visitor economy is still weak. Meanwhile, mounting pressures are dampening the UK’s recovery, affecting London. But employment in the capital is rising, even if the full year total will be lower than in 2020, and businesses remain confident. The Purchasing Managers’ Index suggests that London’s output growth remained stable in September, contrasting with the previous two months when growth appeared to slow from record highs.

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Research Briefing | Nov 5, 2021

US retailers’ wish these holidays? A working supply chain

Copy of Ipad Frame (3)Favorable spending fundamentals among US consumers and a desire to make up for last year’s socially distanced holidays should add up to the strongest holiday spending season since 1999. We expect sales to rise 9.5%-11.5% in 2021, fueled by a firming labor market recovery, accelerating wage growth, record asset prices, and a surfeit of aggregate savings, while elevated inflation lifts the nominal sales figure.

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Research Briefing | Nov 5, 2021

US retailers’ wish these holidays? A working supply chain

Copy of Ipad Frame (3)Favorable spending fundamentals among US consumers and a desire to make up for last year’s socially distanced holidays should add up to the strongest holiday spending season since 1999. We expect sales to rise 9.5%-11.5% in 2021, fueled by a firming labor market recovery, accelerating wage growth, record asset prices, and a surfeit of aggregate savings, while elevated inflation lifts the nominal sales figure.

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Research Briefing | Nov 4, 2021

MENA | Regional PMIs, Saudi revenues rise, OPEC+ talks

MENA | Regional PMIs, Saudi revenues rise, OPEC+ talks

The non-oil PMIs for the UAE, Saudi Arabia and Qatar remained in expansionary territory in October, a run that has continued for 11, 14 and 16 months respectively. Output and new orders continue to accelerate as restrictions in the region ease. The UAE is set to see a boost to demand from the start of the World Expo 2020, which started in October and lasts until March 2022.

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Research Briefing | Nov 4, 2021

MENA | Regional PMIs, Saudi revenues rise, OPEC+ talks

MENA | Regional PMIs, Saudi revenues rise, OPEC+ talks

The non-oil PMIs for the UAE, Saudi Arabia and Qatar remained in expansionary territory in October, a run that has continued for 11, 14 and 16 months respectively. Output and new orders continue to accelerate as restrictions in the region ease. The UAE is set to see a boost to demand from the start of the World Expo 2020, which started in October and lasts until March 2022.

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Blog|4 November 2021

UK companies must adapt to changing consumers’ behaviour

Phil Thornton
Phil Thornton
Economics Editor
UK companies must adapt to changing consumers’ behaviour

In the run up to Cop-26 much discussion has centred on the central role of UK businesses and government directives in addressing challenges associated with climate change and environmental sustainability more broadly.

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Research Briefing | Nov 4, 2021

Poland | NBP reaffirms its hawkish turn

Ipad Frame - Poland-NBP-reaffirms-its-hawkish-turn

The National Bank of Poland (NBP) hiked its policy rate by 75bps to 1.25% at yesterday’s meeting. Although some tightening was expected, the magnitude surprised both us and consensus.

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Research Briefing | Nov 4, 2021

Poland | NBP reaffirms its hawkish turn

Ipad Frame - Poland-NBP-reaffirms-its-hawkish-turn

The National Bank of Poland (NBP) hiked its policy rate by 75bps to 1.25% at yesterday’s meeting. Although some tightening was expected, the magnitude surprised both us and consensus.

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Warsaw economic growth
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Research Briefing | Nov 4, 2021

Why Warsaw out-performs its rivals, at least for now

Ipad Frame - European-Cities-Why-Warsaw-out-performs-its-rivals-at-least-for-now

We estimate that Warsaw’s GDP grew by 4.5% a year in the 2010-19 period, so notably faster than its five main rivals among EU accession cities. Drivers include sectoral structure, productivity, skills, and inward investment. But in terms of scale and structure, we do not judge that Warsaw has moved sufficiently ahead of its rivals to create a self-reinforcing circle in which success breeds success, at the expense of the other five. Hence, we forecast a convergence in growth rates.

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Research Briefing | Nov 4, 2021

Why Warsaw out-performs its rivals, at least for now

Ipad Frame - European-Cities-Why-Warsaw-out-performs-its-rivals-at-least-for-now

We estimate that Warsaw’s GDP grew by 4.5% a year in the 2010-19 period, so notably faster than its five main rivals among EU accession cities. Drivers include sectoral structure, productivity, skills, and inward investment. But in terms of scale and structure, we do not judge that Warsaw has moved sufficiently ahead of its rivals to create a self-reinforcing circle in which success breeds success, at the expense of the other five. Hence, we forecast a convergence in growth rates.

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Research Briefing | Nov 4, 2021

Global | Carbon prices are too low, but how high should they be?

Ipad Frame - Global-Carbon-prices-are-too-low-but-how-high-should-they-be

Carbon pricing – either through a tax or an emissions trading scheme – will play an integral role in efforts to reduce carbon emissions. By capturing the cost of greenhouse gas emissions, a carbon price incentivises consumers to move to low-carbon products and firms to innovate away from them.

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Research Briefing | Nov 4, 2021

Global | Carbon prices are too low, but how high should they be?

Ipad Frame - Global-Carbon-prices-are-too-low-but-how-high-should-they-be

Carbon pricing – either through a tax or an emissions trading scheme – will play an integral role in efforts to reduce carbon emissions. By capturing the cost of greenhouse gas emissions, a carbon price incentivises consumers to move to low-carbon products and firms to innovate away from them.

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Solar panel

A framework to interpret the global green infrastructure transition through a sample of 80 representative countries.

Blog|3 November 2021

E-commerce’s COVID boost is a wake-up call for policymakers

James Lambert
James Lambert
Director of Economic Consulting, Asia
E-commerce’s COVID boost is a wake-up call for policymakers

The digital economy has reached a watershed moment in the wake of the COVID-19 pandemic. From major retailers to start-up entrepreneurs, the internet is now the primary tool for businesses to understand their markets and to sell their goods and services. The figure below shows the impact on one sector—clothing and footwear—in the UK.

wpc graph for ei

But there is a growing danger that policymakers will miss the window to exploit the economic growth potential this shift represents because they have such a poor grasp of what is going on in the digital economy.

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Research Briefing | Nov 3, 2021

Malaysia | Fiscal stimulus primed to support the recovery

rb image for Fiscal stimulus primed to support the recovery

The government has announced a record spending plan in the 2022 Budget to spur the post pandemic recovery. Measures include an increase in cash aid and tax and financing support to households and businesses, as well as high multiplier infrastructure projects previously announced.

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Research Briefing | Nov 3, 2021

Malaysia | Fiscal stimulus primed to support the recovery

rb image for Fiscal stimulus primed to support the recovery

The government has announced a record spending plan in the 2022 Budget to spur the post pandemic recovery. Measures include an increase in cash aid and tax and financing support to households and businesses, as well as high multiplier infrastructure projects previously announced.

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Energy
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Research Briefing | Nov 3, 2021

Higher energy prices won’t derail the global recovery

Global - Higher energy prices won’t derail the global recovery

The global recovery from the pandemic will be dented but not derailed if high energy prices persist throughout 2022, our modelling finds. In an extreme scenario where oil, gas and coal prices remain elevated indefinitely, global growth would still be 4.0% and 2.8% in 2022 and 2023 respectively, knocking 0.5ppts and 0.7ppts off our baseline forecast.

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Research Briefing | Nov 3, 2021

Higher energy prices won’t derail the global recovery

Global - Higher energy prices won’t derail the global recovery

The global recovery from the pandemic will be dented but not derailed if high energy prices persist throughout 2022, our modelling finds. In an extreme scenario where oil, gas and coal prices remain elevated indefinitely, global growth would still be 4.0% and 2.8% in 2022 and 2023 respectively, knocking 0.5ppts and 0.7ppts off our baseline forecast.

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Research Briefing | Nov 3, 2021

China | Slowdown on weak demand rather than supply issues

China_slowdown_on_weak_demand_rather_than_supply_issues_first_page

China’s official manufacturing PMI fell 0.4 points to 49.2 in October, while the non-manufacturing PMI dropped to 52.4, from 53.2 in September. High frequency indicators show further declines in housing sales in major cities and car sales. These indicators show that economic momentum in China’s industry worsened in October amid the downturn in residential real estate and continued impact from repeated Covid outbreaks.

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Research Briefing | Nov 3, 2021

China | Slowdown on weak demand rather than supply issues

China_slowdown_on_weak_demand_rather_than_supply_issues_first_page

China’s official manufacturing PMI fell 0.4 points to 49.2 in October, while the non-manufacturing PMI dropped to 52.4, from 53.2 in September. High frequency indicators show further declines in housing sales in major cities and car sales. These indicators show that economic momentum in China’s industry worsened in October amid the downturn in residential real estate and continued impact from repeated Covid outbreaks.

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Research Briefing | Nov 1, 2021

US Recovery Tracker climbs within reach of pre-Covid level

Tracker climbs within reach of pre-Covid level

The US Recovery Tracker rose an impressive 1.5ppts to 99.3 in the week ended October 15, its highest level since February 2020. All six dimensions recorded stronger readings, confirming the economy is warming up in Q4 amid sustained improvement in the health situation.

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Research Briefing | Nov 1, 2021

US Recovery Tracker climbs within reach of pre-Covid level

Tracker climbs within reach of pre-Covid level

The US Recovery Tracker rose an impressive 1.5ppts to 99.3 in the week ended October 15, its highest level since February 2020. All six dimensions recorded stronger readings, confirming the economy is warming up in Q4 amid sustained improvement in the health situation.

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