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Research Briefing | May 31, 2021

South Africa: Public sector wage bill set to increase further

The South African government has been struggling to rein in the public sector wage bill in the past. This seems to be the case again this year as National Treasury already extended an offer that will exceed its own budgeted figure for FY 2021/22. We examine what impact this offer will have on the fiscus.

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Research Briefing | May 31, 2021

South Africa: Public sector wage bill set to increase further

The South African government has been struggling to rein in the public sector wage bill in the past. This seems to be the case again this year as National Treasury already extended an offer that will exceed its own budgeted figure for FY 2021/22. We examine what impact this offer will have on the fiscus.

Read more

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Research Briefing

South Africa | Public sector wage bill set to increase further

Ipad Frame_Public sector wage bill set to increase further

The public sector wage bill is one of South Africa’s largest line items on the expenditure side, accounting for roughly one-third of total expenditure. In an effort to reduce remuneration costs, the government has opted to “freeze” the wage bill over the next three years. However, unions were not happy and forced the government’s hands to revise its offer. What will the impact of this new offer be?

What you will learn:

  • The public sector wage bill has increased rapidly over the past couple of decades
  • Unions are swinging for the fence with insane demands
  • Government will have to reprioritise spending or overspend

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Research Briefing

South Africa | Public sector wage bill set to increase further

Ipad Frame_Public sector wage bill set to increase further

The public sector wage bill is one of South Africa’s largest line items on the expenditure side, accounting for roughly one-third of total expenditure. In an effort to reduce remuneration costs, the government has opted to “freeze” the wage bill over the next three years. However, unions were not happy and forced the government’s hands to revise its offer. What will the impact of this new offer be?

What you will learn:

  • The public sector wage bill has increased rapidly over the past couple of decades
  • Unions are swinging for the fence with insane demands
  • Government will have to reprioritise spending or overspend

Read more

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Research Briefing | May 28, 2021

UK | Fiscal repair job is probably smaller than feared

Ipad Frame (4)-Jun-02-2021-02-56-14-94-PM

Though the budget deficit remains very high, monthly borrowing totals have
consistently undershot the OBR’s forecasts. We expect this to continue through the remainder of fiscal year 2021-2022, as the recovery proves much faster than the OBR anticipates, boosting tax receipts and lowering government spending.

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Research Briefing | May 28, 2021

UK | Fiscal repair job is probably smaller than feared

Ipad Frame (4)-Jun-02-2021-02-56-14-94-PM

Though the budget deficit remains very high, monthly borrowing totals have
consistently undershot the OBR’s forecasts. We expect this to continue through the remainder of fiscal year 2021-2022, as the recovery proves much faster than the OBR anticipates, boosting tax receipts and lowering government spending.

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Research Briefing | May 28, 2021

US inflation will be higher for longer

US Inflation will be higher for longer

Over the past year, we have consistently predicted higher inflation stemming from base effects, stronger activity in the wake of the economic reopening, higher commodities prices, and supply chain bottlenecks. But two uncertainties cloud the outlook: the level that inflation will peak at, and the persistence of inflation into 2022.

What you will learn from this report:

  • Our latest US headline CPI inflation and core PCE inflation forecasts.
  • Where could the risks of overheating come from?
  • How will the Fed react?

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Research Briefing | May 28, 2021

US inflation will be higher for longer

US Inflation will be higher for longer

Over the past year, we have consistently predicted higher inflation stemming from base effects, stronger activity in the wake of the economic reopening, higher commodities prices, and supply chain bottlenecks. But two uncertainties cloud the outlook: the level that inflation will peak at, and the persistence of inflation into 2022.

What you will learn from this report:

  • Our latest US headline CPI inflation and core PCE inflation forecasts.
  • Where could the risks of overheating come from?
  • How will the Fed react?

Read more

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Research Briefing | May 28, 2021

Demographics: The quadragenarian boomer dividend in Africa

Academic work has established that a mature workforce (one in which the 40-49-year-old cohort is large) has a positive impact on overall economic productivity. In this Research Briefing we examine the correlation, and then look at demographic forecasts to consider which African countries are best positioned to benefit from these gains.

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Research Briefing | May 28, 2021

Demographics: The quadragenarian boomer dividend in Africa

Academic work has established that a mature workforce (one in which the 40-49-year-old cohort is large) has a positive impact on overall economic productivity. In this Research Briefing we examine the correlation, and then look at demographic forecasts to consider which African countries are best positioned to benefit from these gains.

Read more

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Research Briefing

US | Recovery Tracker looking good ahead of summer liftoff

US Recovery Tracker

The US Recovery Tracker rose 0.4ppts to 92.1 in the week ended May 14, pointing to solid momentum ahead of the summer liftoff. Four of the tracker’s six components increased, led by rapidly improving health conditions.

What you will learn:

  • Ongoing vaccination progress lifted the health tracker to its highest since October, giving consumers the confidence to commute more and travel as gasoline demand climbed to a 14-month high.
  • The labor market continued healing, with small-business employment on the rise, fewer layoffs, and increased job postings. Demand rose at a steady clip, driven by increased credit card spending, more restaurant outings, more hotel nights, and greater outlays on recreation, despite cooler housing activity.
  • Our State Recovery Trackers signal a mild improvement in mid-May, with 34 states recording higher readings. All regional recoveries gained ground, with the East and Midwest leading the charge.

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Research Briefing

US | Recovery Tracker looking good ahead of summer liftoff

US Recovery Tracker

The US Recovery Tracker rose 0.4ppts to 92.1 in the week ended May 14, pointing to solid momentum ahead of the summer liftoff. Four of the tracker’s six components increased, led by rapidly improving health conditions.

What you will learn:

  • Ongoing vaccination progress lifted the health tracker to its highest since October, giving consumers the confidence to commute more and travel as gasoline demand climbed to a 14-month high.
  • The labor market continued healing, with small-business employment on the rise, fewer layoffs, and increased job postings. Demand rose at a steady clip, driven by increased credit card spending, more restaurant outings, more hotel nights, and greater outlays on recreation, despite cooler housing activity.
  • Our State Recovery Trackers signal a mild improvement in mid-May, with 34 states recording higher readings. All regional recoveries gained ground, with the East and Midwest leading the charge.

Read more

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Research Briefing | May 27, 2021

LATAM | Recovery Tracker slows on Argentine, Chilean travails

Recovery Tracker slows on Argentine, Chilean travails - iPad

Our Latin America Recovery Tracker (LART) rose 0.5pts during the week ending May 21 – a considerable slowing after the 3.6pt gain in the previous week. Sharp contractions in Argentina and Chile partially offset gains elsewhere.

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Research Briefing | May 27, 2021

LATAM | Recovery Tracker slows on Argentine, Chilean travails

Recovery Tracker slows on Argentine, Chilean travails - iPad

Our Latin America Recovery Tracker (LART) rose 0.5pts during the week ending May 21 – a considerable slowing after the 3.6pt gain in the previous week. Sharp contractions in Argentina and Chile partially offset gains elsewhere.

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Research Briefing | May 27, 2021

MENA | GCC inflation; Saudi privatisation; Iranian nuclear deal

MENA | GCC inflation; Saudi privatisation; Iranian nuclear deal

Saudi Arabia’s inflation rose to 5.3% y/y in April from 4.9% y/y in March, but we expect the rate to ease in H2 as the base effects from last year’s VAT hike fades. Meanwhile, both Qatar and Oman registered positive inflation rates following a sustained period of deflation.

What you will learn:

  • Saudi Arabia aims to raise US$55bn by 2025 under the Vision 2030 privatisation programme in an effort to boost government revenues and narrow the fiscal deficit, estimated at 1.5% of GDP this year after 11.2% in 2020.
  • A one-month extension of the key monitoring pact between the International Atomic Energy Agency and Iran has been extended by a month, providing additional time for Iran and the US to reach an agreement that could see Iran return to the JCPOA in exchange for sanction relief.
  • Saudi Arabia’s inflation rose to 5.3% y/y in April from 4.9% the previous month, the lowest the lowest since the tripling of VAT to 15% in July last year. 

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Research Briefing | May 27, 2021

MENA | GCC inflation; Saudi privatisation; Iranian nuclear deal

MENA | GCC inflation; Saudi privatisation; Iranian nuclear deal

Saudi Arabia’s inflation rose to 5.3% y/y in April from 4.9% y/y in March, but we expect the rate to ease in H2 as the base effects from last year’s VAT hike fades. Meanwhile, both Qatar and Oman registered positive inflation rates following a sustained period of deflation.

What you will learn:

  • Saudi Arabia aims to raise US$55bn by 2025 under the Vision 2030 privatisation programme in an effort to boost government revenues and narrow the fiscal deficit, estimated at 1.5% of GDP this year after 11.2% in 2020.
  • A one-month extension of the key monitoring pact between the International Atomic Energy Agency and Iran has been extended by a month, providing additional time for Iran and the US to reach an agreement that could see Iran return to the JCPOA in exchange for sanction relief.
  • Saudi Arabia’s inflation rose to 5.3% y/y in April from 4.9% the previous month, the lowest the lowest since the tripling of VAT to 15% in July last year. 

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Research Briefing | May 27, 2021

Eurozone | Recovery shouldn’t mean an end to all fiscal stimulus

Ipad Frame_Eurozone-Recovery-shouldn’t-mean-an-end-to-all-fiscal-stimulus

Our baseline forecast sees a strong rebound in eurozone economic activity as vaccinations bring the pandemic under control, but this shouldn’t imply a rapid reversal in supportive fiscal policy. Rather, it should aim to support weak spots of the economy and focus on maintaining the recovery’s momentum beyond 2021 to prevent lasting damage and uneven sectoral recovery.

What you will learn:

  • It’s very unlikely that eurozone countries will add US-style blanket fiscal stimulus due to a combination of self-imposed political constraints and institutional arrangements such as the EU fiscal rules. 
  • Consumers will power the recovery as they unwind their excess savings. But those are held mainly by higher-income households.
  • The partial rebound in Q3 2020 serves as a guide: Retail sales and consumption of durable goods reached pre-pandemic levels, but services, particularly social consumption, remained depressed despite a solid rebound.

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Research Briefing | May 27, 2021

Eurozone | Recovery shouldn’t mean an end to all fiscal stimulus

Ipad Frame_Eurozone-Recovery-shouldn’t-mean-an-end-to-all-fiscal-stimulus

Our baseline forecast sees a strong rebound in eurozone economic activity as vaccinations bring the pandemic under control, but this shouldn’t imply a rapid reversal in supportive fiscal policy. Rather, it should aim to support weak spots of the economy and focus on maintaining the recovery’s momentum beyond 2021 to prevent lasting damage and uneven sectoral recovery.

What you will learn:

  • It’s very unlikely that eurozone countries will add US-style blanket fiscal stimulus due to a combination of self-imposed political constraints and institutional arrangements such as the EU fiscal rules. 
  • Consumers will power the recovery as they unwind their excess savings. But those are held mainly by higher-income households.
  • The partial rebound in Q3 2020 serves as a guide: Retail sales and consumption of durable goods reached pre-pandemic levels, but services, particularly social consumption, remained depressed despite a solid rebound.

Read more

Ungated Post|27 May 2021

FocusEconomics ‘Best Economic Forecaster Awards’ ranks Oxford Economics top most consistently over last 2 years

FocusEconomics ‘Best Economic Forecaster Awards’ ranks Oxford Economics top most consistently over last 2 years

Focus Economics Awards 2021Oxford Economics is proud to announce that over the past two years combined it has been ranked top in FocusEconomics’ Best Economic Forecaster Awards. 

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Bahrain
Blog|27 May 2021

Will GCC countries be economies of the future or old oil ghost countries?

Will GCC countries be economies of the future or old oil ghost countries?

The sustainability of hydrocarbon revenues among Gulf Cooperation Council (GCC) economies has been a major concern for decades, prompting a plethora of policies, visions and reforms focused on economic diversification. Undoubtedly, oil will continue to play an important role in the foreseeable future, even as demand for hydrocarbons is set to run out of steam and weaken from current levels, consistent with the gradual transition towards renewable energy, in line with the Paris Agreement to achieve net carbon zero by 2040.

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Research Briefing | May 26, 2021

Canada | Recovery Tracker enters May with positive momentum

Canada Recovery Tracker enters May with positive momentum - iPad

The Canada Recovery Tracker (CRT) rose 1.4ppts to 87.4 in the week ended May 7 and is once again heading in the right direction. The health index has made steady improvements across all categories in recent weeks, and about half the population has received at least one dose as of late May. The mobility and activity indices are also trending upward again, and several provinces have now presented plans to fully reopen their economies in coming months. Eased restrictions should allow for a strong economic acceleration in H2 2021, supported by massive fiscal stimulus, accommodative monetary policy, and robust US growth.

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Research Briefing | May 26, 2021

Canada | Recovery Tracker enters May with positive momentum

Canada Recovery Tracker enters May with positive momentum - iPad

The Canada Recovery Tracker (CRT) rose 1.4ppts to 87.4 in the week ended May 7 and is once again heading in the right direction. The health index has made steady improvements across all categories in recent weeks, and about half the population has received at least one dose as of late May. The mobility and activity indices are also trending upward again, and several provinces have now presented plans to fully reopen their economies in coming months. Eased restrictions should allow for a strong economic acceleration in H2 2021, supported by massive fiscal stimulus, accommodative monetary policy, and robust US growth.

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Research Briefing | May 26, 2021

APAC | How households unleash their savings is key to growth

Ipad Frame (42)

A great uncertainty for the growth outlook is the extent to which households will spend the additional savings they’ve accumulated once normal conditions resume. We recently concluded that for advanced economies, the upside risks to our relatively optimistic baseline from an estimated US$4.7tn of excess savings are material. This issue is also important for Asia-Pacific’s economies.

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Research Briefing | May 26, 2021

APAC | How households unleash their savings is key to growth

Ipad Frame (42)

A great uncertainty for the growth outlook is the extent to which households will spend the additional savings they’ve accumulated once normal conditions resume. We recently concluded that for advanced economies, the upside risks to our relatively optimistic baseline from an estimated US$4.7tn of excess savings are material. This issue is also important for Asia-Pacific’s economies.

Read more

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Research Briefing | May 26, 2021

Global | “Earn it!” What price fiscal reputation in emerging markets?

Earn it. What price fiscal reputation across 64 EMs?

Emerging Markets’ reputations for delivering on fiscal commitments has never been so important as it is now, given the need for medium-term adjustment in the Covid crisis aftermath. We reveal where markets may be underplaying the importance of reputation based on EMs’ fiscal adherence over the last 10 years.

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Research Briefing | May 26, 2021

Global | “Earn it!” What price fiscal reputation in emerging markets?

Earn it. What price fiscal reputation across 64 EMs?

Emerging Markets’ reputations for delivering on fiscal commitments has never been so important as it is now, given the need for medium-term adjustment in the Covid crisis aftermath. We reveal where markets may be underplaying the importance of reputation based on EMs’ fiscal adherence over the last 10 years.

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Research Briefing | May 25, 2021

US | A post-pandemic productivity resurgence

A post-pandemic productivity resurgence - iPad

We expect a mix of cyclical and structural factors will power above-trend productivity growth in the US in the post-Covid era. These factors include a strong investment cycle, increased business dynamism, faster technology adoption, and lasting remote work.

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Research Briefing | May 25, 2021

US | A post-pandemic productivity resurgence

A post-pandemic productivity resurgence - iPad

We expect a mix of cyclical and structural factors will power above-trend productivity growth in the US in the post-Covid era. These factors include a strong investment cycle, increased business dynamism, faster technology adoption, and lasting remote work.

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Research Briefing | May 25, 2021

Eurozone | Near-term upside risks for inflation are on the rise

Ipad Frame-Eurozone-Near-term-upside-risks-for-inflation-are-on-the-rise

The upside risks to our above-consensus view on eurozone inflation in 2021 are rising. However, we think that this primarily reflects the odds of a more frontloaded bout of reflation as the economy reopens. Risks of a more sustained pick-up in inflation beyond 2021 still appear low, given the region’s ample spare capacity and a gradual labour market recovery keeping a lid on wage growth.

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Research Briefing | May 25, 2021

Eurozone | Near-term upside risks for inflation are on the rise

Ipad Frame-Eurozone-Near-term-upside-risks-for-inflation-are-on-the-rise

The upside risks to our above-consensus view on eurozone inflation in 2021 are rising. However, we think that this primarily reflects the odds of a more frontloaded bout of reflation as the economy reopens. Risks of a more sustained pick-up in inflation beyond 2021 still appear low, given the region’s ample spare capacity and a gradual labour market recovery keeping a lid on wage growth.

Read more

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Research Briefing | May 25, 2021

Global | Coronavirus Watch: The limits of vaccines

Vaccines are the key to a safe and permanent transition to more normal conditions. But evidence from economies that already have implemented widespread vaccine rollouts confirms our long-held view that high vaccination rates will not be the sole factor.

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Research Briefing | May 25, 2021

Global | Coronavirus Watch: The limits of vaccines

Vaccines are the key to a safe and permanent transition to more normal conditions. But evidence from economies that already have implemented widespread vaccine rollouts confirms our long-held view that high vaccination rates will not be the sole factor.

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Research Briefing | May 25, 2021

Africa | DRC and Zambia to cash in on the copper bull run

Copy of Ipad Frame (25)

Africa may be best known for its wealth of gold, diamonds, and oil, but the mineral-rich continent also hosts significant copper reserves. The red metal has recently been placed in the spotlight as the demand thereof has surged, while its supply has been throttled. This combination has led to a copper bull run.

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Research Briefing | May 25, 2021

Africa | DRC and Zambia to cash in on the copper bull run

Copy of Ipad Frame (25)

Africa may be best known for its wealth of gold, diamonds, and oil, but the mineral-rich continent also hosts significant copper reserves. The red metal has recently been placed in the spotlight as the demand thereof has surged, while its supply has been throttled. This combination has led to a copper bull run.

Read more

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Research Briefing | May 24, 2021

DRC and Zambia to cash in on the copper bull run

The mineral-rich African continent may be best known for its wealth of oil, gold, and diamonds, but the region also hosts significant copper reserves. Copper has recently been placed in the spotlight as the demand for the red metal has surged, while the supply thereof has been throttled. This has caused the price of copper to soar.

Read more

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Research Briefing | May 24, 2021

DRC and Zambia to cash in on the copper bull run

The mineral-rich African continent may be best known for its wealth of oil, gold, and diamonds, but the region also hosts significant copper reserves. Copper has recently been placed in the spotlight as the demand for the red metal has surged, while the supply thereof has been throttled. This has caused the price of copper to soar.

Read more

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Research Briefing | May 24, 2021

Global | Inflation overshoot possible, but not yet probable

Strong CPI figures in the US have intensified the debate about the inflation outlook, especially in the context of soaring commodity prices. In recent decades, commodity surges have not been strongly associated with inflation, but some of the structural and policy-related factors behind this may be shifting, raising the risk of an inflation overshoot.

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Research Briefing | May 24, 2021

Global | Inflation overshoot possible, but not yet probable

Strong CPI figures in the US have intensified the debate about the inflation outlook, especially in the context of soaring commodity prices. In recent decades, commodity surges have not been strongly associated with inflation, but some of the structural and policy-related factors behind this may be shifting, raising the risk of an inflation overshoot.

Read more