Sanele Mjikane 
The extent to which UK employers can respond to likely 2024 interest rate cuts with increased output, rather than rises in prices and wages, will partly reflect the extent of spare capacity. This will inevitably vary by region. Evidence on this is imperfect, but in terms of capital assets (including intangibles) and labour availability, southern regions appear to be in a stronger position than those in the UK’s traditional industrial heartland.
The impact of Red Sea shipping disruption on the eurozone economy continues to be limited, in line with our baseline view. Our new Eurozone Supply Stress Indicator suggests that supply pressures have returned to normal following a period of easing in 2023.
For Gulf cities, the near-term outlook will be tied not only to the global macroeconomic backdrop, but also the progress of the diverse visions and strategies in the region. With the aim to diversify their economies and reduce the dependence on oil, Gulf states continue to invest in the non-oil economy and implement various reforms. That said, oil revenues remain key to funding diversification efforts.
We think the Riksbank will cut rates in May, before the Federal Reserve and the European Central Bank do so. The Riksbank’s monetary policy tightening has had a large impact on the interest rate sensitive Swedish economy, while recent inflation outcomes have undershot Riksbank’s forecasts and converged to the target. The effect of an earlier rate cut on the krona is a key risk.
Profit margins in the eurozone have largely dropped back towards their long-term pre-pandemic average, after they increased faster than wages during the post-pandemic rebound. But we think margins will narrow further as wages catch up to inflation and productivity remains weak.
The short-term outlook for Europe’s largest cities remains subdued, but as the current pressures ease the medium-term picture is set to improve. We expect GDP growth to pick up pace from 2025 onwards and settle at 2.1% on average through to 2028. This will still be weaker than in the years preceding the pandemic.
We are cautiously optimistic about the medium-term outlook for Europe’s cities as a whole, but less sanguine about southern European cities than most others. They have tended to underperform in the past and will probably do so in the future. Madrid, the largest, has the strongest growth prospects of the larger cities.
Our study “The German Music Industry: Investments and Payments to Artists”, on behalf of the German Music Industry Association (BVMI), examines whether and how artists have benefited from the increased revenues of German music labels in recent years.
Our study “The German Music Industry: Investments and Payments to Artists”, on behalf of the German Music Industry Association (BVMI), examines whether and how artists have benefited from the increased revenues of German music labels in recent years.
The cause of Easter egg inflation of 50% or more this year is largely explained in the latest paper from our Africa team on one of the key countries at the start of the supply chain, those producing the raw ingredient.
A scenario where neither the Federal Reserve nor the European Central Bank cut rates in 2024 would reduce eurozone GDP by 0.5ppts by 2025. We still think the eurozone economy would grow by 0.5% in 2024, but the projected expansion in 2025 would be 1.4%, lower than 1.8% in our baseline forecast.
The European Central Bank’s updated monetary policy framework retains key advantages of the previous system and in our view is well-tailored to the eurozone’s bank-dominated financial infrastructure. It also gives the ECB a versatile toolkit allowing it to react flexibly to episodes of
market stress.
Even though incoming hard data on eurozone industry is still downbeat, leading indicators suggest that we’re at a turning point. We expect favourable cyclical and structural tailwinds will now take over, and industry output to accelerate through this year to 2% y/y growth by Q4.
The first round of Senegal’s presidential election will take place on Sunday, March 24. The race is unpredictable, given the dramatic backdrop to it. In this Research Briefing, we set out the main dynamics relating to the election and refresh our political scenarios.
The Nordic economies will have a better 2024 than last year, but growth rates will diverge across the region. The main growth drivers will be improving domestic demand, higher confidence, and easing financial conditions amid lower inflation and policy easing. A pharma boom will make Denmark outperform, while a weak finish to 2023 will weigh on growth in Finland and Sweden.
Africa’s mineral riches are central to its history. However, the race to combat climate change has reignited interest in the continent given its vast deposits of critical minerals. Southern Africa, in particular, has received much attention with the development of several key transport corridors with the almost explicit purpose of scaling up the availability of these minerals on international markets. We set out to investigate the economic potential of the region in terms of its critical minerals while taking into consideration what the establishment of these corridors means for the regional economy.
While economic growth in the north of England is generally below the UK average, that is not always the case. In 2016-19, 21 northern local authority districts, or a third of the total, outpaced the UK for GVA growth, some of them substantially, and with the City of Manchester leading. Unfortunately, we forecast that the number will fall to just seven in the 2024-28 period.
Our sentiment data suggests that the ECB’s worries about sticky inflation driven by strong wage growth are misplaced. The sentiment data-based nowcast, which allows us to track labour market developments in near-real time, suggests that pay growth continued to cool at the start of 2024 and is running below the ECB’s projections.
Our suite of nowcasting models corroborates our tepid near-term expectations for the hibernating eurozone economy, indicating Q1 growth will come in at 0.1% q/q. This is a touch below our 0.2% q/q baseline forecast, though the spread of results across our models plus mixed signals from latest data highlight the uncertainty around the immediate growth outlook.
China has been accused of dumping stock onto the European market within the automotive, metals and chemicals sectors with the possibility of the EU placing tariffs on these products. Dumping is defined as a company exporting at a price lower than its domestic price and requires greater evidence than just a surge in imports, which will take time to gather and assess
