Posts

Showing posts from November, 2018

United Kingdom: Brexit Update

The economy grew strongly in the third quarter according to recent figures, supported by private consumption, public spending and net exports. Moreover, real earnings growth accelerated notably, as the tight labor market fed wage pressures. Employment growth, however, softened in quarter-on-quarter terms, possibly on rising Brexit uncertainty. Looking to Q4, signs are less positive. In October, both the services and manufacturing PMIs fell, while annual retail sales growth slowed considerably and consumer sentiment worsened. On the fiscal front, the government recently presented an expansionary budget, which should support growth next year thanks to higher spending and tax cuts. In mid November, the UK and EU reached a preliminary agreement on Brexit withdrawal terms. Its ratification would support business confidence and investment, although there are serious doubts over whether the UK parliament will give the green light to the deal as it currently stands. • Growth should be fueled…

China Economic Outlook December 2018

Image
China’s spectacular economic growth of recent decades will slow. 

Amid rising trade tensions with the United States, economic growth decelerated in the third quarter to levels not seen since the trough of the global financial crisis in 2009. This has piled pressure on the Chinese government to reignite economic activity. On the upside, growth in fixed asset investment ticked up in September, suggesting that the first bunch of stimulus measures have started to kick in. Moreover, the economy is benefiting from the front-loading of shipments ahead of planned additional tariffs to be imposed by the U.S. in January 2019, as well as by less restrictive anti-pollution policies. Meanwhile, on 20 October the government presented a new special deduction plan to be implemented in 2019, which builds upon the tax reform announced in August and hopes to support household consumption. More recently, President Xi Jinping vowed to support private companies in a meeting with top businesses on 1 Novembe…

Update On Brazil November 2018

Image
Right-wing Jair Bolsonaro was elected president on 28 October, after a polarizing and turbulent election cycle. Bolsonaro campaigned on a largely market-friendly platform, vowing to continue with economic reforms and curb the worrysome fiscal deficit, which should bode well for the economy going forward if enacted. That said, Bolsonaro is a controversial and wildcard figure; he could thus have difficultly drumming up support in Congress to pass legislation throughout his tenure, while some uncertainty remains regarding his incoming policies. Meanwhile, mixed economic data is rolling in on the recovery. The unemployment rate fell in the third quarter and consumer confidence jumped in October, positive signs for household spending. However, industrial production contracted sharply in September and business confidence fell further the following month. Overall, growth is expected to have firmed in Q3 as the economy normalized after the truckers’ strike caused widespread disruptions in Q2…

Global Economic Outlook November 2018

Image
Global economic growth appears to have lost steam in the third quarter in annual terms following Q2’s strong showing. A preliminary GDP estimate for the global economy put year-on year growth at 3.3% for Q3. While the print was a notch below the 3.4% increase from the previous period, it matched last month’s forecast. The softer Q3 reading was driven in part by weaker dynamics in global powerhouse China, which saw growth fall short of expectations according to recent figures, amid rising trade disputes with the U.S. and subdued industrial production and investment. In order to shore up flagging activity, the Chinese authorities have loosened credit conditions, relaxed anti-pollution measures and unveiled plans to reduce taxes in recent weeks, with the impact of changes likely to be felt from Q4 onwards. Moreover, growth in the Eurozone likely dimmed in annual terms, despite remaining robust, due to a tough base effect arising from a stellar performance in 2017. In contrast, monthly i…

Greece Nov. 2018 Economic Outlook Improves

Image
Incoming data suggests that sluggish growth continued in the third quarter, after Q2’s deceleration. Industrial production growth waned in August and the manufacturing PMI edged down in September pointing to lackluster manufacturing activity. However, a booming tourism sector is expected to have buttressed momentum over the summer. Against a backdrop of languishing growth, the government unveiled its first post-bailout budget on 1 October. Authorities penned in a large primary surplus—greater than the amount agreed with its lenders—to shield them from having to cut pensions again. Although another round of unpopular pension cuts had been agreed upon, policymakers want to avoid the slash ahead of elections next year and stated that the European Commission has approved the budget. The government remains under close monitoring by its European lenders after the end of the third bailout. Meanwhile, the Finance Ministry and Central Bank announced they will begin lifting capital controls in…