Showing posts from July, 2019

Euro Outlook Moderates August 2019

Growth is expected to have lost steam in the second quarter, after a healthy expansion at the start of the year. The latest data continues to point to a two-speed economy, with lingering weakness in the manufacturing sector contrasting relatively robust services sector activity. The manufacturing PMI recorded its worst quarter since Q1 2013 in Q2, and a sharp downturn in industry confidence caused economic sentiment to fall to a near three-year low in June. However, the unemployment rate fell to a new over one-decade low in May and the services business activity index rose to a seven-month high in June. Meanwhile, on 2 July, the European Council nominated Christine Lagarde for ECB President, Ursula von der Leyen to head the European Commission and Charles Michel to lead the European Council. The nominees represent a largely pro-European integration stance and also the continued influence of Germany and France, although ultimately policy will be spearhead by heads of states. • Activit…

Major Economies Consensus Forecast

Global growth is likely to dim this year, due largely to weaker momentum in developed economies and China. However, tight labor markets and more accommodative monetary policy should prop up activity. A further escalation of trade tensions, particularly between the U.S. and China, is the key downside risk

Economic growth will likely soften noticeably in 2019 compared to last year, amid weaker domestic demand growth and as a moderating global growth outlook hits exports. Volatile commodity prices, uncertain trade relations with the U.S. and elevated household debt pose downside risks.

Euro Area
Activity is seen slowing sharply this year amid a less favorable external environment, problems in the manufacturing sector and as uncertainty dent exports and investment growth. However, solid spending will curb the downturn. Risks stem from global protectionism, a sharp slowdown in China, resurging financial turbulence sparked by Italy and Brexit uncertainty.

Lower global demand shoul…

China Economic Stability: August 2019

Economic Outlook Moderates In the second quarter of the year, the Chinese economy expanded at the weakest pace since at least 1992, as the trade war with the United States continued to undermine the external sector and investment. Nominal merchandise exports contracted in Q2, mostly reflecting weak global demand and spillovers from the China-U.S. trade spat. Moreover, trade disputes dragged on investment throughout the quarter despite increased bank lending causing a notable uptick in June. Volatility in China’s economic data is expected to continue further down the road until the trade dispute settles. In this regard, June’s strong economic data for the domestic economy should be taken with a pinch of salt until additional data can corroborate that growth has indeed effectively bottomed out. In late June, China and the U.S. agreed to restart trade negotiations, while the U.S. canceled new tariffs on Chinese exports.
Uncertainty regarding the China-U.S. trade war will continue to wei…

Crude Oil Outlook July 2019

Brent Crude Brent crude oil prices stabilized in recent weeks after falling sharply in May and the first days of June on the back of fears of a global slowdown and escalating trade tension between China and the United States. On 5 July, oil prices traded at USD 64.2 per barrel, which was 3.3% higher than on the same day last month. Moreover, the benchmark price for global crude oil was 16.7% lower than on the same day last year, although it was up 27.0% on a year-to-date basis. Oil prices were influenced by diverging forces in recent weeks. Uncertainty about the health of the global economy and the trade spat between the two superpowers sparked concerns about a fall in demand for the black gold. Moreover, the U.S. continued to post new oil production highs thanks to its booming shale industry. On the other hand, oil production cuts by OPEC+, falling production in Venezuela, fears of supply disruptions in Libya and Nigeria, and U.S. sanctions against Iran’s oil industry threatened to …

Russia Economic Outlook July 2019

Russia Economic Outlook July 2019

A second GDP estimate confirmed that the economy ran out of steam in the first quarter, amid a broad-based deceleration. Wholesale and retail trade contracted in Q1 as January’s VAT hike dented consumer demand, while a lackluster outturn in the manufacturing and constructions sectors further derailed growth. Moreover, constrained oil output and weak energy demand from Europe curbed mining activity, bringing merchandise exports to a near halt in Q1. Turning to Q2, soft momentum appears to have persisted. After rebounding in April, economic activity growth tumbled again in May, owing to a deterioration in the manufacturing sector. In addition, weaker household consumption likely played a role, as retail sales growth slid in the month. Going into Q3, the focus is on 1–2 July OPEC+ meeting, where oil output cuts are likely to be extended.

Sliding private consumption and a downbeat external sector will restraint growth this year, although an uptick in pub…

Spain: July Economic Outlook

Euro area Manufacturing PMI (Final, June): 47.6, Flash: 47.8, Previous: 47.7
Germany Manufacturing PMI (Final, June): 45.0, Flash: 45.4, Previous: 44.3 France Manufacturing PMI (Final, June): 51.9, Flash: 52.0, Previous: 50.6 Italy Manufacturing PMI (June): 48.4, GS: 49.1, Consensus: 48.7, Previous: 49.7 Spain Manufacturing PMI (June): 47.9, GS: 49.8, Consensus: 49.5, Previous: 50.1
Italian manufacturing PMI fell by 1.3pt to 48.4 in June, below market expectations. 

Spanish manufacturing PMI also fell considerably, slipping by 2.7pt to 47.9, well below expectations. This reflected notable weakness in new orders, output, and employment. The drag on the industrial sector was largely attributed to global trade tensions and political uncertainties.

Incoming data points to slightly weaker growth in the second quarter, on the heels of a strong Q1 upturn that was buoyed by a robust rebound in fixed investment. Although industrial production bounced back solidly in April, the composite PMI f…

Japan Economic Outlook 2019

Comprehensive GDP data for the first quarter confirmed that the relatively robust expansion was mostly propelled by a sharp decline in imports of goods and services. Underlying domestic demand, meanwhile, appeared weak as reflected by lackluster private consumption in Q1, raising concerns over Prime Minister Shinzo Abe’s plans for household demand to drive economic growth. Turning to the second quarter, consumer confidence tumbled to an over three-year low in May, which does not bode well for a recovery in consumer spending and leaves Abe at a crossroad whether to move ahead with a controversial sales tax in October. Japan’s economic prospects are quickly worsening as escalating trade tensions, especially between China and the United States, could further erode global demand and, in turn, Japan’s all-important external sector.

Faltering global demand is expected to weigh on growth this year. Conversely, the economy should benefit from frantic front-loading of consumer purchases ahead…