In 2010 we argued that fast growth in emerging markets (EM) and their increasing weight in world GDP was driving an economic super-cycle. We have lowered our forecasts for China, India and others, but the case broadly still holds (see Part 1).
• The summer tourism season was even worse than expected
• But banking deposits have shown renewed resilience, strengthening a pillar of the economy
• Investors seem to remain sanguine about Lebanon bonds
• We revise our GDP growth forecast down on oil output, which is constrained by the operating environment
• The security situation has worsened substantially in recent months
• Oil potential remains vast but thwarted for now
• The non-hydrocarbon sector continues to show subpar metrics
• Moody’s has downgraded Bahrain again
• Refinery output capacity should rise by 38%
• Hydrocarbon-based economies are using their fiscal strength to drive near-term growth and diversify their economies to reduce long-term risks. Oil importers are constrained by high domestic subsidy bills and weak investment; this is hampering econ...
• Strong growth momentum to remain
• Higher twin deficits on the back of higher investment
• Political uncertainty has increased...
• The Fed’s decision to postpone tapering QE in September led to a relief rally in some markets. In others, the focus on more negative credit fundamentals remains. With tapering of QE still expected eventually, we look at the underlying trend in mor...
• Worries over the impact of eventual US tightening and policy actions in China may have affected markets, but Asia’s underlying macro resilience remains intact. Domestic demand indicators have been holding up. We have downgraded our 2013 growth for...
Top 3 data/events
• Japan – Growth strategy is not impressive so far
• UK – Above-target inflation to persist, with near-term upside pressure
• Germany – ZEW set to show unspectacular investor sentiment recovery
• Market focus
• We expect the ...
Top 3 data/events
• Japan – Machinery orders likely corrected from March’s jump
• India – April IIP likely stayed lacklustre
• Euro area – German and French recovery set to lift regionwide April IP
• Market focus
• In May, EM-21 central ...
Our scorecard suggests the US has now largely recovered from the 2008 crisis; only a ‘lost half-decade’
• Japan and the UK are behind; Spain still has a long way to go
• We focus on progress in balance sheet adjustment and the effectiveness of mon...
Temporarily weaker oil output and a continued global slowdown will likely pressure the BoP in 2013
• External accounts should trough in 2013, with continued improvement from 2014 onwards
• By 2020, Brazil’s oil and derivatives production is set t...
• Despite a modest planned increase in 2013 spending, budget oil-revenue assumptions are still optimistic
• Augmentation of revenue from Nigeria’s Excess Crude Account is still possible
• Calls for greater monetary easing, given near-term growth c...
• Fiscal policy is likely to be constrained in 2013 in a number of Sub-Saharan African sovereigns
• In some countries, debt levels have increased to worrying levels
• Reducing energy subsidies can alleviate the pressure on public finances
• Gradual recovery in real GDP looks likely in 2013
• Inflation concerns mean the policy rate should remain on hold until 2014
• Oil will provide a long-term boost to growth, but production is still several years away
• Despite tightening measures, pressure on the currency has persisted
• Planned Bank of Zambia Act to allow the central bank to monitor and better regulate current account transactions
• Exporters may be required to remit earnings back to Zambia
• Angola has announced plans to issue a USD 1bn sovereign eurobond
• Strong fundamentals and a stable political outlook support Angola’s rating
• While the country has long suffered perceptions of poor transparency, this is gradually changing
• Ghana surprised markets with its admission of spending overruns in 2012, resulting in a deficit of 12.1% of GDP
• Despite reforms, in 2013 – typically the most benign year of the political cycle – the deficit narrows to only 9% of GDP
• Large de...
• Barring any new supply-side shocks, 2013 growth should improve on the 2.5% recorded in 2012
• Higher public-sector investment and accommodative monetary policy should support growth
• A more competitive ZAR is key to South Africa’s recovery pro...
• Greater certainty post-election is required for markets to rally
• Economic recovery is evident from the high-frequency data
• Managing fiscal devolution post-election will be a key challenge
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The world economy is in transition. Global growth rates are picking up, but transition means elevated risks and volatility.
In terms of global implications, all eyes will be on the US and China, with the US normalising monetary policy and China rebalancing its economy.
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