• China’s budgetary stance for 2014 is neutral; it forecasts a 2.1% deficit
• SOEs are still not contributing much to the MoF budget, but the situation is gradually improving
• The MoF is overhauling budget planning, improving transparency, cuttin...
We expect a bounce in NFPs after two consecutive weak prints; ongoing harsh weather adds uncertainty
• The end of benefits for the long-term unemployed may drive down participation and unemployment rates
• Fed QE tapering is on auto pilot, in our...
• The euro-area economy is accelerating; we expect more institutions to upgrade their growth forecasts
• The ECB would consider QE if region-wide deflation threatened, but can tolerate prolonged low inflation
• EUR-USD should grind lower but the ...
The US-China trade corridor continues to be dominant for manufactured products
• Evidence of ‘near-shoring’ in Mexico is feeble; Mexico is still a small player in many segments
• The US foreign oil bill is shrinking, but the 2013 non-oil trade def...
• Growth is likely to remain sub-par at 5.3% and 5.9% in FY14 and FY15, respectively
• We expect no change in policy rates as the BB seeks to preserve macroeconomic stability
• A narrower current account surplus could put mild depreciation pressur...
• Spare capacity is key for BoE policy makers: by Q4-2014, less slack in the labour market should trigger concerns over the medium-term inflation outlook
• We expect a measured hiking path equivalent to 25bps each quarter from Q1-2015 through 2016
• Africa is key to Brazil’s push to increase its strategic importance
• As a fellow Lusophone country, relations with Angola are especially important
• Brazilian companies have played a key role in Angola’s reconstruction; this is part of Angola...
Optimism about the Philippine economy remains strong, while USD-PHP expectations are more divided
• Most of our respondents expect inflation to rise but remain within the central bank’s target zone in 2014
• The economy saw positive developments –...
Harsh weather conditions, which continue into February, are muddying the US data picture
• There is more than the weather at play; but this cool-down is not a sign of a bigger downturn, in our view
• We see the Fed remaining undistracted, muscling...
• Macro prudential measures and steep policy tightening will constrain real GDP growth
• We do not envisage a recession scenario; fiscal expansion and exports will limit the downside risks
• Politics remain uncertain and could stress markets again...
• The FY14 fiscal deficit announcement is better than budgeted owing to expenditure compression
• Adherence to the FY15 fiscal deficit target requires expenditure cuts; tax-revenue projections are high
• We will watch for any revisions to FY15 ...
The US economy is off to a slow start this year; but this is not a regime change, in our view
• Uneven data is unlikely to distract the Fed from continued QE tapering: the Fed is on ‘auto pilot’
• We see the first rate hike in September 2015; with...
January’s payroll data is a disappointment; the impact of the harsh weather is unclear
• Unemployment rate is now 0.1% above the Fed’s 6.5% threshold; but the threshold has lost its substance
• Fed’s USD 10bn/meeting QE tapering is broadly on aut...
• RGI rose 5.9% m/m in December, bringing 2013 increase to 84%; deposit growth is the key driver
• We expect RGI to reach 2,200 and Renminbi deposits in Hong Kong to reach CNY 1.15-1.20tn by end-2014
• Dim Sum bonds enjoy a strong start to 2014;...
Argentina’s economic crisis is not over; USD-ARS and local rates are likely to move higher
• Inflation is expected to spike, and the economy to contract; this is bad news for Brazil
• The trade links between Brazil and Argentina are significant
The euro-area recovery is showing more encouraging signs, according to ECB President Draghi
• ‘There is no deflation’; inflation is low due to falling energy prices and the periphery’s adjustment
• The ECB can act, if required, but wants to see th...
Despite the harsh weather, we think the labour market remained healthy in January
• The end of benefits for long-term unemployed may drive the participation and unemployment rates down
• Fed QE tapering is broadly in ‘auto pilot’ mode; the bar to ...
Ahead of the first MPC meeting of 2014, the Bank of Ghana issues new details on FX regulations
• Existing regulations regarding export proceeds are restated
• Rules on the operation of foreign-currency accounts are modified
• Foreign-exchange bu...
• Our Indonesian clients are slightly more optimistic this year on business prospects
• Our survey results suggest that sustaining revenue growth remains the key challenge
• Indonesian clients are bearish on their local currency vs. USD in 2014,...
We now see US growth at 2.6% in 2014, 2.7% in 2015 and 2016, below current market consensus
• The Fed is steadily exiting its accommodative ‘insurance policies’; this is restricting growth
• We now forecast the first Fed hike in September 2015, ...
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This report provides an economic outlook for more than 60 economies worldwide and investment implications for commodities, credit, equities, FX and interest rates markets in 2014. We expect a better 2014, with world economic growth picking up and inflation staying benign. Global growth should increase to 3.5% in 2014 from 2.7% in 2013, helped by improvements in economic activity in the US and Europe. A pick-up in growth in the West is good news for the rest of the world, and we expect emerging economies’ growth to outpace G7 growth by almost 4 percentage points.
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