- Our updated calendar identifies the top events that should be on your radar this week.
- We also provide an outlook overview region by region for the rest of the year.
Our view in a nutshell
- Despite relatively stable domestic demand, a downside risk to growth remains as drags from real exports could re-emerge.
- We expect core CPI inflation to remain around 0.5% y-o-y for a while as it continues to decelerate for a while
- We expect the current YCC policy to remain untouched in the longer run, despite continuing hints from the BOJ for further rate cuts
- The risk is renewed yen appreciation caused by our concerns over a global recession and US protectionism.
- The export-led downturn has spilt into capex, and consumption is now at risk. We don’t expect a recovery until Q1 at the earliest
- We expect more central bank rate cuts: China, Korea, India, Indonesia, Malaysia, Thailand, the Philippines and Australia.
- The region’s new stars in terms of rising long-run potential growth are mainly in parts of Southeast Asia.
- China: We expect the slowdown to worsen and policy easing to continue; the outbreak of Wuhan coronavirus is a new risk
- Korea: We expect the BOK to deliver a 25bp rate cut in Q3 2019 (most likely July) and another in Q4 (most likely November).
- India: We expect the cumulative effects of monetary policy easing to support a cyclical recovery starting Q3 2019.
- Indonesia: President Jokowi’s re-election bodes well for further reforms, investment spending and potential growth.
- Australia: We see better, but still-sub trend growth, continuing low inflation and two more 25bp rate cuts (Q4, Q1).
- Coronavirus risks slowing GDP growth sharply in Q1 2020, but this should be followed by a V-shaped pickup in Q2.
- Growth has slowed to potential but we expect a modest acceleration starting in H2 2020 as uncertainty wanes.
- Recession risk has dissipated as consumer fundamentals help sustain the expansion.
- Core inflation should pick up as the impact from transitory factors continues to wane and labor markets remain tight.
- After cutting rates three times in 2019, we expect the Fed to remain on hold over the forecast horizon.
- Balance sheet expansion has started but the FOMC will need to make adjustments in coming quarters.
- Risks include aggressive trade policy, elevated levels of corporate debt and a sudden tightening of financial conditions.
- We expect growth to stay weak but to slowly recover in 2020; however, we have revised our outlook down due to COVID-19.
- We see euro area core inflation rising gradually over time, but remaining well below the ECB’s inflation aim.
- We expect the ECB to remain on hold and should growth surprise to the downside fiscal support may be needed.
- The tail risks of a Brexit cliff edge at the end of 2020 remain, but we expect a free trade deal to be agreed which avoids that.
- UK growth has been volatile thanks to Brexit uncertainty but we see a recovery in the run-rate of growth in 2020.
- The BoE has revised down its growth and inflation views, and now sees inflation rising to around target in three years.
- We think the window for rate cuts has now closed and see very gradual normalisation back on the table from mid-2021.
For more information read our weekly report here
Chief US Economist
Chief UK & Euro Area Economist
Chief China Economist
Chief Japan Economist
Head of Global Macro Research and Co-head of Global Markets Research
Chief Economist, India and Asia ex Japan