Nomura

What's on the horizon for the global economy?

Our weekly updated overview highlights the key releases of global economic market data from around the globe and provides an economic outlook for the rest of 2020 by region.

  • 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.
  • In our episode of the week ahead podcast we are looking at the top three market moving themes that should be on your radar.
Global Markets Research Economic Data and Events Calendar

Our view in a nutshell

Japan

  • With COVID-19 spreading, we expect real GDP to keep declining for three quarters through Q2, followed by a gradual recovery.
  • We expect core CPI inflation to continue to decelerate and to plunge below 0% y-o-y in Q4 led by lower oil prices.
  • The ¥108trn stimulus package will help keep the economy from falling into a vicious cycle but have a limited impact on demand.
  • The risk is renewed yen appreciation, caused by a full-blown global recession and further risk averse moves in markets.

Asia

  • COVID-19 to derail Asia’s GDP growth to -0.5% y-o-y in 2020, from 5.3% in 2019. 8 out of 10 economies will contract in 2020.
  • After China spillovers in Q1, we expect a sharper growth slump in Q2 due to domestic lockdowns and weaker external demand.
  • A sequential recovery is likely in H2, but at a gradual pace due to spillovers from unemployment and weak corporate profits.
  • Despite the supply-side disruptions, we expect disinflationary pressures due to lower oil prices and weak aggregate demand.
  • Monetary and fiscal policy easing have already been stepped up, but be prepared for even more easing ahead.
  • China: We expect GDP growth to remain negative at -0.5% in Q2 and Beijing to roll out a large stimulus package soon.
  • Korea: Growth will likely contract more sharply in Q2 on slumping external demand; we expect the BOK to cut in Q2.
  • India: COVID-19 amid a weak financial sector to trigger a growth contraction in 2020 and easy policies – monetary, fiscal and liquidity.
  • Indonesia: Despite a sharp growth downturn, the chance of a policy rate hike is rising due to balance of payments fragility.
  • Australia: We now see a sharp recession in H1, with unemployment rising from 5.1% to almost 9% by year-end.

United States

  • We expect a short, but steep, recession in H1 2020 before a gradual recovery aided by fiscal and monetary accommodation.
  • Responding to a significantly weaker outlook, we expect the Fed to remain at the ELB through 2021.
  • The Fed will implement credit facilities already announced and ensure that long-term rates do not constrain the recovery.
  • We expect additional fiscal stimulus from Washington, but it may be less effective due to social distancing.
  • The unemployment rate will rise sharply, peaking around 15-20% in Q2, as labor market conditions deteriorate due to COVID-19.
  • Core inflation will likely be weighed down by COVID-19’s impact on service prices and excess labor market slack.
  • Notable risks include the failure of social distancing policies as well as corporate credit and financial sector stress.

Europe

  • As COVID-19 spreads across Europe, we expect the euro area economy to fall into an even deeper recession in 2020.
  • Lower oil prices and a demand shock caused by COVID-19, should push euro area inflation lower.
  • The ECB announced an additional €750bn of QE, and we think the next ECB move will be a 20bp rate cut in April.
  • We have axed again our UK GDP forecasts and see a recession in H1 – with output falling by more than 15% vs Q4 2019.
  • GDP recovers from H2 though takes time to get back to its pre-virus peak. Loose monetary and fiscal policy remain supportive.
  • The BoE has cut rates to 0.10% and announced €200bn of QE. We do not see any further easing in our base case.
  • The tail risk of a Brexit cliff edge at end-2020 has risen, but the outcome is uncertain with COVID-19 disruption.

For more information read our weekly report here

Contributors

  • Lewis Alexander

    Chief US Economist

  • George Buckley

    Chief UK & Euro Area Economist

  • Ting Lu

    Chief China Economist

  • Takashi Miwa

    Chief Japan Economist

  • Rob Subbaraman

    Head of Global Macro Research and Co-head of Global Markets Research

  • Sonal Varma

    Chief Economist, India and Asia ex Japan

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