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 2019 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.
Global Markets Research Economic Data and Events Calendar

Our view in a nutshell

Japan

  • 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.

Asia

  • 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.
  • India and parts of Southeast Asia are the region’s new stars in terms of rising long-run potential growth.
  • China: We expect the slowdown to worsen and policy easing to continue, but inflation has become a new policy constraint.
  • 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).

United States

  • Elevated trade tensions and other factors will likely slow growth over 2019-20 before a modest recovery in 2021.
  • Recession risk is elevated, but strong consumer fundamentals will help to sustain the expansion.
  • Core inflation should pick up as higher tariffs pass-through to consumer prices and labour 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
  • Notable risks include aggressive trade policy, unresolved fiscal issues and further deterioration in financial conditions.

Europe

  • We have revised down our GDP growth forecast. The recession in euro area manufacturing risks spilling over into services.
  • We see euro area core inflation rising gradually over time, but remaining well below the ECB’s inflation aim.
  • Following the ECB’s easing we expect a further 10bp rate cut in December 2019 under the presidency of Ms. Lagarde.
  • The tail risks of a no Brexit and no deal are substantial, but we continue to base our forecasts on deal and transition period.
  • UK growth has been volatile thanks to Brexit uncertainty but we see a recovery in the run-rate of growth in 2020.
  • The BoE forecasts overshooting inflation but only because of its market conditioning assumptions (low FX and rates).
  • We see the BoE raising rates annually from May 2020. The risks are skewed towards a more dovish outcome.

For more information read our weekly report here

Contributors

  • Lewis Alexander

    Chief US Economist

  • George Buckley

    Chief UK 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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