global economics quarterly - credit suisse
TRANSCRIPT
DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES, LEGAL ENTITY DISCLOSURE AND ANALYST CERTIFICATIONS.
3 April 2017 Europe
Economic Research
Global Economics Quarterly
Research Analysts
Berna Bayazitoglu
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Alonso Cervera
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Vincent Chan
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Ray Farris
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Neville Hill
44 20 7888 1334
Santitarn Sathirathai
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Hiromichi Shirakawa
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James Sweeney
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Nilson Teixeira
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Credit Suisse Economics Teams (See inside for contributor names)
Reflation – Hype and Reality
After a burst of excitement about global “reflation,” investors are beginning to
question its actual existence. That may be because “reflation” has not been
properly defined.
There has indeed been reflation: global growth has sustainably improved
across a broad range of economies in both real and nominal metrics after a
weak patch in 2015-16.
But what the global economy has not seen is acceleration to “escape velocity.”
And while such acceleration doesn’t look imminent, risks to growth are
generally skewed to the upside.
■ Although expectations for the size and scope of US tax cuts and reforms
have diminished, it’s still possible a significant package is passed. One that
would provide the global economy with a tailwind in 2018.
■ Investment spending in developed economies could strengthen now that
excess capacity in labor markets is diminishing and business confidence is
high. There’s potential upside in both the US and Europe, in our view.
For now we remain cautious. But that still means real global GDP growth of
around 3% this year and next. That implies further tightening in labor markets
in developed economies. And central banks are likely to become less
accommodative: this “reflation” should be good enough for them.
By the end of the year, we expect the Fed to raise rates twice more; the ECB
to have pre-announced a tapering of its asset purchase program, and possibly
adjusted its deposit rate slightly higher; and the Bank of Japan to have lifted its
target rate for government bond yields.
Investors remain understandably focused on political risks. Indeed, there are
political outcomes in the US, Europe, and Asia that could well lead us to
change our forecasts.
But the fundamentals should not be ignored. In the absence of political shocks
the global economy should grow at a healthy pace and the extraordinary
amounts of monetary stimulus seen in recent years should abate. After their
recent rally – in response to a slight moderation in short-term growth
momentum – government bonds look vulnerable in the second half of the year.
3 April 2017
Global Economics Quarterly 2
Table of contents
Forecast Table 3
Reflation – Hype and Reality 4
US: Still waiting for policy changes 11
Euro area: Sustainably stronger 13
China: Focus on stability 15
Japan: Reduced chances for meaningful monetary policy normalization 17
Non-Japan Asia: Great expectations, bumpy reality 19
Latin America: Hope endures 22
Europe 25
Emerging Europe, Middle East and Africa: Russia and South Africa to
ease monetary policy while Turkey to stay tight for a while 27
3 April 2017
Global Economics Quarterly 3
Forecast Table
Source: Credit Suisse estimates, Thomson Reuters DataStream
*Countries with particularly high inflation are removed in the calculation of the global inflation aggregate.
Real GDP Growth (% , Annual Average) Inflation (% , Annual Average)
2015 2016E 2017E 2018E 2015 2016E 2017E 2018E
Global 100% 2.9 2.5 3.0 2.9 1.0 1.4 2.3 2.1
DM 61.7% 2.1 1.6 2.0 1.9 0.2 0.8 1.9 1.7
EM 38.3% 4.2 3.9 4.5 4.6 5.7 9.0 9.0 7.9
US 26.9% 2.6 1.6 2.3 2.2 0.1 1.3 2.3 2.1
Canada 2.3% 0.9 1.3 1.9 2.0 1.1 1.6 2.1 2.1
Latam 7.5% -0.4 -1.3 1.0 2.1 18.8 37.8 35.6 30.4
Brazil 2.7% -3.8 -3.6 0.2 2.0 10.7 6.3 4.3 5.0
Mex ico 1.7% 2.6 2.3 1.7 2.5 2.1 3.4 5.4 3.8
Argentina 0.8% 2.6 -2.3 2.9 2.8 20.6 36.2 20.5 15.5
Venezuela 0.4% -5.7 -10.0 -6.1 -2.8 180.9 501.7 505.0 430.9
Colombia 0.4% 3.1 2.0 2.4 3.0 6.8 5.7 4.2 3.3
Chile 0.4% 2.3 1.6 2.2 2.6 4.4 2.7 3.4 3.0
Peru 0.3% 3.3 3.9 3.8 4.1 4.4 3.2 2.8 2.5
Euro area 17.3% 1.9 1.7 2.0 1.8 0.0 0.2 1.7 1.2
Germany 1.5 1.8 2 1.8 0.1 0.4 1.5 1.4
France 1.2 1.3 1.7 1.8 0.1 0.3 1.4 1.1
Italy 0.6 1 1.3 1.2 0.1 0.0 1.0 1.0
Spain 3.2 3.2 2.8 2.1 -0.6 -0.3 1.5 1.6
Netherlands 2.0 2.0 2.1 1.8 0.2 0.1 1.2 0.8
Belgium 1.5 1.2 1.5 1.6 0.6 1.8 2.8 2.4
Austria 0.8 1.5 1.7 1.8 0.8 1.0 2.4 2
Greece -0.3 0.4 3.2 3.3 -1.1 0.0 0.8 0.4
Finland 0.2 1.5 1.3 1.3 -0.2 0.4 1.7 1.3
Portugal 1.6 1.3 1.7 1.5 0.5 0.7 1.5 1.1
Ireland 26.3 4.4 4.0 3.3 0 -0.2 0.8 0.4
UK 4.3% 2.2 1.8 1.4 1.4 0.0 0.7 2.6 2.8
Sw itzerland 1.0% 0.8 1.0 1.3 1.5 -1.1 -0.4 0.0 0.5
Sw eden 0.7% 3.8 3.1 2.2 2.2 0.9 1.4 1.7 1.8
Norw ay 0.6% 1.0 0.7 1.5 2.0 2.7 3.1 1.7 1.5
EEMEA 6.9% 1.0 1.0 2.2 2.3 1.9 1.4 1.3 1.3
Russia 2.0% -3.7 -0.2 1.5 1.7 12.9 5.4 3.8 4.0
Turkey 1.1% 6.1 2.3 3.1 2.5 8.8 8.5 9.1 8.0
South Africa 0.5% 1.3 0.3 1.4 2.0 5.2 6.7 5.0 5.5
Israel 0.4% 2.5 3.7 3.4 3.2 -1.0 -0.2 0.9 1.0
Ukraine 0.1% -9.9 1.6 3.4 2.2 43.3 12.0 7.7 6.2
Japan 6.2% 1.2 1.0 0.8 0.8 0.6 -0.3 0.3 0.7
Australia 2.0% 2.4 2.9 2.7 2.9 1.5 1.3 2.1 2.4
New Zealand 0.3% 3.0 2.8 2.7 2.6 0.3 0.7 1.6 2.0
NJA 23.8% 6.0 5.9 6.0 5.8 1.7 2.3 2.9 2.7
China 16.3% 6.9 6.7 6.8 6.5 1.3 2.2 2.6 2.3
India 3.1% 7.6 6.9 7.4 7.5 4.8 4.0 5.2 5.3
South Korea 2.1% 2.5 2.7 2.3 2.6 1.1 1.4 1.7 1.7
Indonesia 1.3% 4.8 5.0 5.2 5.2 3.4 3.0 4.5 4.1
Taiw an 0.8% 0.7 1.5 1.8 2.0 0.1 1.7 1.5 1.7
Thailand 0.6% 2.8 3.2 3.3 3.4 -0.9 1.1 1.8 2.0
Malay sia 0.4% 5.0 4.2 4.5 4.2 2.7 1.6 3.8 2.4
Singapore 0.4% 2.0 2.0 1.7 1.1 -0.6 0.2 0.8 0.0
Hong Kong 0.5% 2.4 1.9 2.0 2.0 2.5 1.2 2.1 2.0
Philippines 0.4% 5.9 6.8 6.4 6.2 1.5 1.7 3.2 3.7
Weights (%)
3 April 2017
Global Economics Quarterly 4
Reflation – Hype and Reality For financial markets, the hype of the recent months has been “reflation.” This idea,
imprecisely defined at best, has been associated with the prospect of fiscal stimulus in the
United States. And over the past few months, market price action has largely reflected this
“reflation” theme. Risk assets outperformed, and government bond yields in the US and
Europe rose substantially from the lows of last summer.
But as can be case with fads and hypes, pushback has begun. Investors have started to
question the likelihood, timing, size and efficacy of any fiscal stimulus, especially after the
failure of US Congress to repeal and replace the Affordable Care Act. They ask whether
recent optimism over stronger growth will prove another false dawn.
The recent focus on “reflation” is reminiscent of the mania surrounding “deflation” in early
2015 (Figure 1). And for all the thought about risks, and the market repricing that occurred
at the time, we would observe that two years later the world is not in deflation, and
everyone is now talking about “reflation.”
Figure 1: You say “deflation,” I say “reflation”
Bloomberg news story count, 50 day sum
Source: Credit Suisse, the BLOOMBERG PROFESSIONAL™ service
Acceleration is most apparent in the tradeable sector (Figure 2 and Figure 3). Having run
close to zero in 2015 and 2016, global industrial production growth should sustain a trend-
like 3.0% pace in 2017. Although business activity surveys in the US may be buoyed by
political sentiment (US ISM marks the top of the shading in Figure 2), the improvement in
global manufacturing surveys has been unusually synchronized.
The pick-up is also clear from our forecasts: we expect global GDP to grow 3.0% this year
and 2.9% next, an improvement from 2.5% in 2016. That acceleration is broad-based, with
stronger growth in both EM and DM. And the acceleration is even more pronounced in
nominal terms – where the global economy has clearly reflated from the slump of 2015-16.
Neville Hill
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James Sweeney
212 538 4648
Wenzhe Zhao
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Jeremy Schwartz
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Xiao Cui
212 538 2511
Sarah Smith
212 325 1022
Veronika Roharova
44 20 7888 2403
3 April 2017
Global Economics Quarterly 5
Figure 2: PMIs point to a synchronized upswing Figure 3: IP growth has recovered
High to low range of manufacturing PMI new orders for the US, euro area, China, and Japan
Global IP, y/y% with CS forecast
Source: Credit Suisse, Markit Source: Credit Suisse, Thomson Reuters Datastream
Figure 4: Real GDP growth is also strong Figure 5: A nominal reflation of the global economy
Real GDP YoY % Nominal GDP, YoY%
Source: Credit Suisse, Thomson Reuters Datastream Source: Credit Suisse, Thomson Reuters Datastream
It has also been a synchronized reflation. Most economies and regions should see
stronger growth and higher inflation this year.
Idiosyncratic shocks and headwinds have punished various parts of the global economy in
recent years: bank deleveraging and fiscal tightening; the euro area crisis; tighter financial
conditions in emerging markets after the “taper tantrum”; ongoing slowdown in China; and
a commodity price shock.
Those shocks have passed. China’s inexorable deceleration, seen between 2011 and
2016, has ceased for now. Cyclical indicators are consistent with our view that Chinese
growth will be stronger this year than it was in 2016. The downdraft in commodity demand
driven by slowing Chinese investment has consequently also come to an end, at least for
the time being. And so the terms of trade shock against commodity producers has
additionally ended.
3 April 2017
Global Economics Quarterly 6
Indeed, the outlook for Chinese growth this year remains promising. We continue to
forecast growth of 6.8%, so the government’s commitment to growth stability looks
achievable. And growth should be supported by ongoing modest fiscal expansion. The
acceleration in nominal growth should buoy corporate profitability and in turn support
industrial fixed asset investment. And although tightening measures are weighing on the
housing market, we expect a correction, not a collapse, which in turn should prevent an
outright contraction in housing investment.
Figure 6: Chinese PMI had its best start to the year
since 2011
Figure 7: Global trade recovers in real and US dollar
terms
China NBS PMI – Jan/Feb average Global Trade YoY %, in volumes and USD
Source: Credit Suisse, Markit Source: Credit Suisse, Thomson Reuters Datastream
There seems to be limited upside to growth in Japan, where we look for 0.8% GDP growth
this year and next. The lack of further fiscal stimulus looks to be a key constraint, with
growth driven by exports and construction investment.
The prospect for the rest of Asia looks constructive, despite several crosscurrents. Most
Asian economies should post stronger growth in 2017 than they did in 2016. There should
be a moderate slowdown in exports, partly driven by the tech product cycle fading in Q2.
But that should be somewhat offset by stronger domestic demand, driven by higher rural
incomes and expansionary fiscal policy.
The US economy appears to have recovered from its dip last year, and we look for GDP
growth of 2.3%. The improvement is largely due to headwinds abating: better global
growth, stabilization in the energy sector, and lower inventories. At the same time,
consumer spending should remain strong, supported by solid real labor incomes. And
there are tentative stirrings of an improvement in business investment. Fiscal expansion
remains an upside risk in 2018.
Growth in Latin America, though still weak, has improved markedly this year. We look for
1.2% growth for the region as a whole, up from -1.1% in 2016. The forecast is largely a
consequence of Brazil, Argentina and Ecuador moving out of recession. The stronger
global economy has clearly been a driver of improvement, as have more generous
financing conditions. Looking ahead, Mexico poses some upside risk if the outlook for its
future relationship with the US improves.
3 April 2017
Global Economics Quarterly 7
After several years of insipid growth, the expansion in the euro area has accelerated.
Cyclical indicators are consistent with growth stronger than our (above consensus)
forecast of 2.0%. This acceleration looks durable. The main drivers of expansion in recent
years – consumer spending and business investment – should sustain their recent pace.
And they should be accompanied by greater contributions to growth from exports and an
emerging – albeit heterogeneous – recovery in residential construction.
So the global economy has seen a synchronized acceleration, and is now growing at a
brisk, albeit not spectacular pace. Risks, for once, seem skewed to the upside. Having hit
growth of about 3.0%, could global GDP accelerate further? We see the key upside risks,
and uncertainties, as follows.
Can developed market investment improve?
One persistent area of weakness in global demand in recent years has been investment in
developed economies, in contrast to more robust consumer spending and retail sales.
Most recently, the slump in commodity prices crushed investment in that sector. But what
are the chances investment could improve from here?
We think there are a couple of factors that could support a modest improvement in
investment spending.
First, the recent acceleration in global IP and trade could lead firms to raise spending
plans. As Figure 8 shows, there is a close correlation between trade and investment, and
trade growth is picking up. And although we’re inclined to downplay the importance of the
recent surge in “animal spirits,” the more time confidence is sustained alongside stronger
production growth, the more likely it is that such euphoria translates into greater financial
outlays.
Second, labor markets continue to tighten. Unemployment in developed economies
continues to fall steadily (Figure 9). A simple Okun’s law relationship between GDP growth
and labor market dynamics suggests that the pace of growth we expect in the global
economy should be consistent with further declines in unemployment.
Since the global financial crisis, there has been a substitution of labor for capital in
developed economies. Firms have increased output by hiring more, not by investing. The
separation between investment and employment in this cycle is captured in Figure 11.
However, a trend can only continue for so long. As labor markets become genuinely
“tight,” and wage growth starts to rise (as is the case in the US), the relative appeal of
investment may improve. Of course, in other economies – Europe and Japan – there’s
little sign yet of upward pressure on wages.
There are also reasons to be cautious about investment. Commodity prices are still low.
So while mining investment has stopped falling, there’s little price incentive for recovery.
But overall, we think a combination of stronger global growth, heightened corporate
confidence, and tightening labor markets all skew the risks to investment over the next
year or so to the upside.
3 April 2017
Global Economics Quarterly 8
Figure 8: Improving trade may spur investment Figure 9: Unemployment falling steadily in DM
Global trade volumes and investment goods demand DM Unemployment Rate %
Source: Credit Suisse, Thomson Reuters Datastream Source: Credit Suisse, Thomson Reuters Datastream
Figure 10: Growth in DM is consistent with further
falls in unemployment
Figure 11: Investment has lagged employment so
far in this cycle
GDP growth in DM and changes in unemployment rates G3 real investment as % of GDP and DM unemployment rate
Source: Credit Suisse, Thomson Reuters Datastream Source: Credit Suisse, Thomson Reuters Datastream
Can stronger growth in the euro area be sustained given political risks?
One of the most notable areas of improvement has been the euro area. After the end of its
recession in 2013, it spent much of the last few years growing at an unremarkable
1.5%pa. But the last six months have seen acceleration, with PMI surveys consistent with
growth above 2.0%.
The strengthening has been broad-based and seems sustainable – meaning the euro area
may make a modestly stronger contribution to global demand growth.
The key downside rise is, of course, politics. Over the next year, there are several key
elections – France (April/May), Germany (September), and Italy (early 2018). Could any of
these events derail the economic improvement?
3 April 2017
Global Economics Quarterly 9
We think not. First, the performance of the euro area has shown that political uncertainty
has little effect on the economy. The events of Grexit, Brexit, and the political turbulence in
Spain and Italy all passed without significant economic consequence. So the forthcoming
political calendar should not pose a risk by itself.
The events will however pose a risk if their outcomes call into question the viability of a
country’s membership in the euro, or the euro itself. The French and Italian elections are
the most plausible risks here, with both having candidates contemplating taking their
country out of the euro.
If Marine Le Pen wins in France, there would likely be considerable capital flight and
enough financial stress to depress economic growth. But we think the chances of her
achieving victory are extremely slim. Opinion polls show her trailing in the second round by
20 percentage points, well beyond the margin of error.
And in Italy, the anti-euro convictions of the party that might be able to form a government –
M5S – are not that strong. They are unlikely to make leaving the euro a key part of their electoral
platform and would potentially be constrained by other coalition partners in any anti-EU policies.
A M5S victory would pose far less of a risk than would a Le Pen presidency, in our view.
So we remain confident that the euro area’s cyclical improvement can be sustained, even
against the backdrop of the coming year’s political risks.
Can China’s recent phase of stable growth be sustained?
One of the noteworthy features of the global economy this year is that the Chinese growth
has strengthened, rather than weakened. This has likely supported the stabilization in
commodity prices and upturn in global trade.
Though given the ongoing need for economic reform and adjustment in China, there’s a
clear risk that this year’s bounce proves fleeting. Indeed, much of this year’s strength
appears to have come from policy support, rather than from stronger fundamentals.
Trends in manufacturing investment and bank earnings point to underlying weakening.
And looking ahead, the marginal tightening of monetary and credit conditions this year
could also contribute to slower growth, especially through the housing sector.
Consequently, the political transition later this year may also have a bearing on the outlook for
growth over the next year or so. It’s possible that the new leadership will choose to embrace
reform and accept a growth rate that is meaningfully below the current target of 6.5%.
Although Chinese growth should remain stable for much of this year, the strength is
unlikely to be sustained. So there’s a risk that China’s contribution to global growth softens
in 2018. If the slowdown is modest, it should not be too much of a threat to “reflation.” But
if there is a marked further deceleration in investment, especially in housing, then there’s a
risk of a broader hit to global growth through a renewed downturn in commodity prices.
Will there be a meaningful boost from fiscal policy, particularly in the US?
US fiscal policy remains highly uncertain. Failing to repeal and replace the Affordable Care
Act is a significant setback to the Republican agenda and exposes some of the internal
tensions within the majority party. Even with Trump’s support, the bill failed to pass. This
lack of cohesion does not bode well for some of the more controversial aspects of
corporate tax reform – especially the border adjusted tax. The failure to pass a health care
replacement – which would have provided an easier deficit baseline for fiscal year 2018 –
has also created risks of reductions in the proposed stimulus.
However, we continue to expect an ambitious proposal for personal and corporate tax cuts
and look for a fiscal stimulus of close to 0.6% of GDP in 2018. But for the global economy
as a whole, this means a limited boost to growth. For fiscal policy to present a meaningful
upside risk to global growth next year, the US stimulus would need to be more meaningful
than what is currently expected.
3 April 2017
Global Economics Quarterly 10
Figure 12: Little evidence of “fiscal reflation” for 2018
Global fiscal tightening or loosening as % of global GDP
Source: Credit Suisse
Taken together, the balance of risks to global growth beyond the next few months seems
skewed to the upside. After a prolonged succession of downside shocks to the global
economy, that bias is significant. It strengthens our conviction that the recent improvement
in global real and nominal GDP growth can be sustained. In that sense, the “reflation” that
has been achieved should endure. But whether it can improve remains an open question.
Solid growth should have policy implications. Cyclical indicators are at levels historically
consistent with both the Fed and the ECB moving in a hawkish direction. The Fed has
already done so, with robust global and US growth prompting it to hike in March. Although
we only expect a further two rate increases this year, the fact is that the Fed is slowly
peeling rates off the zero bound.
A combination of negative rates and aggressive QE by the ECB has sustained an
extremely low rates structure in the euro area. In particular, the low level of German bond
yields (along with the Bank of Japan’s zero yield target) has acted as a powerful anchor to
global yields. But there are signs that stronger growth in the euro area is driving a shift in
tone. Given the ECB’s commitment to undertake QE until the end of this year, no sudden
change is likely. But policymakers are likely to signal their willingness to end “emergency”
measures such as QE and the deeply negative deposit rate later this year. Its September
meeting may prove particularly important.
In Japan, our economists argue that the Bank of Japan will not be willing to lean against a
rise in yields driven by optimism on global growth. Consequently, we expect the BoJ to
raise its 10 year government bond yield target to +20bp in the fourth quarter.
And in the rest of Asia, we generally expect central banks to respond to better global
growth and higher inflation by shifting from a general dovish stance towards neutral, or
even modestly hawkish.
The direction of monetary policy globally looks clear. The US continues to successfully lift
itself from the zero lower bound. And in the second half of this year, the ECB and BoJ
should start to extract themselves from their aggressively easy monetary policies. The one
thing that could disrupt such a process is a meaningful dip in global growth. But not only
do we think such an outcome is unlikely, risks are building in the opposite direction.
And in that respect, once markets have digested the ongoing moderation in the short-term
momentum of global growth, they are likely to face a material shift in the support central banks
have provided to bond markets in the past few years. This might be enough “reflation” for them.
3 April 2017
Global Economics Quarterly 11
US: Still waiting for policy changes
After a growth slump in 2016, the US economy is set to rebound this year as key
headwinds begin to fade – global growth is improving, the energy sector is stabilizing, and
business inventories are coming down. Although growth appears soft in Q1, we expect the
weakness to be temporary. Solid consumption and an improvement in business
investment should drive real GDP growth to 2.3% in 2017. The recent sharp increase in a
broad range of survey measures, including consumer confidence, ISM, small business
optimism, and CEO confidence all pose upside risks to our outlook. However, we remain
skeptical that strength in these survey measures will translate into a rapid acceleration in
actual spending growth.
The Trump administration has introduced significant political risk to the growth outlook, as
policies on taxes, health care, trade, immigration, and regulations are all likely to shift. We
expect fiscal and regulatory policy to be a tailwind to growth in the coming years. While the
failure to pass a health care replacement bill is a setback that demonstrates some internal
tensions within the Republican Party, we continue to expect some personal and corporate
tax reforms to pass by early 2018. Although the end result may be less ambitious than was
previously anticipated.
Household spending has slipped in Q1, but is likely to be supported by continued progress
in the labor market, in our view. Forward-looking indicators of employment signal some
additional room for improvement and we expect an unemployment rate of 4.5% by year-
end. After slowing in 2016, trend job gains picked up again earlier this year. Combined
with accelerating wages, this has kept total payroll income growth at a solid level.
One of the factors dragging GDP growth last year was weak business investment, but we
expect this component to return to positive growth in 2017. Mining investment was
particularly weak the past two years, but recovery looks likely given the rebound in energy
prices and possibility of deregulation. Outside of energy, we expect investment to
accelerate after a weak patch last year. Business confidence has clearly improved, and
leading indicators suggest investment demand should pick-up in the next few months.
Corporate tax reform could determine investment decisions, but the details of any policy
changes are uncertain and we anticipate reform will have a larger impact on 2018 than on
2017 business spending.
We remain optimistic on housing. Housing construction and home sales have proved
resilient to higher mortgage rates, but financial conditions continue to tighten and
downside risks remain. However, a solid labor market, the current lean housing supply,
and demographics remain supportive of new construction in the medium term.
Net exports have lowered growth by 1.0ppt on average in the past two quarters, and we
expect trade to continue to weight on growth going forward. Although global growth is
improving, renewed dollar strength and solid US growth are likely to boost imports relative
to exports in the quarters ahead. We don’t expect disruptive trade policies as a base case,
but the risk of an absolute decline in the volume of trade is not out of the question.
Government spending, which has contributed mildly to growth after being a huge drag in
the early years of the recovery, remains an area of uncertainty in our forecast. The Trump
administration proposed a 10% increase in defense spending, and no decreases to Social
Security or Medicare. The first version of Trump’s budget (which is only a rough guide)
proposes reductions in non-defense discretionary spending of about one-tenth, affecting
numerous agencies including the State Department, Health and Human Services, and
Education. The administration has also insisted on a $1 trillion infrastructure program,
perhaps through public-private partnerships.
James Sweeney
212 538 4648
Jeremy Schwartz
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Xiao Cui
212 538 2511
Sarah Smith
212 325 1022
3 April 2017
Global Economics Quarterly 12
Our inflation outlook remains cautiously constructive. Despite the recent strength, we
expect core inflation to remain below the Fed’s 2% target for the remainder of 2017.
Although growth has picked up in the US and globally, inflation expectations remain low by
historical standards and we see few signs of overheating in the labor market. Nonetheless,
the possibility of a policy-driven inflation shock (from fiscal policy, trade, health care
legislation, and turnover at the Fed) has risen under the Trump administration, adding a
great deal of longer-term uncertainty. However, this uncertainty will likely play out over
years, not months.
Our growth and inflation scenario is consistent with some gradual Fed tightening in the
coming years. We expect two more 25bps rate hikes in September and December, and
two rate hikes in 2018. Yellen’s term as Fed Chair will expire in February 2018. We expect
the Trump Fed to be less willing to raise interest rates and more willing to reduce the
balance sheet. We expect no changes to the Fed’s reinvestment policy this year.
US Economic Forecasts
Quarter-to-Quarter %
Changes at annual rates
2016 2017E Q4/Q4 Annual Average
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 15 16 17E 18E 15 16 17E 18E
Real GDP 0.8 1.4 3.5 2.1 1.9 2.6 2.3 2.4 1.9 2.0 2.3 2.1 2.6 1.6 2.3 2.2
Consumer Spending 1.6 4.3 3.0 3.5 1.5 2.6 2.3 2.5 2.6 3.1 2.2 2.1 3.2 2.7 2.6 2.3
Residential Investment 7.8 -7.8 -4.1 9.6 11.0 1.0 6.5 6.5 13.1 1.1 6.2 4.0 11.7 4.9 4.8 4.6
Business Investment -3.4 1.0 1.4 0.9 6.7 3.8 3.7 3.1 0.8 -0.1 4.3 2.7 2.1 -0.5 3.4 3.0
Equipment -9.5 -3.0 -4.5 2.0 9.0 3.0 3.0 3.0 3.7 -3.8 4.5 3.0 3.5 -2.9 2.9 3.0
Intellectual Property 3.8 9.0 3.2 1.3 3.5 2.5 2.0 2.0 3.8 4.3 2.5 2.0 4.8 4.7 2.9 2.0
Non-Res Structures 0.1 -2.1 12.0 -1.9 7.0 8.0 8.0 5.0 -8.8 1.9 7.0 3.0 -4.4 -2.9 5.5 4.3
Total Government 1.6 -1.7 0.8 0.2 -0.2 0.8 1.5 1.5 2.2 0.2 0.9 1.5 1.8 0.8 0.4 1.5
Federal -1.5 -0.4 2.4 -1.2 1.3 0.5 1.5 1.5 1.7 -0.2 1.2 1.5 0.0 0.6 0.7 1.4
State and Local 3.5 -2.5 -0.2 1.0 -0.7 1.0 1.5 1.5 2.5 0.4 0.8 1.5 2.9 0.9 0.3 1.5
Net Exports (contr. to GDP, %) 0.0 0.2 0.9 -2.0 0.1 0.1 -0.3 -0.3 -0.7 -0.2 -0.1 -0.1 -0.7 -0.1 -0.2 -0.2
Real Exports -0.7 1.8 10.0 -4.5 3.5 3.5 1.2 1.2 -2.2 1.5 2.3 1.5 0.1 0.4 2.2 1.5
Real Imports -0.6 0.2 2.2 8.9 2.0 2.0 2.5 2.5 2.5 2.6 2.2 2.0 4.6 1.1 3.3 2.2
Inventories (contr. To GDP, %) -0.4 -1.2 0.5 0.9 -0.2 0.0 0.0 0.0 -0.1 0.0 -0.1 0.0 0.2 -0.4 0.1 0.0
Nominal GDP 1.3 3.7 5.0 4.2 4.0 3.4 4.4 4.9 3.0 3.5 4.2 4.3 3.7 3.0 4.1 4.4
CPI (y/y%) 1.1 1.1 1.1 1.8 2.6 2.2 2.3 2.2 0.4 1.8 2.2 2.1 0.1 1.3 2.3 2.1
Core CPI (y/y%) 2.2 2.2 2.2 2.2 2.3 2.3 2.4 2.4 2.0 2.2 2.4 2.2 1.8 2.2 2.3 2.2
Core PCE (y/y%) 1.6 1.6 1.7 1.7 1.7 1.8 1.8 1.9 1.4 1.7 1.9 2.0 1.4 1.7 1.8 1.9
Industrial Production -1.8 -0.8 1.7 0.4 2.0 3.9 2.0 1.7 -1.6 -0.1 2.4 ... 0.3 -1.0 ... ...
Unemployment Rate (qtr. Avg., %) 4.9 4.9 4.9 4.7 4.7 4.6 4.5 4.5 5.0 4.7 4.5 4.4 5.3 4.9 4.6 4.4
Fed Funds Rate (end of pd, %) .25-.50 .25-.50 .25-.50 .50-.75 .75-1.00 .75-1.0 1.-1.25 1.25-1.5 .25-.50 .50-.75 1.25-1.5 1.75-2.0 … … … …
Source: Credit Suisse estimates, Thomson Reuters DataStream
3 April 2017
Global Economics Quarterly 13
Euro area: Sustainably stronger The euro area economy has seen a material acceleration over the past six months.
Cyclical indicators are now consistent with growth above 2%, strengthening our conviction
in our above consensus forecast of 2% GDP growth this year, after several years at a
pace of around 1.5%.
This acceleration looks broad-based and self-sustaining. Consumer spending growth has
been solid for the past year or so, supported by decent real income growth. Although the
windfall from lower oil prices passed, stronger employment growth should shore up labor
incomes. Firms’ hiring intentions are extremely high.
Corporate spending should also remain sturdy. Corporate profits continue to strengthen,
buoyed by stronger sales and subdued labor costs. So far, firms have been cautious in
deploying strong cash flows, choosing to save rather than to boost investment or
dividends. But given a growing obsolescence of the capital stock (evident in high capacity
utilization), we think the recent pace of business investment growth can be sustained. And,
as we discuss above, the risks to corporate spending are likely skewed to the upside.
But demand should be supported by other factors as well. For the past two years, exports
have been a limited driver of growth given soft global trade. Given the quickening in
growth looks sustainable, we expect trade to make a greater contribution to euro area
growth in coming quarters.
Finally there are signs that, after prolonged weakness, residential construction is starting
to pick up. The revival is heterogeneous. It is most advanced in economies such as
Germany, where house prices have been rising for some time and construction confidence
is at an all-time high. Even in France and Italy, where housing activity has been depressed
by a long period of cyclical weakness, the economic recovery is supporting a turn in the
housing market. As such, construction investment should make a sustained positive
contribution to growth.
This more vigorous outlook for the euro area will also have positive effects on underlying
financial fundamentals. As noted above, this should be a particularly benign environment
for corporate profitability. But stronger income growth, falling unemployment and extremely
low interest rates should also further the process of private sector deleveraging and drive
down non-performing loans in the banking system.
It should also deliver modest upwards pressure on core inflation. A combination of base
effects, higher energy prices and a spike in fresh food prices has led headline HICP
inflation to surge to 2% in recent months. But headline inflation should abate somewhat in
the next few months.
So far, core inflation has been stable, stuck just below 1% for the past few years. But a
combination of solid demand growth and rising input costs should put sufficient upwards
pressure on core inflation to mean it drifts up in the second half of the year. Although we
don’t expect the rise to be substantial, it is important as an upward trend in core inflation
could meet the ECB’s condition of seeing “a sustained adjustment in the path of inflation
consistent with its inflation aim” necessary for an end to its quantitative easing program.
Indeed, the economy’s recent vigor, if sustained as we expect, is now consistent with the
ECB becoming less accommodative and moving away from the extraordinary easing
measures of the past couple of years. In European Economics: When Hawks Fly we
observed that real cyclical variables, not inflation, have historically been the best guides to
whether the ECB will ease or tighten. A key threshold has been the composite PMI –
which we regard as an excellent coincident indicator of GDP growth. In the past, when this
indicator has risen above 56, the ECB has tended to tighten. It rose above that level in
March.
Neville Hill
44 20 7888 1334
Giovanni Zanni
44 20 7888 6827
Sonali Punhani
44 20 7883 4297
Anais Boussie
44 20 7883 9639
Peter Foley
44 20 7883 4349
Veronika Roharova
44 20 7888 2403
3 April 2017
Global Economics Quarterly 14
Consequently, a shift in tone should not be a surprise. And in recent weeks some ECB
officials have started voicing thoughts about an exit strategy. Given that the ECB has
committed to buying assets at the pace of €60bn a month until the end of the year, there is
no hurry. But the tone is likely to steadily change in the second half of the year, once key
political risk events have passed.
We expect the ECB to announce in September that it will taper, ending its asset purchases
in 2018. And given growing discomfort, especially from banks, over the deeply negative
deposit rate (at -0.4%), the ECB could even use that announcement, or the process of
tapering, to make a “technical” adjustment to its policy rate structure. In theory the central
refinancing rate – currently at 0.00% – is the active policy rate and there is a symmetric
corridor around it of the deposit (currently at -0.40%) and marginal lending facility
(+0.25%) rates. The ECB’s last cuts of the deposit rate broke that symmetry. By “re-
adjusting” to a symmetrical corridor (of +/-25bps, say), the ECB would be able to reduce
the negativity of the deposit rate without signaling a sustained rise in policy rates.
Strong growth is likely to trigger policies – tapering and a rise in the deposit rate – that will
put upwards pressure on the rates structure in the euro area. We expect markets to
anticipate this in the second half of the year, essentially after the French elections.
As we discuss above, the euro area still has a congested political calendar ahead, with
French Presidential elections in April and May and German parliamentary elections in
September. For markets, the most serious risk event is the French election. If the far right
candidate Marine Le Pen, who is campaigning on a platform of taking France out of the
EU, did win, it would likely prompt capital and deposit flight similar to that seen in the
periphery during the euro crisis of 2011-12 or out of Greece in 2015. As was the case in
those episodes, the financial stress would bring considerable damage to the expansion.
That being said, we remain of the view that a Le Pen victory remains unlikely. She trails
considerably in polls for the second round, well beyond the margin of error. So although
this vote remains a genuine fat tail risk, it is likely to pass without much impact. And with
that risk gone, equity and fixed income investors may have to reconsider valuations in
euro area financial markets in the light of solid economic fundamentals.
Figure 13: Euro area cyclical indicators consistent
with vigorous growth, and a tighter ECB Figure 14: France’s Le Pen unlikely to triumph
Euro area composite PMI and GDP growth Net support for “populist” outcome in opinion polls ahead of UK EU Referendum, US Presidential election & French Presidential election
Source: Credit Suisse Source: Credit Suisse
3 April 2017
Global Economics Quarterly 15
China: Focus on stability China has set its growth target at “around 6.5%” and “seek[s] better performance in
practice” for 2017 – a year of political transitions. We believe the government is committed
to maintain growth stability and prevent financial risk.
We keep our full year real GDP forecast at 6.8% (consensus 6.5%). High frequency data
has been robust thus far. Investment growth (measured by fixed asset investment growth)
accelerated to 8.9% in January-February. Sales volume growth of key industrial goods is
hitting its highest pace since 2010. Sales volume of loaders jumped by 60%y/y in January-
February. While these growth rates are impressive, the higher base in the coming months
might put downward pressure on headline rates. It is also worth noting that sequential IP
momentum seems to be weaker than the upbeat survey data would imply. However, the
government’s commitment to growth stability suggests a smooth growth dynamic ahead.
We expect the government to be pro-active in supporting growth. While the lower bound is
still set at a well-recognized 6.5%, the new phrase “seek for better performance in
practice” reflects the government’s confidence in achieving better-than-target growth. The
National People’s Congress left the approved headline fiscal deficit of 3.0%, but raised the
budget for the local government special-purpose fund by RMB 400B (0.5% of GDP). The
fund is designated for long-term infrastructure projects. We believe such expansion sends
another signal that the government is committed to overall growth stability in the coming
quarters, especially ahead of the political transition.
We believe China’s nominal GDP growth can reach 13.0%y/y in Q1 2017 and stay in
double digits in 2017. We expect PPI inflation at 5.5% in FY2017 (significantly above
consensus of 2.9%). Such PPI reflation is likely to push up the GDP deflator. This should
work with the acceleration of real GDP growth to support a rebound of nominal growth. On
the other hand, we only expect a modest increase in CPI inflation (2.6% in 2017 versus
2.0% in 2016). Food inflation seems likely to remain subdued. Non-food inflation is the key
driver behind the swing in headline CPI, given the PPI reflation.
With CPI inflation below 3.0% (what seems to be the government’s upper bound), we
expect the focus to be on managing potentially risky areas. We expect the PboC to
gradually guide up the interbank rates and conduct more window guidance to cool down
real estate related credit growth in certain cities. However, we do not expect an increase in
benchmark deposit or lending rates. Furthermore, the PBoC is likely to maintain the
stability of overall credit growth and liquidity conditions as the National People’s Congress
sets both the total social financing and M2 growth targets to be around 12.0% (versus
actual growth of 12.8% and 11.3%, respectively).
The leverage issue has seen more attention from the government recently. High and rising
leverage has been a well-known problem for the Chinese economy in the past six to seven
years. We believe the sudden attention it is getting from the Chinese government is due to
the emergence of rising leverage in the financial sector. With a stable short-term interbank
repo market, non-bank financial institutions in China leveraged up aggressively to buy
longer maturity bonds. As a result, interbank activities surged. The rise in the short-term
bond repo rate will drive up the effective lending and deposit rates. But the PBoC should
maintain overall credit growth around target.
Improved nominal GDP growth is likely to support corporate earnings. On the other hand,
fixed asset investment growth has already been decelerating for five years. Against such a
background, we believe the recovery of corporate profits is likely to support industrial
investment growth. Private investment growth has shown further signs of stabilization after
a prolonged deceleration. However, the sustainability of the improvement will depend on
what happens globally.
Vincent Chan
852 2101 6568
Weishen Deng
852 2101 7162
Ray Farris
65 6212 3412
3 April 2017
Global Economics Quarterly 16
Local governments in higher tier cities have launched further measures to tighten the real
estate market. We believe the central government will continue to take a hawkish stance
towards the cities where housing prices have shown significant increases. However, prices
have not yet risen in lower tier cities. Thus, we maintain our view that the overall housing
market is likely to experience a correction rather than a collapse. New starts could contract
by 2.3%y/y in 2017. On the other hand, real estate fixed asset investment is likely to stay
in positive territory (around 2.0%).
Consumption growth may face some headwinds. The auto buyer’s tax cut (launched in
October 2015) supported China’s production and consumption growth in past quarters.
However, the marginal impact has faded and the over-consumption has reduced potential
purchases in the coming quarters. Auto sales turned negative in January-February and are
likely to remain a drag.
Against the background of stability, we lowered our USDCNY forecasts to 6.98 and 7.18 in
3 and 12 months, respectively (from 7.06 and 7.33). Whereas fundamental factors – such
as relative monetary conditions – point to depreciating pressure, we believe the
government and PBoC will be committed to maintain stability. The decline in China’s
foreign exchange reserves seems to moderating after the government tightened the
implementation of policy regarding cross-border flows. This would help the PBoC maintain
currency stability.
3 April 2017
Global Economics Quarterly 17
Japan: Reduced chances for meaningful monetary policy normalization
Inflation outlook now looks less promising
In our 2017 Global Outlook, we stressed the possibility of a meaningful acceleration in
wage growth and an upside risk to inflation, particularly amid the continued tightening of
the labor market. However, financial market developments and further analyses have
forced us to adjust our view somewhat. We have become less confident regarding upward
pressure on inflation.
First, the softening of the USDJPY exchange rate and commodity prices since mid-
January is disappointing. While we recognize that CPI inflation rates have been less
sensitive to import inflation pressures in recent quarters, we continue to believe that
waning import inflation pressures will make it harder for retailers to raise prices.
Importantly, the one-year ahead household expected inflation rate from the Consumer
Survey has weakened. Our statistical analysis of CPI found that upward momentum on
prices has peaked and more retailers are in favor of leaving prices unchanged.
Second, there has been little sign of wage growth acceleration for full-time workers. We
know that a wage inflation story mainly relates to a potential non-linear upshift in unit wage
growth for non-regular workers (typically part-time workers), but the recent moderation in
the growth of scheduled earnings for full-timers is not welcome news. While there seemed
to be a high probability of wage negotiations this spring, the results were disappointing.
Given the remaining unstable correlation between CPI inflation rates and unit labor costs,
we think it appropriate to take a more cautious view on wage inflation.
In this context, we have revised down our core CPI inflation forecast for Q4 2017 to
0.6%y/y from 0.8%. The risks to this revision look rather balanced.
Normalization of monetary policy will be delayed
The gradual normalization of monetary policy by the BoJ appears to be more consistent
with the less promising outlook for inflation. While we saw a decent chance for the BoJ to
raise its 10-year JGB rate target (currently 0.0%) by more than 20-30bps this summer, we
now believe that any rate adjustment will be delayed to Q4 2017 and will likely be of a
maximum of 20bps.
Our projection of a small rate hike in Q4 2017 relates to technical aspects of QE and the
long-term purchases of JGBs (currently somewhat below ¥80T per annum on a net basis).
Unless the BoJ allows the pace of QE to reaccelerate while market JGB yields are under
rising pressures, it will be difficult for it to cap the 10-year JGB yield at around 0.0%
(between -0.1% and 0.1%). We believe the BoJ is hesitant to re-boost QE in a situation
where optimism about the global economy invites upward pressures on long-term interest
rates. This in turn means that no rate hike by the BoJ will be a real possibility if global
long-term interest rates don’t rise meaningfully from current levels.
Another fiscal expansion looks unlikely
With its large external surplus, the international community will continue to argue for more
expansionary fiscal policy by Japan. The Prime Minister’s economic advisory team also
appears to favor some further fiscal actions. However, we continue to think the
introduction of another stimulus package remains unlikely this year as public investment is
set to recover (helped by the package launched in summer 2016). Policy makers
additionally seem to be struggling to reach a consensus on potential measures to boost
“still sluggish” personal consumption.
Hiromichi Shirakawa
81 3 4550 7117
Takashi Shiono
81 3 4550 7189
3 April 2017
Global Economics Quarterly 18
Our forecast for real GDP for CY2017 is unchanged at 0.8%. Although growth momentum
appears to have peaked, we continue to expect the economy to grow at a somewhat faster
pace than its potential (around 0.5%). In addition to the recovery in public investment, net
exports should remain a positive contributor to GDP. Business fixed investment growth will
likely remain steady, as construction investment is likely to show some acceleration.
Japan Economic Forecasts
Quarter-to-Quarter %
Changes at annual rates
2016E 2017E Financial Year Calendar Year
Q1 Q2 Q3E Q4E Q1E Q2E Q3E Q4E 15 16 17E 18E 15 16 17E 18E
Real GDP 1.9 2.2 1.2 1.2 0.2 0.3 1.1 1.2 1.3 1.2 0.8 0.6 1.2 1.0 0.8 0.8
Nominal GDP Growth (y/y%) 1.3 1.3 1.0 1.6 0.6 0.1 0.0 -0.1 2.8 1.1 0.0 -0.4 3.3 1.3 0.1 -0.2
Domestic Demand Growth 0.5 2.3 -0.4 0.2 0.2 0.9 1.4 1.0 1.1 0.6 0.7 0.4 0.7 0.5 0.6 0.7
Consumer Spending 1.5 0.9 1.4 0.2 0.0 0.4 0.6 0.6 0.5 0.6 0.4 0.4 -0.4 0.4 0.4 0.4
Private Residential Investment 5.9 13.8 10.1 0.5 -2.0 -3.0 5.0 0.0 2.7 6.1 0.5 -0.1 -1.6 5.6 1.6 0.3
Corporate Capital Expenditure -0.7 5.7 -0.4 8.4 0.0 -3.0 0.5 1.0 0.6 2.4 0.6 -0.1 1.1 1.4 1.4 0.2
Inventories (contr. To GDP) -1.3 1.3 -1.4 -0.8 -0.2 0.5 0.2 0.0 0.3 -0.3 0.0 0.0 0.6 -0.3 -0.2 -0.3
Government Expenditure 5.5 -4.2 1.0 1.0 1.5 1.5 1.5 1.5 2.0 0.8 1.4 0.9 1.6 1.5 1.0 1.1
Public Investment -4.6 4.1 -3.6 -9.5 3.0 10.0 8.0 5.0 -2.0 -2.3 3.7 0.8 -2.2 -3.0 1.9 2.6
Net Exports (contr. to GDP) 1.4 -0.1 1.6 1.0 0.0 -0.7 -0.3 0.2 0.2 0.6 0.0 0.1 0.5 0.5 0.2 0.1
Real Exports Growth 3.5 -4.6 8.5 11.0 3.0 -3.0 0.0 3.0 0.8 2.6 2.1 2.4 3.0 1.2 3.0 1.9
Real Imports Growth -4.3 -3.9 -1.0 5.3 3.0 1.0 2.0 2.0 -0.2 -1.0 2.1 1.6 0.1 -1.7 1.9 1.6
Industrial Production (y/y%) -1.6 -1.8 0.4 2.1 2.9 3.5 2.6 1.1 -1.0 0.9 2.1 0.7 -1.2 -0.2 2.5 0.9
CPI excl. fresh food (y/y%) -0.1 -0.4 -0.5 -0.3 0.1 0.2 0.4 0.6 0.0 -0.3 0.5 0.7 0.6 -0.3 0.3 0.7
CPI excl. food and energy (y/y%) 0.6 0.5 0.2 0.1 0.0 0.1 0.2 0.3 0.7 0.2 0.2 0.5 0.6 0.3 0.1 0.5
Rate of IOER (at end of QTR) -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 - 0.1 -0.1 -0.1 -0.1
Current account bal. to GDP% 3.8 3.6 3.7 3.9 4.2 3.5 2.9 2.5 3.4 3.8 2.7 1.5 3.1 3.8 3.3 1.6
Fiscal balance to GDP % - - - - - - - - -3.3 -2.6 -2.8 -3.3 - - - -
Government debt to GDP % - - - - - - - - 243.6 243.5 246.3 250.6 - - - -
Unemployment rate % 3.2 3.2 3.0 3.1 3.0 3.0 2.9 2.8 3.3 3.1 2.9 2.6 3.4 3.1 2.9 2.7
Source: Credit Suisse estimates, Thomson Reuters DataStream
3 April 2017
Global Economics Quarterly 19
Non-Japan Asia: Great expectations, bumpy reality
Asian growth momentum could fade, while US rate hikes continue
We think the key macro driver of Asian financial markets this year will be the balance
between the likely improvement in growth and the rise in US interest rates. We think two
more rate hikes by the Fed is manageable for Asia, so long as growth continues to
improve. This has essentially been the story over the past few months, with Asian growth
indicators picking up while the Fed sent more hawkish messages.
However, we see a number of reasons growth momentum might moderate in Q2.
■ Lead indicator: the CRB metal price index (our preferred lead indicator for Asia
exports and the industrial sector) is pointing toward a mild slowdown in growth
momentum in Q2 (Figure 15). This is consistent with the view that global manufacturing
momentum will moderate in the coming months.
■ Tech product cycle: we think the key tailwind boosting Asian exports – the upturn in
the tech product cycle – could fade in Q2. Soft smartphone demand in China could be
a key drag on production (see here and here). The moderation in the tech sector will
likely weigh on the main electronic exporters in the region including Taiwan, Korea, and
to a lesser extent ASEAN economies except Indonesia (Figure 16).
■ US policies: we think many are too optimistic about the prospect of US fiscal policy
stimulus supporting growth this year and leading to greater Asian exports. If US
stimulus is delayed and US business investment moderates, Asian exports to the US
might slow. Protectionist policies, including a border adjusted tax and stricter
immigration rules, could also weigh on Asian growth (see here and here).
Figure 15: Our preferred lead indicator suggests
moderation in growth momentum in Q2
Figure 16: The upturn in the tech cycle partly
contributed to export strength in TW, KR, and ASEAN
Source: Credit Suisse, CEIC Source: Credit Suisse, CEIC
Shifting to domestic demand
We do not expect growth to collapse. The lead indicator and our views on the global
economy imply only a moderate slowdown. We also think domestic demand growth will
partially offset softer export growth. We expect an improvement in domestic spending
given higher rural incomes and expansionary fiscal policies. The rebound in commodity
prices – especially in coal, rubber, and palm oil – since late last year should support
consumption in Indonesia, Malaysia, and Thailand. Expansionary fiscal policy should lift
Santitarn Sathirathai
65 6212 5675
Ray Farris
65 6212 3412
Michael Wan
65 6212 3418
3 April 2017
Global Economics Quarterly 20
growth in China, South Korea, and the Philippines. As a result, we remain constructive on
full year GDP growth in most economies, despite some likely moderation in momentum in
Q2 (Figure 18). In fact, we have seen an upward trend in consensus growth forecast
revisions in Malaysia, the Philippines, and Thailand – with forecasts in the latter two now
matching our projections. We are raising our GDP growth forecast for Hong Kong to 2.0%
from 1.7%. We have however cut GDP projections in South Korea to 2.3% from 2.5%
given the likely downturn in tourism after the bans by the Chinese government on travel
agencies selling packages to Korea.
Figure 17: The likely moderation in US spending on
durables could weigh on Asian exports
Figure 18: We are generally constructive on GDP
growth despite the expected weakening in near-
term export momentum
Green = above consensus, Red = below consensus; () for old forecasts
2016 2017 CS 2017 consensus
China 6.7 6.8 6.5
HK 1.9 2.0 (1.7) 2.0
India 6.8 7.4 7.3
Indonesia 5.1 5.2 5.2
Korea 2.5 2.3 (2.5) 2.5
Malaysia 4.2 4.5 4.3
Philippines 6.8 6.4 6.4
Singapore 2.0 1.7 2.1
Taiwan 1.1 1.8 1.8
Thailand 3.2 3.3 3.3
Vietnam 6.0 6.4 6.6
Source: Credit Suisse, CEIC Source: Credit Suisse, CEIC, Consensus Economics
Higher inflation, Asian central banks shifting to neutral/hawkish from dovish mode
Decent growth and accelerating inflation will likely shift Asian central banks from a dovish
to a neutral/hawkish stance. We expect inflation to surprise on the upside in most places
due to higher commodity prices, administrative price changes, and improving growth
(Figure 19).
At the same time, however, we do not think headline inflation will break above the central
banks’ targets and pressure them to raise rates meaningfully this year. Recent weakness
in the USD and more resilient macro stability across Asian economies should provide
central banks with flexibility to delay rate hikes until they see a stronger economic recovery
(Figure 20).
Only in China and the Philippines do we see central banks undertaking monetary
tightening. The PBoC has already been tightening liquidity open market reverse repo
operations and the Medium Term Lending Facility rates, though we do not expect them to
raise the benchmark rates this year. The Philippines’s BSP has been draining liquidity
from the banking system via its Term Deposit Auction Facilities and we expect it to hike
rates by 25bps in H1 2017. Other countries will likely remain on hold in 2017, but there is a
risk of an earlier tightening move in Vietnam and Malaysia.
3 April 2017
Global Economics Quarterly 21
Figure 19: We think inflation will likely surprise on
the upside in most places, though not enough to
trigger material rate hikes
Figure 20: All Asian economies except Malaysia and
the Philippines have stronger current account
balances now than in 2013
Green = above consensus, Red = below consensus; () for old forecasts
2016 2017 CS 2017 consensus
China 2.0 2.6 2.3
HK 2.4 2.0 1.9
India 5.0 5.2 4.7
Indonesia 3.5 4.5 4.4
Korea 1.0 1.7 1.8
Malaysia 2.1 3.8 3.3
Philippines 1.8 3.2 3.2
Singapore -0.5 0.8 1.0
Taiwan 1.4 1.8 1.5
Thailand 0.2 1.8 1.6
Vietnam 2.4 4.5 4.4
Source: Credit Suisse, CEIC Source: Credit Suisse, CEIC
3 April 2017
Global Economics Quarterly 22
Latin America: Hope endures We still project a modest regional growth improvement in 2017. Yet, Latin America
will likely remain an underperformer relative to other EM regions. Our Latam real GDP
growth forecast remains 1.2% in 2017. We revised Brazil’s real GDP growth forecast to
0.2% (from 0.0%). This was however offset by lower growth expectations in Colombia,
Peru, and Ecuador. We maintain our earlier estimates for the rest of the countries while
noting potential upside surprises in Mexico given continued uncertainty regarding its future
relationship with the US.
We now expect slightly lower regional consumer price inflation this year. We
lowered Brazil’s annual headline inflation forecast to 4.3% in 2017 (from 5.3%) due to
lower than expected food inflation, currency appreciation, and less inflation stickiness. In
Mexico, we increased our annual headline inflation projection to 5.4% (from 4.0%) with the
increase in gas prices and the pass-through effects from last year’s currency depreciation.
Argentina and Venezuela will probably continue to post the highest 2017 inflation rates in
the region, and in Venezuela’s case, the world.
Figure 21: Latin America: CS 2016-2017 Real GDP Growth and Inflation Forecasts
2016 Real GDP Growth 2017 Real GDP Growth 2016 Inflation 2017 Inflation
Dec-16 Mar-17 Dec-16 Mar-17 Dec-16 Mar-17 Dec-16 Mar-17
Argentina -2.2 -2.3 2.9 2.9 37.1 36.2 20.1 20.5
Brazil -3.5 -3.6 0.0 0.2 6.8 6.3 5.7 4.3
Chile 1.8 1.6 2.2 2.2 3.0 2.7 3.2 3.4
Colombia 2.0 2.0 2.7 2.4 5.7 5.7 4.2 4.2
Ecuador -2.2 -2.2 0.8 0.5 1.1 1.1 1.5 1.2
Mexico 2.1 2.3 1.7 1.7 3.4 3.4 4.0 5.4
Peru 4.0 3.9 4.5 3.8 3.1 3.2 2.6 2.8
Venezuela -10.0 -10.0 -6.1 -6.1 501.7 501.7 468.7 505.0
Latin America -1.0 -1.1 1.2 1.2 18.3 18.1 16.0 15.3
IMF PPP weights are used to compute regional aggregate figures
Source: National Statistical Agencies, Credit Suisse
Stronger global growth should benefit the region, although it will remain sensitive
to commodity price fluctuations. Oil prices have not risen as much as expected, despite
compliance with OPEC’s production reduction agreements. This could pose downside
risks for fiscal accounts, debt rates, and debt service in certain economies. Meanwhile, the
perceived dovishness of the US Fed has led local currencies and interest rates to rally. A
longer than expected normalization of DM interest rates could help facilitate financing and
boost growth in Latam. In turn, more hawkish US interest rate expectations present a
downside risk.
We now project a marginally narrower regional current account deficit and a smaller
fiscal deficit in 2017. The current account improvement is mainly driven by a slightly
lower deficit expectation in Brazil and notably narrower deficit projections in Mexico and
Colombia. We note, though, the lower current account surplus forecast in Ecuador, and
the higher deficit estimate in Venezuela, given downward revisions to our oil price
assumptions. Moreover, the slightly narrower fiscal deficit forecast stems from improved
expectations in Brazil and Mexico, which more than offset our wider deficit projections in
Argentina, Chile, Ecuador, and Venezuela.
Alonso Cervera
52 55 5283 3845
Casey Reckman
212 325 5570
Juan Lorenzo Maldonado
212 325 4245
juanlorenzo.maldonado@credit-
suisse.com
Alberto J. Rojas
52 55 5283 8975
Nilson Teixeira
55 11 3701 6288
3 April 2017
Global Economics Quarterly 23
Figure 22: Latin America: CS 2016 Current Account, Fiscal Balance,
Government Debt, and Foreign Debt Forecasts
% of GDP
2017 Current Account 2017 Fiscal Balance 2017 Government Debt 2017 Foreign Debt
Dec-16 Mar-17 Dec-16 Mar-17 Dec-16 Mar-17 Dec-16 Mar-17
Argentina -2.8 -2.9 -7.3 -7.6 53.0 50.7 33.4 31.4
Brazil -1.8 -1.5 -10.5 -9.8 79.0 78.0 34.0 28.2
Chile -2.0 -1.9 -2.5 -2.6 21.7 22.7 67.2 64.1
Colombia -4.1 -3.5 -2.6 -2.5 51.2 50.6 41.7 41.0
Ecuador 0.7 0.4 -3.5 -4.4 46.7 49.1 35.9 35.8
Mexico -3.5 -3.0 -3.0 -2.5 50.0 47.7 33.9 32.7
Peru -2.7 -2.7 -2.4 -2.4 27.3 26.2 36.5 36.6
Venezuela -2.1 -4.5 -12.4 -13.1 102.0 106.9 164.3 178.6
Latin America -2.5 -2.2 -6.8 -6.6 60.5 60.4 39.1 35.6
Central government only, IMF PPP weights are used to compute regional aggregates
Source: National Statistical Agencies, Credit Suisse
The most relevant macro and political stories in Latin America will likely continue to
vary from country to country. Below we provide a summary:
In Argentina, the government must navigate increased domestic tensions during Q2
even though economic growth has increased. The uneven nature of the recovery has
limited the rise in sentiment among the general population. At the same time, administered
price increases and combative annual salary talks have renewed concerns about the
trajectory of disinflation. We expect improvement on both fronts in Q2 and Q3, which will
be crucial to the ruling coalition’s performance in October’s legislative elections. We still
project 2.9% real GDP growth this year, but have raised our inflation forecast for
December to 20.5%y/y. Meanwhile, the tax amnesty program has increased the odds of
adherence to the 4.2% of GDP primary fiscal deficit target for 2017. The budget shortfall
remains large, though, and partially funding it through substantial external borrowing is
contributing to the real exchange rate appreciation (which is generating concern among
exporters and investors).
In Brazil, Congress will focus on the discussion of the Bill for Constitutional
Amendment related to social security reform. Approval of this bill is important in
avoiding further fiscal deterioration. Even if this reform is approved, we expect the primary
fiscal deficit to remain at 2.9% of GDP in 2017 and 2.5% of GDP in 2018. Such dynamics
will likely keep gross public debt on an upward trend, reaching 90% of GDP by the
beginning of next decade. We expect the economic recovery to be gradual, with GDP
growth of 0.2% in 2017 and 2.0% in 2018. The unemployment rate should increase slightly
in the next few months with lower growth in payroll jobs than in the labor force. The sharp
decline in inflation should help keep real wages stable in 2017. Inflation is expected to
decline to 4.3% in 2017 from 6.3% in 2016. This decline will likely be mainly driven by the
path of food prices. The benign scenario for inflation will likely allow the central bank to cut
the Selic basic interest rate from 13.75% in 2016 to 9.0% in 2017, its lowest level since
August 2013.
In Chile, we remain unexcited about economic prospects for 2017. We continue to
project a modest acceleration in real GDP growth after a disappointing performance in
2016. Inflation should stay in check, thanks to subdued demand and a stable currency.
This will likely lead the central bank to cut the monetary policy rate further in the coming
months. Fiscal and external imbalances remain modest and are not a concern to us or to
investors. Interest in Chile from abroad will likely gain momentum by the summer months
with more clarity on the November 2017 presidential elections.
3 April 2017
Global Economics Quarterly 24
Colombia should have a less turbulent 2017 after an eventful 2016. A year ago, oil
prices were at multi-year lows, the government had lost its oil-related revenues, the
current account had risen, the exchange rate was at multi-year highs, inflation was
accelerating, and the peace agreement with FARC guerrillas was delayed. Today, fiscal
reform should make up for a good portion of the lost oil revenues, the current account
deficit has narrowed, the currency has stabilized, the peace agreement was signed, and
inflation is declining. We think Colombia will achieve a new equilibrium within our forecast
horizon, characterized by modest growth rates, a stable current account deficit, and within-
target inflation.
Ecuador will elect either ruling party candidate Lenin Moreno or opposition
candidate Guillermo Lasso as its new president on April 2. Whoever wins will face
important structural challenges in the fiscal, external, and monetary sectors, which need to
be addressed to guarantee the sustainability of the monetary system. We think that, during
the next administration, some sort of adjustment will be either engineered or imposed on
the economy, which is set to go through a multi-year stagnation.
The 2017 economic outlook for Mexico remains uncertain and contingent on the
course of negotiations with the US, particularly on the trade front. We maintain our
view that growth in 2017 will likely be lower than in 2016 as the economy faces headwinds
from lower real wage gains, higher inflation and interest rates, and generally lower
business and consumer confidence. Despite this, sentiment appears to have improved,
aided by “risk-on” sentiment globally, the authorities’ decision to slow the pace of gasoline
price increases, and the friendlier rhetoric from the US about NAFTA. However, whether
this friendlier rhetoric materializes into a “good” NAFTA deal from Mexico’s point of view is
unclear.
Peru will face difficult exogenous challenges to growth this year. The join negative
impact of corruption and natural disasters will be met by fiscal stimulus and reconstruction
efforts, which will likely cause volatility in the data. The government will likely continue to
look to infrastructure investment as the key driver of growth. To do so, a fiscal stimulus
package has been put in place, and more resources will be deployed for reconstruction.
In Venezuela, we remain rather pessimistic about prospects for improvement in the
economic, political, and social conditions in Q2. The authorities appear unlikely to
pursue reforms that could improve fundamentals despite massive distortions and
imbalances. We project a 6.1% contraction in real GDP and inflation over 500% in 2017.
Meanwhile, the constitutional channels for bringing regime change have been blocked,
support for opposition leadership has declined, and the population fears repression. We
expect the public sector to continue repaying its external bond debt in the coming months.
However, downward revisions to oil price assumptions and doubts about China’s financial
support complicate the outlook for debt service later this year and in 2018.
3 April 2017
Global Economics Quarterly 25
Europe
United Kingdom
We expect UK growth to slow to 1.4%y/y in 2017 from 1.8% in 2016. The outlook depends
critically on consumer demand. Since the referendum, the UK economy has exceeded
expectations, mainly on the back of a resilient consumer sector. However, the fall in sterling
is pushing up inflation and suppressing household real incomes. Consumers can respond to
falls in real incomes by continuing to borrow or by reducing consumption. We have started
seeing signs of a slowdown in consumer spending and expect it to weaken further.
Corporates seem to be responding to increasing input costs due to falling sterling by
raising domestic prices to preserve their margins. But a slowdown of the consumer sector
should hit corporate profitability in the future. For exporters, the weak sterling should
provide a short-term boost. UK exporters are raising export prices in sterling terms in
response to the fall in sterling, yielding limited competitiveness gains. An increase in
export volumes has occurred, but this is due to improving demand rather than
competitiveness gains. So while UK exporters are likely to have seen an increase in
corporate profits, this has not translated into increased levels of business investment. The
uncertainty and fear that the UK’s trading relationships may be less favorable post-Brexit
might also be deterring long-term investments.
The BoE expects the negative effects of the fall in sterling on household spending to be
made up for by positive effects on business investment and net exports. Our analysis
suggests this is unlikely. As a result, we expect growth at 1.4%y/y, which should tone
down the recent hawkish rhetoric of the BoE and keep them on hold in 2017.
Inflation is expected to rise to 2.6% in 2017. While oil prices increased, domestic inflation
(wages) remains subdued. However, if the slowdown doesn’t happen and inflation keeps
rising, the hawkish views could gain more traction in the next few BoE meetings and there
could be more votes for a hike in the coming months.
Theresa May triggered Article 50 on March 29th. The EU leaders will convene a summit on
April 29th to ratify the guidelines for Michel Barnier, the European Commission’s chief
negotiator. EU officials have said the bloc may wait to June to fully engage.
Sweden
We expect the economy to grow at 2.5% in 2017 given expansionary monetary policy. The
outlook is positive for both households and companies, and exports are rising due to
increasing global demand. CPIF inflation has come close to target, but the increase has
been due mainly to energy prices.
The positive growth trend and rising inflation prints should give the Riksbank reasons to
tone down its highly accommodative stance. The Riksbank is however concerned about
political uncertainty abroad. The Riksbank kept the repo rate at -0.50% in February and
said there is a greater probability of a cut relative to a hike in the near term, and that
increases will not begin until 2018. QE continues until June 2017 (adding up to SEK
275B). We expect no further expansions.
Norway
We expect mainland GDP growth to rise to 1.6% in 2017 from 0.8% in 2016. The regional
network survey from March reported moderate output growth in Q1. Growth has picked up
somewhat in all sectors outside exports and is at its strongest since spring 2014, primarily
due to higher public demand. Stronger output growth is expected over the next six months.
Inflation has been lower than expected and underlying inflation declined to 1.6%y/y in
February (1.0% below the Norges Banks’s forecasts). We need to wait and see if there is
a rebound or sustained fall in inflation and how inflation expectations are impacted.
Sonali Punhani
44 20 7883 4297
Neville Hill
44 20 7888 1334
3 April 2017
Global Economics Quarterly 26
While the fall in inflation and strength in the currency may concern the Norges Bank, it is
important to note that growth has remained relatively robust. The Norges Bank kept rates
on hold in March and signaled they would remain on hold for the medium term. The bank
weighed the lower than expected inflation against stronger growth expectations, the rapid
rise in house prices, and firmly anchored inflation expectations.
3 April 2017
Global Economics Quarterly 27
Emerging Europe, Middle East and Africa: Russia and South Africa to ease monetary policy while Turkey to stay tight for a while Since the publication of the December issues of the EM Quarterly, we revised
our 2017 real GDP growth forecast higher for South Africa while keeping it
unchanged for Russia and Turkey.
We continue to expect Russia to post real positive GDP growth this year. Rosstat’s
preliminary estimate for 2016 real GDP was 0.2% (compared to our forecast of 0.4%). In
our seasonally adjusted estimates, real GDP growth picked up to 1.0%q/q in Q4 from
0.2% in Q3. Available real sector indicators suggest the recovery in economic activity has
been driven by investment rather than consumer demand. We maintain our real GDP
growth forecasts at 1.5% for 2017 and 1.7% for 2018.
In South Africa, we expect domestic demand to get a boost from the easier monetary
policy stance. We revised our 2017 real GDP growth forecast to 1.4% from 1.1%. We
expect household consumption expenditures to grow by 2.0% (versus 1.2%) and fixed
investment to grow by 0.6% (versus 0.2%). We estimate a growth rate of 2.3% for import
volumes (compared to -3.7% in 2016) and a growth rate of 2.0% in export volumes
(compared to -0.1% in 2016).
In Turkey, following a 2.7%q/q contraction in Q3 2016 due to the failed coup attempt, real
GDP probably recovered sharply in Q4. Measures announced by the government since
September 2016 – including tax cuts, employment support schemes, and credit
guarantees for SMEs and exporters – should lead to modestly stronger full-year real GDP
growth in 2017. We maintain our real GDP forecasts of 2.3% for 2016 and 2.1% for 2017,
but acknowledge downside risks given a less accommodative global environment and the
country’s idiosyncratic growth-negative factors. We are revising our 2018 real GDP growth
forecast to 2.5% from 3.0% given higher political and policy uncertainty.
Figure 23: EEMEA: Real GDP Growth Rates
%, Annual
December 2016 Quarterly March 2017 Quarterly
2016E 2017E 2018E 2016E 2017E 2018E
Russia -0.4 1.5 1.7 -0.2 1.5 1.7
South Africa 0.4 1.1 2.0 0.3 1.4 2.0
Turkey 2.3 3.1 3.0 2.3 3.1 2.5
Source: Credit Suisse estimates, National Statistical Agencies
Over the last few months, the inflation outlook has improved in South Africa
and worsened in Turkey.
In Russia, headline inflation fell to 4.6% in February from 5.4% in December 2016.
Although this was driven to some extent by temporary factors (stronger rouble and
favorable harvest), fundamental factors – such as subdued consumer demand and tight
policy – also contributed. Official core inflation fell to 5.0% in February, the lowest level on
record. Our measure of core inflation (net food and energy) fell to 3.5%, also the lowest
level on record. We estimate the run-rate of core inflation fell below the central bank’s
4.0% target in January and moved even lower in February. Due to downside surprises in
headline inflation, we revised lower our end-2017 inflation forecast to 3.9% from 4.2%. We
maintain our end-2018 forecast at 4.0%.
Berna Bayazitoglu
44 20 7883 3431
3 April 2017
Global Economics Quarterly 28
In South Africa, CPI inflation will likely fall to 5.0% by end-2017 (versus 6.7% at end-
2016). We expect it to fall below 6.0% in April. The key drivers are (i) an expected sharp
deceleration in food price inflation as a result of the continued fall in domestic agricultural
prices (which are down calendar-YTD an average of 27%); (ii) a lower assumption for
Brent oil prices ($52.50/bbl in 2017 versus $58.00/bbl previously); (iii) a lower assumption
for electricity prices following the decision by the National Energy Regulator to approve an
annual average increase for Eskom’s retail tariffs of only 2.2% for the 2017/18 financial
year; and (iv) a revision lower in our forecast for USDZAR (which we now expect to end
2017 at 13.95 versus 15.25).
In Turkey, end-2016 inflation surprised sharply to the upside due to food prices. Additionally,
the lira depreciated in January, leading to deterioration in the inflation outlook. For the first
time since April 2012, year-on-year headline inflation moved into double-digits in February.
The increase in headline inflation to 10.1% in February (from a low of 7.0% in November)
was driven by food (1.5pps) and energy (0.9pps) prices, but core prices (0.6pps) also
contributed. The run-rate of core inflation increased to about 11.5% in February from about
7.0% in September-November due to the lira’s sharp depreciation since late September
2016. We expect headline inflation to hover around 11.0% in Q2, possibly peak in May, and
end 2017 at 9.1%. Our end-2018 inflation forecast remains at 8.0%.
Figure 24: EEMEA: CPI Inflation Rates
%, End-Period
December 2016 Quarterly March 2017 Quarterly
2016E 2017E 2018E 2016E 2017E 2018E
Russia 5.5 4.2 4.0 5.4 3.8 4.0
South Africa 6.5 6.0 4.7 6.7 5.0 5.5
Turkey 7.6 8.4 8.0 8.5 9.1 8.0
Source: Credit Suisse estimates, National Statistical Agencies
We now expect both Russia and South Africa to ease monetary policy this year.
In Russia, the CBR cut the policy rate by 25bps to 9.75% in March and delivered a dovish
statement. This was in contrast to its hawkish statement in February, when it stated the
likelihood of a cut in H1 had decreased given changes in the domestic and external
environments. The change in stance was driven by the resilience of the rouble to the
Finance Ministry’s operations in the FX market and the surprise in inflation to the
downside. We maintain our end-2017 policy rate forecast at 9.00%. In 2018, we expect the
CBR to cut the rate by 150bps (versus 125 bps), bringing the rate to 7.50%.
In South Africa, we expect the MPC to begin lowering the policy rate in July, cutting the
rate by a total of 75bps to 6.25% in 2017. This expectation is based on our view that
inflation will fall sharply this year and that GDP will remain below trend until Q2 2018.
There have bene no public indications from MPC members that they have turned more
dovish. Recent statements rather appear to show they are in no rush to react to the
stronger rand, lower oil prices, or collapse in agricultural prices.
In Turkey, the MPC has tightened monetary policy aggressively since the beginning of
2017. In response to the sharp lira depreciation in early January, the central bank
tightened off-shore (through daily FX swaps) and onshore lira liquidity. The bank’s
effective funding rate increased to 11.3% in March (from 8.31% at the end of 2016)
through a use of the late liquidity window rate. Given the combination of downside risks to
growth and high inflation, the MPC prefers this tightening to be temporary. However, the
outlook for inflation and the balance of payments suggests that this might not be realistic.
We think the MPC might hike the one-week repo rate to 9.00% during the year, but our
conviction is quite low given the MPC’s preference to use liquidity tools. The MPC has
pledged to keep monetary policy tight until the inflation outlook displaces “significant
improvement.” The central bank might decide to ease lira liquidity if USDTRY stabilizes
3 April 2017
Global Economics Quarterly 29
around 3.50-3.52 (the level that supported the “wait and see” mode in December 2016) or
if there is a notable decline in the headline inflation rate (which might happen in early Q3).
We think the MPC will keep the late liquidity window rate unchanged at 11.75% for the
next few months.
Figure 25: EEMEA: Policy Rates
%, End Period
December 2016 Quarterly March 2017 Quarterly
2016E 2017E 2018E 2016E 2017E 2018E
Russia 10.00 8.75 7.50 10.00 9.00 7.50
South Africa 7.00 7.00 6.00 7.00 6.25 6.25
Turkey* 8.00 9.00 9.00 8.00 9.00 9.00
*Under the assumption of a normalized monetary policy framework in 2016
Source: Credit Suisse estimates, National Statistical Agencies
GLOBAL FIXED INCOME AND ECONOMIC RESEARCH
James Sweeney, Managing Director Head of Fixed Income and Economic Research
+1 212 538 4648 [email protected]
Dr. Neal Soss, Managing Director Vice Chairman, Fixed Income Research
1 212 325 3335 [email protected]
US / GLOBAL ECONOMICS AND STRATEGY
James Sweeney Chief Economist +1 212 538 4648 [email protected]
Xiao Cui +1 212 538 2511 [email protected]
Zoltan Pozsar +1 212 538 3779 [email protected]
Jeremy Schwartz +1 212 538 6419 [email protected]
Sarah Smith +1 212 325-1022 [email protected]
Wenzhe Zhao +1 212 325 1798 [email protected]
Praveen Korapaty Head of Interest Rate Strategy 212 325 3427 [email protected]
Jonathan Cohn 212 325 4923 [email protected]
William Marshall 212 325 5584 [email protected]
EUROPEAN ECONOMICS AND STRATEGY
Neville Hill Head of European Economics & Strategy +44 20 7888 1334 [email protected]
Anais Boussie +44 20 7883 9639 [email protected]
Peter Foley +44 20 7883 4349 [email protected]
Sonali Punhani +44 20 7883 4297 [email protected]
Veronika Roharova +44 20 7888 2403 [email protected]
Giovanni Zanni +44 20 7888 6827 [email protected]
David Sneddon Head of Technical Analysis 44 20 7888 7173 [email protected]
Christopher Hine 212 538 5727 [email protected]
GLOBAL FX / EM ECONOMICS AND STRATEGY Shahab Jalinoos Head of Global FX Strategy 212 325 5412 [email protected]
Honglin Jiang 44 20 7888 1501 [email protected]
Trang Thuy Le +852 2101 7426 [email protected]
Alvise Marino 212 325 5911 [email protected]
Bhaveer Shah 44 20 7883 1449 [email protected]
Kasper Bartholdy Head of Global EM Strategy +44 20 7883 4907 [email protected]
Ashish Agrawal +65 6212 3405 [email protected]
Daniel Chodos +1 212 325 7708 [email protected]
Nimrod Mevorach +44 20 7888 1257 [email protected]
Berna Bayazitoglu Head of EEMEA Economics +44 20 7883 3431 [email protected]
Alexey Pogorelov +44 20 7883 0396 [email protected]
Carlos Teixeira +27 11 012 8054 [email protected]
Alonso Cervera Head of Latin America Economics +52 55 5283 3845 [email protected]
Juan Lorenzo Maldonado +1 212 325 4245 [email protected]
Casey Reckman +1 212 325 5570 [email protected]
Alberto Rojas +52 55 5283 8975 [email protected]
Nilson Teixeira Head of Brazil Economics +55 11 3701 6288 [email protected]
Paulo Coutinho +55 11 3701-6353 [email protected]
Iana Ferrao +55 11 3701 6345 [email protected]
Leonardo Fonseca +55 11 3701 6348 [email protected]
Lucas Vilela +55 11 3701-6352 lucas.vilela @credit-suisse.com
ASIA PACIFIC DIVISION
Ray Farris, Managing Director Head of Fixed Income Research and Economics, Asia Pacific Division
+65 6212 3412 [email protected]
EMERGING ASIA ECONOMICS
Dr. Santitarn Sathirathai Head of Emerging Asia Economics +65 6212 5675 [email protected]
Vincent Chan Head of China Macro +852 2101 6568 [email protected]
Deepali Bhargava +65 6212 5699 [email protected]
Weishen Deng +852 2101 7162 [email protected]
Christiaan Tuntono +852 2101 7409 [email protected]
Michael Wan +65 6212 3418 [email protected]
JAPAN ECONOMICS
Hiromichi Shirakawa Head of Japan Economics +81 3 4550 7117 [email protected]
Takashi Shiono +81 3 4550 7189 [email protected]
Disclosure Appendix
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