The Weekly Briefing from Capital Economics

By mid-century, India will have risen to become the world’s third biggest economy. But China will remain at number two, despite forecasts that it is set to overtake the US. These are findings from our latest Long Run Economic Outlook, a report which looks out decades to show a global economy that has been reshaped by intense US-China competition, but also by major demographic shifts and the widespread adoption of productivity-boosting technologies. Chief Global Economist Jennifer McKeown and Mark Williams, our Chief Asia Economist, discuss just some of the report’s key takeaways, including the forces that will propel India up the global GDP rankings but will also hold China back from the number one spot.Plus, Group Chief Economist Neil Shearing is on the phone from a departure lounge in Singapore after a week briefing clients – and it seems they share common near and long-term concerns about what’s happening in the global economy. Click here to access the analysis referenced in this episode.

Russia invaded Ukraine a year ago this week, prompting a torrent of prediction about how much this singular moment would change Europe’s economy forever. 12 months later, David Wilder talks to Andrew Kenningham, our Chief Euro-zone Economist, and Liam Peach, our Emerging Europe research head, all about how the war in Ukraine has – and hasn’t – altered Europe’s economic picture. Plus:A looming UK recession will trigger a wave of corporate insolvencies. Deputy Chief UK Economist Ruth Gregory talks to UK Economist Olivia Cross about how big this wave will be and how it will affect the UK’s long-term economic outlook.As Nigerians prepare to head to the polls for a crunch presidential election, Jason Tuvey and Virág Fórizs discuss what this could mean for the future of Africa’s biggest economy.Click here to read the analysis referenced in this analysis.

Not only have emerging market economies, for the most part, come through this aggressive global tightening cycle without being plunged into a 1980s or 90s-style debt crisis. In many cases, their central banks were raising rates even as their advanced economy peers were still debating whether inflationary forces were “transitory”. In the latest episode of The Capital Economics Weekly Briefing:·        Group Chief Economist Neil Shearing discusses what’s changed in EMs since crises past; ·        Why their central banks didn’t hesitate to raise rates; ·        How they’re likely to fare as advanced economies stall. Plus: ·        With the Adani Group’s woes continuing to dominate the headlines, our EM team assess Indian – and broader emerging world – bank vulnerabilities. Click here for the analysis referenced in this episode.

A stunning January jobs report has shifted the market narrative around the US economy, but has the fundamental story really changed that much? And does the economic picture justify the market’s bullish start to 2023 or have investors been partying in the face of a looming recession? Paul Ashworth, our Chief US Economist, joins Chief Markets Economist John Higgins for a discussion about what’s really happening in the US economy, what the Fed is likely to do, and what this all means for US equities, bonds and the dollar. Click here to read the analysis in this episode.

In this episode:Forecasts are being revised up, the global tightening cycle is slowing down and markets are cheering. But are things really looking better? Group Neil Shearing reviews the recent data – including January’s stunning US payrolls numbers – as he explains why the isn’t an entirely feelgood story. Plus;Long-standing buyers of US Treasuries may not have the appetite they once did, says Tom Mathews from our Markets team in an in-depth new report.. He discusses what this means for the outlook for yields.Click here to read the research referenced in this episode.

In this week's episode:It's a big week for markets, with US December payrolls due and the Fed, the ECB and the Bank of England all set to deliver their first policy decisions of the year. Group Chief Economist Neil Shearing discusses what to expect, showing how the economic landscape has shifted since these institutions last voted on rates and highlighting the scope for any surprises. Also this week;Andrew Kenningham and Jack Allen-Reynolds from our euro-zone team talk through the ECB's policy challenges;And Sheana Yue and Gareth Leather on what China's reopening means for Asia. Click here to read all the research referenced in this episode.

Headlines have been dominated by talk of what follows this most recent era of globalisation, forming the basis of this year’s Davos meetings and a new IMF paper warning of a potentially major hit to the global economy. It’s a theme we’ve been discussing with clients for months, leading up to and following last October’s publication of our work on the fracturing of the global economy. Group Chief Economist Neil Shearing discusses what's missing from the debate around fracturing, what the world economy looks like in an age of fracturing, and explains which countries and sectors will be most vulnerable as geopolitics increasingly drives policy-making. Plus, Senior Economic Adviser Vicky Redwood talks to Chief Global Economist Jennifer McKeown about housing market downturns and what they mean for advanced economies and the timing of central bank pivots. Click here to read the research referenced in this episode.

This special episode is all about property markets, with Chief Property Economist Andrew Burrell leading wide-ranging discussions about what to expect in 2023 and some key sector trends. In this episode:Andrew outlines our forecasts for US, UK and European markets this year, explaining how bad things can get as recessions take hold;Kiran Raichura, head of our US Commercial Property coverage, and Property Economist Sam Hall run through our latest rankings of US metro demand, exploring the factors behind southern markets taking the top spots as most desirable among remote workers;Andrew talks with David Oxley, the head of our Climate Economics coverage, about the property sector's outsized contribution to global carbon dioxide emissions and what it can do to decarbonise, including office versus residential and how construction regulations in emerging markets need to catch up. Click here to read the reports referenced in this episode. 

China’s economy was tied down by the government’s tough zero-COVID regime. And then it wasn’t. The virus appears to have ripped through much of China’s urban population in the wake of the dramatic policy U-turn by Beijing, setting the stage for a dramatic rebound in economic activity this year. But how big will it be, and what will it mean for the global outlook in 2023? Group Chief Economist Neil Shearing talks to Mark Williams, our Chief Asia Economist, about what could be one of the year’s biggest economic curveballs. Plus, after a cheering US CPI report, Senior US Economist Andrew Hunter and Stephen Brown, who leads our Canada coverage, discuss about what lies ahead for US and Canadian inflation and what the Fed and Bank of Canada are likely to do next. Click here to get the research referenced in this episode.

It was meant to be a discussion all about the upside and downside risks that clients should keep an eye on in 2023. But a growing online debate about attempts to push the renminbi in energy trade between China and the GCC countries sidetracked it. Group Chief Economist Neil Shearing does talk about potential inflation surprises – both positive and negative – and address what post-zero-COVID China could mean for the 2023 global outlook. But his conversation with David Wilder also takes in geopolitical risk, and that brings up the faddish idea of a "petroyuan" and whether it could displace the US dollar's status as the dominant reserve currency. Also this week, Mark Williams and Julian Evans-Pritchard from our China team talk about what's really happening on the ground in China following the government's abrupt public health policy U-turn and what that means for the timing of an economic recovery. You'll find the research referenced in this episode here.