The Weekly Briefing from Capital Economics

Recent data releases suggest the global economy is holding up better than anticipated by gloomy forecasts (including ours). But it's far too soon to breathe a sigh of relief. In this latest episode of The Weekly Briefing, Group Chief Economist Neil Shearing explains why there's still appetite among central banks to keep raising rates, and why recessions still loom in advanced economies. Plus, EM sovereign debt may be in better shape than in the past, but households and corporate borrowing has surged and they now face a sharp rise in debt service costs – are they going to be able to cope? Liam Peach and Shilan Shah from our EM team discusses which economies are most vulnerable. 

This year’s has been a dollar rally for the ages, but recent weeks have seen the currency come under pressure. That’s fuelling talk that the greenback is finally past the peak with only downside ahead. Jonas Goltermann and Jonathan Petersen from our FX Markets team aren’t convinced and in this episode they talk about the drivers of dollar strength this year and what – if anything – has changed of late. Plus, fresh from client meetings in New York and Toronto, Group Chief Economist Neil Shearing gives our take on the latest activity data and what they mean for the policy outlook and whether Jeremy Hunt’s Autumn Statement means the UK government has finally made its peace with markets. 

Despite the rumours, the Chinese government isn't about to abandon zero-COVID. Although new measures to tweak the rules raise hopes of a near-term end to the draconian policy, Mark Williams and Julian Evans-Pritchard explain the many difficulties involved in doing so – including the fact that the economy would likely suffer, rather than get a boost, from scrapping it. Plus, Group Chief Economist Neil Shearing discusses the challenges central bankers face at this stage of the monetary tightening cycle, not least in understanding inflation dynamics and how far rates will have to rise accordingly.    

A slew of central bank decisions last week highlighted a range of policy dilemmas at this stage of the tightening cycle, from the impact of higher rates on teetering housing markets to the threat that even hints of a slower pace of hikes triggers a market stampede back into risky assets. In this episode of The Weekly Briefing, Group Chief Economist Neil Shearing sifts through the outcomes of the meetings to explain how policymakers are coping with the challenge. Plus, as COP27 kicks off in Sharm El Sheikh, David Oxley, the head of our new Climate Economics coverage, explains why multilateral efforts such as these aren't the answer to containing the rise in global temperatures. 

Central bankers are driving the global economy into its steepest downturn in four decades, barring the GFC and the pandemic. But which economies will be hardest hit and how will the onset of recession change the inflation-monetary tightening calculus? David Wilder speaks to Jennifer McKeown, the head of our Global Economics coverage, about our just-published Q4 Global Economic Outlook and asks her why, even with such gloomy forecasts, the risks are skewed to the downside. 

David Wilder talks to Group Chief Economist Neil Shearing about the latest on the central bank war on inflation. They discuss what signs of persistently high core numbers mean for expectations for how far and fast interest rates need to rise and the role that weaker activity and cooling housing markets will play in easing price pressures. Plus, our Europe team has slashed its forecasts for euro-zone growth next year. Chief Europe Economist Andrew Kenningham explains what's dragging on the economy and whether the ECB will change tack accordingly.  

The Communist Party 20th Congress will accelerate a huge personnel reshuffle throughout the party and the state apparatus, affecting key policymakers including central bank governor Yi Gang, Guo Shuqing, the chief bank regulator, and Liu He, a Vice Premier known as Xi Jinping's "economic czar". David Wilder talks to Senior China Economist Julian Evans-Pritchard about who might replace these influential reformist voices within the government, but also what it will mean to be a reformist under Xi's more centralised and authoritarian decision-making process. Plus, Group Chief Economist Neil Shearing discusses whether Chancellor Kwasi Kwarteng's defenestration marks an end to the UK's crisis.      

Globalisation isn't dead, but it is undergoing a fundamental shift which will reshape the global economy and markets in the years ahead. Group Chief Economist Neil Shearing discusses The Fracturing of the Global Economy, our major new research project, which makes the case for the resurgence of geopolitics as a major driver of economic and market outcomes for the first time in a generation. He talks about how the global economy is coalescing US and Chinese economic blocs and explains what this will mean for flows of everything from finance to technology to people. 

Group Chief Economist Neil Shearing flew from London to Singapore intending to talk global macro with clients there. Instead, his discussions were dominated by the chaos of the UK's political economy. He calls in (on an occasionally spotty line) from Changi Airport to explain the teachings that an extraordinary week for the UK have for other governments and central banks as interest rates move up from historic lows. Also this episode, Jennifer McKeown, who heads our Global Economics service, discusses our new global forecasts and we have an exclusive extract of our Markets team briefing clients on FX intervention in Asia.