Pantheon Macroeconomics

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Key Issues

21 Jan 2022 Trade Regathers Momentum, but Bottlenecks are Building Again Too

Japanese December export data are better than they look, along with the rest of the region. External demand still looks robust, despite Omicron, but supply challenges loom large. Omicron is in fact more worrying from a supply perspective, given its implications for China.

Craig BothamChina+

19 Jan 2022 Inflation Risks on the Rise in Japan, but Not Enough to Change Policy

The biggest change from the latest BoJ meeting was a reappraisal of the inflation outlook. Risks to inflation are now seen as balanced, rather than to the downside, the first change since 2014. Still, there will be no change in key policy settings for the next two years, with the target not in sight.

Craig BothamChina+

18 Jan 2022 A Better Year for Consumption, but Now Normal Service Resumes

Growth was stronger than expected at the end of 2021, but still slowed... The outsized contribution from both consumption and exports will now fade... the central government takes centre stage, supported from the wings by the PBoC.

Craig BothamChina+

14 Jan 2022 Credit Growth is Grease to the Wheels, not Fuel for the Fire

China's money and credit growth improved in December, but this isn't a stimulus surge. The authorities are laying down the groundwork to bail out swathes of the economy. We expect the Q4 GDP reading to be the weakest since the start of the pandemic.

Craig BothamChina+

13 Jan 2022 Chinese Inflation is Past the Peak, and Set to Plunge

China's CPI inflation surge was short-lived, and is set to be followed by a sharp reversal, soon. Producer prices are also rolling over rapidly, relieving inflation pressure at home and abroad. Omicron is now spreading in China, which will hit activity and inflation, but disrupt supply chains.

Craig BothamChina+

7 Jan 2022 Service Growth is Overstated, but Inflation Really is Fading

China's service sector PMIs are surprisingly strong, given the Covid outbreaks in December. We think financial activity is distorting the readings, which are unlikely to be followed by real growth. Inflation pressures are receding, leaving policy free to focus on the growth challenge this year.

Craig BothamChina+

5 Jan 2022 Regional PMIs Show Fading Inflation Despite Bottlenecks

Manufacturing PMIs point to an inflection in inflation pressure, despite stretched supply chains. External demand has weakened, but we think it will prove to be short lived. Recent Covid outbreaks in China threaten renewed tightening of global bottlenecks.

Craig BothamChina+

22 Dec 2021 Korean Export Data Signal a Soft End to the Year

Slower Korean export growth in December rounds off a quarter of deceleration. Supply constraints remain an issue, but demand is also fading from the post-lockdown boom. Rising Covid cases globally have added to head- winds, and risk a bleak midwinter.

Craig BothamChina+

17 Dec 2021 Further Tentative Signs of Easing Bottlenecks in Japanese Exports

Japanese exports jumped in November, amidst signs of reduced supply chain pressures. Unfortunately, the outlook for December is dimming, thanks in part to Chinese Covid policy. Omicron is set to renew supply disruptions, just as they were easing, but it will also weaken demand.

Craig BothamChina+

16 Dec 2021 Infrastructure is Still En Route, but Other Headwinds are Forming

November's data are a mixed bag, but investment weakness, led by property, is the main concern. Infrastructure should begin to offset property soon, but manufacturing faces its own challenges. Omicron has entered China, and will intensify the cycle of zero-Covid lockdowns.

Craig BothamChina+

14 Dec 2021 Service Sector and SME Revivals are Boosting Japanese Growth

Japan's Tankan survey points to an improvement in Q4, particularly outside manufacturing. Success in containing Covid, for now, has boosted the services sector, and smaller firms are reviving. Inflationary pressures continued to build in Q4, but will not disturb BoJ policy yet.

Craig BothamChina+

10 Dec 2021 China Finds Seasonal Cheer in November Inflation

Chinese consumer price inflation accelerated in November, driven by food prices... ...but base effects will soon weigh on the index, such that November marks the near-term peak. Producer price inflation has already begun to rollover, as energy prices start to fall.

Craig BothamChina+

8 Dec 2021 Further Signs of Stabilisation from Chinese Trade Data

Both exports and imports were better than expected in November. Import data are especially cheering this month, for what they tell us about China's...

Craig BothamChina+

7 Dec 2021 Under Duress, and Trying to Sound Upbeat, the PBoC Acts

Evergrande, and a nudge from upstairs, seem to have forced the PBoC's hand. A 50 bps cut to the RRR frees up funds to deal with the clean-up operation, not supercharge growth. More cuts will be needed, with growth likely to remain soft in Q1 of next year.

Craig BothamChina+

2 Dec 2021 Bottlenecks Continued to Ease on the Eve of Omicron

Korean exports beat expectations in November, though we think the data overstate performance. Supply chains are still improving at the margins, even if U.S. ports remain congested. The Omicron variant is a risk to this recovery, but will not derail it entirely.

Craig BothamChina+

1 Dec 2021 Stability and the Easing of Stagflation Risk in China

Chinese economic momentum stabilised in November, thanks to policy action. The end of the energy crisis has boosted output, and eased some bottlenecks. Infrastructure support looks to be arriving, propping up construction as property struggles.

Craig BothamChina+

30 Nov 2021 Coal Boosts Profits as Omicron Lurks in the Wings

October was another strong month for Chinese industrial profits, propelled by coal... ...But coal prices have been slashed, and energy rates hiked, so we expect deceleration from here. China is doubling down on zero-Covid in the face of Omicron, which will prove costly.

Craig BothamChina+

26 Nov 2021 An Expected Hike from the BoK, and Now a Long Pause

The Bank of Korea hiked as expected, taking the policy rate to 1.00%, from 0.75%. Further hikes were made conditional on a plethora of factors, providing plenty of wriggle room. We expect a pause until mid-2022, as Covid cases spike, and with an election looming in March.

Craig BothamChina+

25 Nov 2021 Infrastructure Spending is Coming, but Less than you Hope

Policymakers are low on options to support economic growth amidst multiple headwinds. Infrastructure investment is the surest way to ensure money is actually spent... ...But local governments may still have difficulties spending it, given a lack of viable projects.

Craig BothamChina+

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