FocusEconomics Insights - Latest Posts
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Sub-Saharan Africa's 2016 & 2017 growth rates
September 22, 2016
Sub-Saharan Africa economies have been hit by low prices for raw materials and multiple domestic challenges this year. Our panel of analysts downgraded the region’s outlook for the fourth consecutive month and they now expect the economy to expand 2.0% in 2016 and 3.6% next year.
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China: Recent postive economic data may be papering over the cracks
September 22, 2016
China’s economy has been a bit of an enigma since the summer of 2015 when the country’s previously booming economy started to show signs of vulnerability. A combination of structural changes, subdued global demand and domestic challenges such as overcapacity in certain sectors and high corporate debt led growth to fall to a 25-year low for the full year 2015. It didn’t get much better from there, as economic activity continued to decelerate at the outset of the year. The Q1 economic expansion of 6.7% represented the weakest since the height of the global financial crisis in Q1 2009. The economy unexpectedly started to look better in Q2, as support from Chinese authorities prompted economic activity to stabilize. This trend continued into Q3, as encouraging economic data for August has shown that in addition to government spending, a booming housing market have supported growth. However, many of the same issues that plagued China’s economy in 2015 persist and there are concerns among analysts that decreasing private investment and a potential housing bubble could be detrimental in the longer term.
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The Italian Dilemma: Weak banks pose risk to already faltering domestic demand
September 19, 2016
The sudden panic about a potentially imminent Italian banking sector collapse back in July has somewhat subsided for now, but sooner or later the issue will inevitably rear its ugly head again. Two months after Italian bank stocks collapsed even further in the aftermath of the Brexit vote, fears of an imminent need for a bail-in have receded as the Italian government works on plans to shore up its weakest bank, Monte dei Paschi di Siena (MPS). This will be achieved via an alternative but rather ambitious method culminating—if all goes according to plan—in a new capital injection. However, MPS, which came up short in July’s ECB stress tests, has already received capital injections in the past. Such plans to patch up banks have tended to involve kicking the can down the road rather than providing a more definitive solution to the 360 EUR billion of non-performing loans (NPLs) weighing down Italy’s banking sector, equivalent to one fifth of its GDP. If a sustainable solution is not found to clean up Italian bank balance sheets in the near future, they will inevitably constrain domestic demand and thereby weigh on the country’s already feeble growth even further.
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How much money do migrants from Latin America send home?
September 14, 2016
Remittances from around the world to Central and Latin America rose to over USD 65 billion last year. Mexico is the top destination for remittances – it received nearly USD 25 billion in 2015. Haiti and Honduras are the most dependent on money from abroad, which accounted for 24.4% and 18.1% of GDP in 2015, respectively.
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The U.S.' (Not So) Mysterious Case of the Missing Men
September 13, 2016
It’s been some time since the United States was considered to be amid the Great Recession, a period of general economic decline that spanned from the late 2000s until, depending on who you talk to or what source you are using, sometime in 2015. One of the big effects of the Great Recession, was very high unemployment in the US. At the height of the Great Recession, in October of 2009, unemployment peaked at 10%. Way back in January of this year, Timothy Taylor, the Conversable Economist, wrote a post on the unemployment rate falling and falling fast on its way to pre-Great Recession levels, “the unemployment rate in the last three years has fallen by more than even the most optimistic member of the Federal Reserve Open Market Committee believed was likely.”
Fast forward to 2 September, the monthly jobs report was released by the U.S. Bureau of Labor Statistics that found that unemployment was at 4.9% for the third month in a row. So, the number has halved since the Great Recession, which sounds like great news, right? Not so fast. There are concerns that the statistic is masking a greater problem: The mystery of disappearing men from the workforce.
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What to expect from the G20 economies by 2020
September 5, 2016
Over the last few days, the world’s most powerful leaders have met in Hangzhou, China for the G20 summit. Economics has been at the center of discussions as the world economy has looked rather shaky over the last year.
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The Pain in Spain: Robust GDP growth cannot mask the persistent structural deficit
September 1, 2016
Spain’s robust GDP growth despite the ongoing political impasse has made the headlines time and time again. The panel of 35 analysts we surveyed for this month’s Consensus Forecast expect GDP to expand 2.8% in 2016, one of the fastest rates in the Eurozone this year, before decelerating to 2.1% in 2017. And yet both Spain’s Independent Authority for Fiscal Responsibility (Airef) and the European Commission have warned in recent months that Spain is relying too heavily on GDP growth to reduce its deficit while neglecting much-needed progress with structural reforms to reduce its sizeable structural deficit (the part of the overall deficit which is adjusted for temporary measures and cyclical variations). This leaves it vulnerable to its deficit increasing in the future should economic conditions become unfavorable again.
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Assessing Vietnam's economy: key growth drivers and challenges
August 28, 2016
As many of the world's largest emerging economies were faltering earlier this year, namely China, Russia, and Brazil, Vietnam appeared to be one of the emerging market standouts. Since then, however, the Vietnamese economy has shifted into a lower gear as adverse weather conditions damaged a large share of agricultural output, which accounts for almost 20% of GDP. Following disappointing first and second quarter GDP readings, analysts now project Vietnam expanding 6.1% this year, which is substantially lower than the near 7% growth that was expected earlier in year. Despite the disappointing year thus far for Vietnam, FocusEconomics expects steady growth in the manufacturing and construction sectors to offset the impact of the lower agricultural yield and help the economy recover in the second half of the year. We recently sat down with our Vietnam expert economist Jean-Philippe Pourcelot to chat about how he views Vietnam's economic outlook, the key factors that will affect the country's economic growth in 2016 and how reforms could help Vietnam's government to improve FDI and foster a more business-friendly environment overall.
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[INFOGRAPHIC] Brazil Beyond Rio 2016
August 23, 2016
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What goes up, must come down: Sweden’s housing market post 2015
August 22, 2016
Low interest rates and a supply shortage have turned Sweden into one of the hottest housing markets in the world. Swedish house prices have risen faster than almost any other developed country. Prices for flats in Gothenburg, Sweden’s second largest city, have doubled since 2007 and other cities are not far behind. An increasing urban population, high economic growth and accommodative monetary policy have pushed up housing prices and spurred a property boom. However, Sweden may soon become a victim of its own success, as high prices for homes begin to restrain Sweden’s growth potential.
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