Economic Perspectives


China Eyes Liquidity War as Equities Gyrate

PDF 282kJuly 10, 2015
Senior Vice President and Global Economic Research Analyst

Beijing’s swift and high-handed policy response to the Chinese stock market’s sharp correction has raised eyebrows. In our view, however, a greater issue is whether policymakers will abandon their reform agenda and go the full monty to support the market. If they do, there is a huge amount of liquidity to be tapped, as well as slush funds at various government arms that can be marshalled for fiscal stimulus.

Latin America

Brazil: The Slow Road to Fiscal Adjustment

PDF 262kJuly 10, 2015
Senior Economist—Latin America

A weaker-than-expected economy and attempts by Congress to derail more fiscal tightening have made it all but impossible for Brazil’s administration to deliver on its promise of a large primary fiscal surplus this year. We expect the government to announce a less ambitious fiscal target soon.


US Budget Long-Term Outlook—An Unsustainable Imbalance

PDF 247kJuly 02, 2015
Senior Vice President and Director—Global Economic Research

The Congressional Budget Office estimates that the budget deficit for fiscal year 2015 will narrow further, extending to six consecutive years a trend of shrinking deficits. But the longer term looks bleak. In fact, continued economic growth over the next decade won’t likely generate enough revenue to cover rising costs of entitlements and interest payments on US debt. Legislative changes are needed to combat the rising tide of deficits.


Greece: Time to Think the Unthinkable?

PDF 274kJuly 02, 2015
Senior Vice President and Senior European Economist

With the Greek economy on the verge of implosion, it’s reasonable to ask if it might not already be too late to avoid euro-area exit. A Greek departure would plunge the region into uncharted waters, with unpredictable consequences. But policymakers now have powerful tools to help combat contagion and prevent a Greek accident sending the rest of the region back into recession.


Could BOJ Begin Tapering in 2016?

PDF 304kJuly 03, 2015
Senior Vice President and Senior Economist–Asia Pacific

The consensus view holds that the Bank of Japan is likely to continue with its quantitative easing for some time yet, even if expectations of further easing have gone a little cold. But is it possible to paint a scenario where the central bank starts tapering because it judges the policy to be a success?


Housing: The Next Shoe to Drop?

PDF 283kJune 26, 2015
Senior Vice President and Senior Economist–Asia Pacific

Up until now, housing has been one of the bright spots in Australia’s economic rebalancing story. But as supply dynamics start to shift, the outlook for this sector is set to become more gloomy. Even as some of the negativity fades from the commodity picture, there are still plenty of reasons to think Australia’s economy will continue to underperform.


Bank of Canada Will Need More Time to Assess Oil Impact

PDF 261kJune 05, 2015
Director—Global Economic Research

The Bank of Canada (BoC) warned of underperformance in the beginning of the year, citing a faster—but not larger—impact from the oil price shock than previously expected. While May employment data confirms this view, the recent GDP and trade data support that the impact is even bigger than what the BoC originally thought. If growth does not recover, additional easing or a weaker currency could become a reality, but we believe the BoC will wait longer before acting to see the true effects from the oil plunge.