Weekly Economic Insights - 5 November 2018

Macro Highlights - 11/6/2018

Highlights of the week

Economist insights: The US Midterms and employment report, Chinese PMIs down once again and monetary status quo in Japan

  • If the Democrats win the House of Representatives in the US mid-term elections on 6 November, as the polls indicate, the expected slowdown in growth in 2019 could be slightly exacerbated
  • In China, the PMI surveys for October confirmed that the slowdown in activity continued at the start of the fourth quarter
  • In Japan, the BoJ revised its inflation forecasts once again, which supports our scenario according to which an exit from its accommodative monetary policy is not currently on the agenda

Focus Trade in Asia: Is the strengthening of intra-Asian trade following the financial crisis a structural or cyclical phenomenon?

  • The results of the estimates of our econometric model show that the factors driving trade between Asian countries are structural rather than cyclical
  • According to our calculations, the strengthening of intra-Asian trade following the 2008 crisis is mainly due to stronger structural GDP growth in Asia than in the rest of the world
  • Consequently, if structural growth in Asia were to be sustainably maintained at a higher level than in the rest of the world, this trend could gain force over the long term

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