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May economic update: Dining in the rain

Company: ING Bank N.V., organizační složka

May's monthly economic update in full! Eating out is the new stuck-at-home eating in. It's a symbol of freedom and optimism. In so many parts of the world, we can smell normality and just like our damp main course, it tastes good. Download our latest report by pressing the button below

Executive summary

Dining in the rain: The new symbol of freedom and optimism.

Carsten Brzeski gives his take on the global situation as most countries start to ease lockdown restrictions

US: Racing back to life

Unprecedented stimulus has lifted US economic activity to within touching distance of its pre-pandemic levels.

Eurozone: The recession is over 

With another GDP contraction in the first quarter, the eurozone experienced a double-dip recession. However, as the vaccination campaign gains traction lockdowns can now be gradually lifted, heralding a robust recovery.

UK: The good times and economic recovery return as Covid-19 recedes 

Falling Covid-19 prevalence and widespread vaccinations have boosted confidence in the durability of the recovery.

China: deleveraging spurred on by recovery 

China's economic recovery seems to be sustainable, although the high GDP growth number was partly due to the low base effect.  

Asia: India - what went wrong? 

While there is a narrative that talks about double mutations and Indian variants, mass rallies, sporting events and religious festivals probably also played a significant part in the recent acceleration of cases in India. There are very clear lessons to be drawn from this. India may be looking at another lost year for the economy

CEE: Inflation pressures continue to build in central and eastern Europe 

Inflation pressure is building across central and eastern Europe, particularly in Poland and Hungary. Both central banks are reluctant to tighten; Poland should get away with it but Hungary may be forced to hike.

FX: The normalisation game 

FX markets have entered May split down the middle. Outperforming are the commodity currencies. Underperforming are the defensive low-yielders, with very distant prospects of rate hikes.

Rates: The bonkers relationship between inflation and yields 

"Hey neighbour, here's $100. Give me back $92 in 10 years and you're good. And don't bother paying me any interest." That's the (real) bond market today, not in the inverted eurozone rates space, but in the US, where perversely there is a macro boom brewing.

Commodities are buoyant but supply concerns are still a worry 

Metals prices are flirting with record levels, agricultural markets are trading at multi-year highs, and oil has staged an impressive recovery.

Central bank update 

As many developed markets tentatively begin to emerge from the Covid-19 pandemic, attention is turning to taper and tightening in many economies.

Biden’s promise: Building back better and greener

Of the $4tn of extra spending proposed by President Biden, $2.2tn looks set to go on green and sustainability-related infrastructure investment. It marks a clear shift in government policy that can be built upon with regulatory changes and incentives





Carsten Brzeski

Global Head of Macro



Tags: Economics | Finance |

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