PLEASE SEE ANALYST CERTIFICATIONS AND IMPORTANT DISCLOSURES STARTING AFTER PAGE 47
Global Forecasts 2Global Synthesis 3Global Rates and Inflation 5Global Markets Watch 6United States
Outlook 7InFocus: Auto sector getting out of reverse gear 9Data Preview & Review 11
Outlook 13Data Preview & Review 15
Outlook 17Data Preview & Review 19
Outlook 20Data Preview & Review 22
China Outlook 23Asia Outlook 25InFocus: Thailand – A tactical long 27Data Preview & Review 29
Outlook 31Data Preview & Review 33
Outlook 36Data Preview & Review 38
Country Snapshots 39Global Weekly Calendar 41
GLOBAL ECONOMICS WEEKLY
Signs of a partial turn
Economic data in Japan are improving as the economy is beginning to heal fromthe contraction after the earthquake.
US manufacturing data are bottoming out as the temporary factors impedinggrowth are starting to fade.
We have downgraded our GDP forecast for the euro area, and look for apersistent slowing in growth, in part due to the effects of tighter fiscal policy.
In China, we believe that policy firming and tighter credit conditions are alsoyielding a more lasting slowing in growth than in the US or Japan.
United States: A production turn - To everything there is a season 7
A V-shaped recovery appears to be taking hold in Japan, easing supply chaindisruptions to auto production and sales in the US.
Euro area: Austerity hurts and inflation bites 13
Following the strong growth in Q1 this year, and given what we believe was a weak Q2,real GDP growth in H2 is set to be more modest than thought previously.
UK: Q1 wan, Q2 too 17
The available data suggest that growth in Q2 was even weaker than the disappointing0.5% expansion in Q1, and we now expect growth to have been just 0.2% q/q.
Japan: An interim assessment 20
The BoJ will re-visit its GDP and CPI forecasts next week, likely projecting modest realgrowth and core inflation for FY11. This will not reflect the CPI rebasing.
China: Rate hike cycle close to an end 23
The PBoC delivered an overdue benchmark interest rate hike on Wednesday, ahead of therelease of the June CPI data, which we expect to jump to 6.3% y/y from 5.5% in May.
Emerging Asia: Inflation pains linger on 25
Bank Negara Malaysia kept rates on hold due to moderation in external demand. Weexpect the central bank to raise the policy rate 25bp in September.
EEMEA: Doves rule as inflation peaks and growth slows 31
Global commodity prices are moderating and prospects for local harvests are improving.
Latin America: A currency war again? Yes, but not for long…. 36
As commodity price pressures dissipate and headline inflation moves south, thecrusade against currency appreciation is starting to re-emerge in the Latin region.