JPM Global Data Watch Ep 2022-05-14 4094381

Economic Research
May 13, 2022
Global Data Watch

 Expected resilience on display in the midst of inflation, China shocks
Contents
 But there are cracks in our forecast that drags will quickly fade ...
Euro area: Tracking consumer oil prices 12
 … and global financial conditions tighten more than expected Spain: Consumption w eakness remains a
key concern 15
 Next week: April China data dive, US retail sales surge; SARB hikes Japan: Restarting nuclear pow er could
ease high energy costs 17
EM Asia: It's getting hot in here 20
Epistrophy Malay sia: Monetary policy management
The global expansion is facing its first material resiliency test as an already starts w ith grow th 24
substantial squeeze on household purchasing power, related to surging con- Global Economic Outlook Summary 4
sumer price inflation, is being magnified by commodity price spikes associat- Global Central Bank Watch 6
ed with Russia’s invasion of Ukraine. As if that were not enough, China’s Now cast of global grow th 7
difficulty in managing its Omicron wave with a zero-tolerance policy is Selected recent research from J.P.
weighing heavily on its domestic demand and adding to global supply chain Morgan Economics 9
J.P. Morgan Market Watch 10
pressures. In response, we have materially altered 1H22 forecasts to show a
worsening growth-inflation trade-off (Figure 1). We have lowered our global Data Watches
United States 27
GDP forecast by 2.5%-pts since the start of the year, to a sub-par 1.7%ar. The Euro area 33
upward revision to inflation is more substantial: we now project CPI inflation Japan 37
(ex. Turkey) to reach an unprecedented 7.8%ar during 1H22. Canada 41
Mex ico 43
Global growth is being dented, but we continue to forecast a return to above- Brazil 45
potential GDP gains in 2H22. This view largely is based on the judgment that Argentina 47
Andeans 49
the private sector is in an unusually strong position to cushion these blows and United Kingdom 51
limit their spread. The evidence on this front has been encouraging. The dra- Emerging Europe 55
matic squeeze on household purchasing power from higher inflation has been South Africa 59
tempered by DM households’ willingness to draw down a large reservoir of Australia and New Zealand 61
excess savings: the US household saving rate is projected to have fallen by 2%- China, Hong Kong, and Taiw an 63
Korea 67
pts in 1H22, a drop that boosts consumption gains by more than 4%-pts annual- ASEAN 69
ized. Households’ constructive behavior has been supported by continued strong India 73
hiring and spending by firms with record-high profits margins and a strong de- Regional Data Calendars 75
sire to rebuild depleted inventories. Following on continued strength in payroll Our Special Report "Liv ing w ith COVID-19" w as
growth, we expect next week’s US April releases to reinforce this message of published on May 9, and is now av ailable on our
resiliency with strong gains in retail spending (1.5%m/m) and IP (0.5%m/m). w ebsite.
This forecast will require more than these cushions in order to be realized, how-
ever. As we move through midyear, the drags also need to fade. We expect
global commodity price pressures to stabilize, contributing to a sharp decelera-
tion in global inflation. We also expect a 1H22 COVID drag to transition into a
2H22 normalization lift as China contains the virus and as widespread progress
toward an endemic equilibrium gathers steam.
Figure 1: J.P. Morgan 2022 global forecast Figure 2: Crude oil price and crack spread Bruce Kasman
% change saar; forecast by date made $/bbl; both scales (1-212) 834-5515
Crack spread bruce.c.kasman@jpmorgan.com
9 CPI 1H 180 Crude oil price (NYMEX WTI) 60 JPMorgan Chase Bank NA
(WTI) 50
7 140
40 Joseph Lupton
(1-212) 834-5735
5 GDP 2H 100 30 joseph.p.lupton@jpmorgan.com
20 JPMorgan Chase Bank NA
3 60
10
CPI 2H GDP 1H Michael S Hanson
1 20 0
Jan Feb Mar Apr May (1-212) 622-8603
07 09 11 13 15 17 19 21 23
michael.s.hanson@jpmchase.com
Source: J.P. Morgan Global Economics Source: Bloomberg Finance, L.P., J.P. Morgan
JPMorgan Chase Bank NA
www.jpmorganmarkets.com
This document is being provided for the exclusive use of Kurt Zhang at Huatai Financial Holdings (Hong Kong) Limited.
JPMorgan Chase Bank NA Economic Research
Bruce Kasman (1-212) 834-5515 Michael S Hanson (1-212) 622-8603 Global Data Watch
bruce.c.kasman@jpmorgan.com michael.s.hanson@jpmchase.com May 13, 2022
Joseph Lupton (1-212) 834-5735
joseph.p.lupton@jpmorgan.com
Cracks in the inflation moderation forecast Figure 3: Global financial conditions

In this regard, the inflation news continues to point to a great- % p.a. Index: 0 = average stress
OFR Financial
er drag than what is built into our forecast. Food price pres- 4 10y Tsy yield Stress (7 day avg.) 10
sures remained a significant factor pushing up EM inflation in
April, while core inflation pressures continue to build broadly. 3
5
Although crude oil prices have moderated from their highs
2
following Russia’s invasion—to levels in line with our fore-
cast—the premium of refined products over crude oil (i.e., 0
1
crack spreads) have been steadily setting new records over the
past month (Figure 2). While it is common for retail fuel pric- 0 -5
es to lag crude oil prices movements, a combination of cut- 11 12 13 14 15 16 17 18 19 20 21 22
backs in Russian supply, low North American inventories, Source: US Treasury Office of Financial Research, J.P. Morgan
and reduced refining capacity are generating unprecedented

upward pressure on energy product prices. Our commodity Inflation persistence trumps growth worries
analysts believe that Middle East refiners can shift Asia-
Despite 1H22 global growth downgrades and a tightening in
bound diesel flows toward the Atlantic to limit further upward
financial conditions, central banks are nearly uniform in their
price pressure. But these developments point to more sus-
continued pivot toward tightening. Broadly speaking, the per-
tained pressure on consumer price inflation through midyear.
sistence of elevated inflation remains the key driving force
behind these moves. Even though much of the recent rise in
China’s activity slides along with CNY inflation reflects supply shocks that threaten growth, the risk
On the pandemic front there is encouraging news that our that persistent inflation is altering the wage-price setting dy-
Google activity measure of mobility is now on the rise across namic is increasing and requires forceful action. In DM econ-
much of the globe. But downside risks around China are in- omies, continued evidence of labor market tightening rein-
creasing. Next week’s April reports should highlight the eco- forces this concern. For EM central banks, pressure comes
nomic damage from the country’s zero-COVID policy; we from April inflation readings that are delivering further upside
expect contractions in production and demand indicators. surprises (Figure 4).
Having lowered our full-year GDP forecast to 4.3%, the poli-
cy response to weakness remains surprisingly tame. April TSF Figure 4: Headline CPI
credit growth decelerated to 10.2%oya and evidence of rising %m/m, sa
inflation limits the room for policy rate cuts. The government 2.5
is signaling no intention to introduce supplementary fiscal 2.0 April 2022 1Q22 average
budgets or direct fiscal subsidies to households in the near
1.5
term. The CNY is where the action is, as the PBOC has been
silent despite the recent sharp depreciation. We have revised 1.0
our year-end USD/CNY forecasts to 6.95, and we think risk is 0.5
biased toward overshooting in the absence of stronger PBOC
resistance. 0.0
Finally, the continued hawkish pivot by global central banks Source: National sources, J.P. Morgan
is generating a quicker and more broadly based tightening in

global financial conditions (Figure 3). Although global policy  In the CEE economies, policymakers are laying the ground
stances remain highly accommodative, the combination of for a slower pace of tightening with Poland’s NBP moderat-
rising yields, widening credit and funding spreads, and falling ing to a 75bp move while Czechia’s CNB adopted a longer
equity prices has pushed the US Treasury’s global financial policy horizon, which could justify raising rates less than its
stress index to levels well above its norms of the past two own forecast indicates. In a recent public interview, Hunga-
decades. While still far from levels indicating stress, these ry’s NBH deputy governor argued the NBH is “transition-
movements point to more significant monetary policy trans- ing from an aggressive rate-hike cycle to a more gradual
mission than during either of the last two global tightening phase of monetary tightening.” But these signals were un-
cycles. dermined by this week’s April upside inflation surprises.
The upside came largely from food, with record monthly
increases in the 3%-5%m/m range. In Romania, an energy Bank of Japan: Lonesome dove
CPI spike (26%m/m) was an additional source of pressure.
Next week core inflation in Japan will turn positive for the
As a result, we have revised our terminal rate forecasts up-
first time in a year, rising 0.2%oya, largely on the fading of
ward for a number of central banks: to 8.5% for the NBH,
negative base effects. Japan’s official core (excluding fresh
8% for the NBR, and 7% for the CNB. In Poland we main-
food but including energy) should rise 0.3% in April, lifting
tain a peak rate of 6.5% but risks are skewed to the upside.
the inflation rate to 1.9%. Buoyed by higher food and energy
prices, this measure should remain around 2% toward the end
 At its last meeting, South Africa’s MPC debated the degree
of this year. However, the BoJ has shown no inclination to
to which its inflation exceptionalism will persist in an envi-
shift from its stance. The April minutes revealed that Board
ronment of high global inflation and a multiplicity of
members did not believe that 2% inflation would be sustained,
shocks. Concern that the current run of low readings will
and expressed no concern about the rapid depreciation of the
come to an end is building, and two developments since
yen. There was no discussion of adjusting the yield curve con-
March—substantially higher food inflation and rand weak-
trol policy. Recent market moves have reduced political pres-
ness—are likely to turn the tide toward a 50bp increase next
sure on the BoJ, and we think it will take some time to see the
week. We believe a further 50bp hike is also likely at the
rises in medium-term inflation expectations and wage growth
subsequent meeting in July. We expect inflation to peak at
needed for the BoJ to pivot toward policy normalization.
7.2% in October and see repo rates rising to 6.75% by mid-
2023.
Painful echoes of Brexit, again
 For EM Asia outside China, growth is likely to be buffeted Unionists have long been opposed to the Protocol for North-
by cross-currents for the rest of this year. China-related ern Ireland put in place as the UK left the EU, which effec-
trade drags are being offset by the relaxation of COVID re- tively places a regulatory and customs border in the Irish Sea.
strictions as the region moves toward an endemic equilibri- They are now refusing to take their place in Northern Ire-
um. The net impact should be neutral to slightly negative land’s power-sharing institutions, demanding that the protocol
for growth. But we also expect it to generate higher core in- be removed. The UK government has hinted at a range of
flation concentrated in the domestic services sector. Thus, unilateral actions it could take, which the EU sees as a sign
even though we have penciled in some easing in headline the UK never intended to implement the protocol properly.
inflation as energy prices stabilize, we expect that core in- The situation potentially calls the whole UK-EU trade settle-
flation could continue to rise over much of this year. Cen- ment into question. However, once the UK takes unilateral
tral banks are likely to tighten in this environment and we action, we expect a proportionate response by the EU that
expect the Philippines’ BSP to hike 25bp next week. pursues legal remedies alongside limitations on a small subset
of UK exports. Although a tit-for-tat escalation cannot be en-
 Despite the relatively balanced tone of Brazil’s May CO- tirely ruled out, we anticipate an uncomfortable disagreement
POM minutes, we still see the central bank hiking an addi- that persists for the foreseeable future.
tional 50bp in June. Risks remain tilted to more on the back
of recent news showing firmer activity and inflation. March
retail sales and services output prompted us to revise up our
1Q GDP estimate and inflation remains relentless, with the
highest April core print since 2003. We see upside risks to
our higher-than-consensus call that inflation will end 2022
at 9.1%. In Mexico, Banxico hiked 50bp to 7% this week,
as expected, while revising up its inflation forecast for
4Q22 to 6.4% (J.P. Morgan: 6.9%). Despite the hawkish
tone of the statement that leaves open the possibility of ac-
celeration, we forecast 50bp hikes at both the June and Au-
gust meetings. In Peru, the BCRP continues with a steady
50bp hiking pace, reaching 5% at this week’s meeting.
Even though core inflation is somewhat better-behaved in
Peru, inflation expectations are still deteriorating—perhaps
exacerbated by risk of another pension fund withdrawal.
Our forecast is for two more hikes to reach 6% by July.
Carlton Strong (1-212) 834-5612 Global economic outlook sum-
carlton.m.strong@jpmorgan.com mary
Joseph Lupton (1-212) 834-5735 May 13, 2022
Global economic outlook summary

Real GDP Real GDP Consumer prices
% over a year ago % over previous period, saar % over a year ago
2021 2022 2023 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 4Q21 2Q22 4Q22 2Q23
United States 5.7  2.8 2.3  6.9  -1.4  3.3  3.5  2.5  2.5  6.7  8.0  6.3 ↑ 3.4↑
Canada 4.6 4.2 2.8 6.7 5.0 3.5 3.5 3.0 2.8 4.7 6.3 ↑ 5.4 ↑ 2.2
Latin America 6.6  2.1 ↑ 1.4  3.7  3.5 ↑ -0.2  -0.1  0.6  1.7  8.3  10.1 ↓ 8.2  5.1 ↑
Argentina 10.3 3.0 1.8 6.3 5.0 -4.5 -2.0 1.0 3.0 51.4 59.5 ↑ 68.9 ↑ 60.1 ↑
Brazil 4.6  1.0 ↑ 0.6  2.2  4.2 ↑ 0.0  -1.8  -1.2  1.2  10.5  12.0 ↓ 9.4 ↑ 6.0↑
Chile 11.7 2.5 0.8 7.5 -1.8 -3.0 -2.0 0.0 2.0 6.6 11.3 8.3 4.6
Colombia 10.6  6.5 3.0  18.2  3.0  0.0  2.5  3.0  3.0  5.2  9.3  8.7  5.4
Ecuador 4.2 3.1 2.5 2.9 3.5 2.5 2.0 3.0 2.7 1.8 3.1 2.7 1.5
Mexico 4.8  1.9 1.7  0.1  3.6  1.6  2.0  1.8  1.3  7.0  7.9  7.0  4.2
Peru 13.3 2.5 2.3 2.6 2.3 -1.8 1.6 2.4 2.5 6.0 7.9 5.5 3.5
Uruguay 4.4  4.4 2.8  8.3  1.0  1.5  1.0  3.0  1.0  7.9  9.7  8.3  5.6
Asia/Pacific 6.2 4.1 4.2 7.6 ↓ 4.8 ↑ 1.4↓ 4.4 ↓ 5.5 4.2 2.1 3.1 ↑ 3.4 ↑ 2.5↓
Japan 1.7  2.1 ↑ 1.8  4.6  0.3 ↑ 4.0  3.5  2.5  1.0  0.5  1.8  2.1  1.4
Australia 4.7 3.4 2.7 14.4 1.9 3.1 2.6 3.3 2.4 3.5 5.2 4.6 2.8
New Zealand 5.6  3.3 2.9  12.6  3.8  3.5  4.1  2.9  2.5  5.9  6.9  4.4  2.3
EM Asia 7.3 4.6 ↓ 4.8 ↓ 7.8 ↓ 6.0 ↑ 0.7↓ 4.7 ↓ 6.3 5.0 2.4 3.2 ↑ 3.7 ↑ 2.7↓
China 8.1  4.3 ↓ 5.2  7.5  6.8  -1.5↓ 4.9  7.3  5.5  1.8  2.3 ↑ 3.0 ↑ 2.4↓
India 8.7 7.1 5.1 7.3 6.0 7.0 5.0 5.0 5.3 5.0 6.3 6.4 5.6
Ex China/India 4.5  4.2 3.8 ↓ 8.9 ↓ 4.0 ↑ 3.6↓ 4.2 ↓ 4.0 ↓ 3.6 ↑ 2.9  4.3  4.2  2.2
Hong Kong 6.3 -0.5 3.9 0.0 -11.5 ↓ 6.2 7.0 6.5 2.4 2.0 1.7 1.8 1.5
Indonesia 3.7  4.9 4.9  14.0 ↑ 3.5 ↓ 5.2  4.9  4.8  5.0  1.8  3.3  4.8  3.3
Korea 4.0 3.0 2.5 ↑ 5.0 3.0 2.0 3.5 3.2 2.0 3.5 4.7 4.0 2.0
Malaysia 3.1  8.3 5.7  19.7 ↓ 16.4 ↑ 4.0↓ 3.0 ↓ 3.0 ↓ 6.0 ↑ 3.2  2.9  3.3  2.3
Philippines 5.7 ↑ 9.6 6.1 ↓ 14.7 ↑ 7.6 ↑ 8.5↓ 5.5 ↓ 5.5 ↓ 6.5 ↑ 3.6 ↓ 5.2 5.0 2.4
Singapore 7.6  4.9 4.9  9.5  6.0  5.0  4.5  4.5  4.5  3.7  6.5  6.2  2.6
Taiwan 6.4 3.7 3.0 7.6 6.4 0.7 2.8 3.2 3.2 2.7 3.2 2.9 2.0
Thailand 1.6  3.0 3.3  7.5  3.4  2.7  4.1  3.7  3.2  2.4  6.8  5.3  0.9
Western Europe 5.7 3.2 2.4 ↓ 2.0 ↓ 1.0 ↓ 2.0↓ 2.6 2.3 2.7 ↓ 4.6 7.8 6.8 2.5
Euro area 5.4  3.1 2.8  1.2  0.8  2.3  3.0  2.8  3.0  4.6  7.7  6.7  2.2
Germany 2.9 3.0 3.5 -1.4 0.8 5.0 4.5 3.0 3.5 5.4 8.0 6.5 1.8
France 7.0  3.0 2.8  3.2  -0.2  1.0  2.0  2.5  3.5  3.3  5.7  5.2  2.0
Italy 6.6 2.8 2.3 2.7 -0.7 1.0 2.0 2.5 2.5 3.7 7.6 7.0 2.3
Spain 5.1  4.4 3.2  9.2  1.3  1.0  3.0  3.5  3.5  5.8  8.7  7.5  2.6
Norway 4.2 3.8 ↓ 2.7 5.6 ↓ -2.4 ↓ 5.5 4.0 3.0 2.3 3.4 4.7 2.8 1.8
Sweden 4.6  2.3 1.6  4.6  -1.6  1.8  2.0  1.8  1.5  3.3  6.2  6.1  3.2
United Kingdom 7.4 3.7 ↓ 1.1 5.2 3.0 ↓ 0.5 ↓ 0.6 0.3 1.6 ↓ 4.9 8.6 7.6 3.7
EMEA EM 6.4  0.5  1.8  7.5  1.9 ↑ -9.9  -2.4 ↓ 3.7  3.8  10.3  23.9 ↑ 21.8 ↑ 8.7↑
Czech Republic 3.3 3.1 2.5 3.2 2.8 0.8 2.0 2.5 2.8 6.1 15.2 ↑ 14.3 ↑ 5.8↑
Hungary 7.1  5.4 ↑ 2.7 ↓ 8.1  8.0 ↑ 3.0↑ 1.0 ↓ 2.0 ↓ 3.0 ↓ 7.1  9.7 ↑ 10.8 ↑ 6.9↑
Israel 7.9 6.1 3.7 17.6 1.6 2.0 2.2 3.6 4.5 2.5 3.9 3.7 2.3
Poland 5.9  5.4  2.9  6.6  8.3  0.0  1.8  2.8  3.3  7.7  13.8 ↑ 13.4 ↑ 10.3↑
Romania 6.0 3.4 5.6 -0.4 7.0 3.6 4.1 5.3 6.1 8.0 14.4 ↑ 14.3 ↑ 9.6↑
Russia 4.7  -6.0  -1.0  8.3  -2.0  -30.0  -10.0  5.0  4.0  8.3  18.5  17.7  6.5
South Africa 4.9 1.9 1.8 4.7 3.7 ↑ 1.5 1.8 2.2 1.9 5.4 6.4 ↑ 6.9 5.3↓
Turkey 11.0  3.2 3.9  6.2  0.4  0.0  0.8  2.8  4.1  25.8  72.3  61.5  18.4
Global 5.9 3.2 ↓ 3.0 6.0 2.1 ↑ 1.4↓ 3.2 3.6 3.2 4.7 7.0 ↑ 6.2 ↑ 3.2
Developed markets 5.2  2.9 2.3  5.1  0.0 ↑ 2.9  3.1  2.5  2.4  5.1  7.1  5.9  2.8 ↑
Emerging markets 7.1 3.7 ↓ 4.0 7.3 5.1 ↑ -0.9↓ 3.2 5.2 ↓ 4.5 ↑ 4.1 6.9 ↑ 6.7 ↑ 3.8↓
Emerging ex China 6.2  3.2  2.9  7.0 ↓ 3.6 ↑ -0.3↓ 1.5 ↓ 3.3 ↓ 3.5  6.4  11.2 ↑ 10.2 ↑ 5.2↑
Global — PPP weighted 6.3  3.7  3.4  6.3  2.8 ↑ 0.4↓ 2.8 ↓ 3.9  3.6  4.9 ↓ 7.9 ↑ 7.2 ↑ 3.7
Source: Government agencies and J.P. Morgan Global Economics. Details on request. Note: For some emerging economies seasonally adjusted GDP data are estimated by J.P.
Morgan. Bold denotes changes from last edition of Global Data Watch, with arrows showing the direction of changes. Underline indicates beginning of J.P. Morgan forecasts. Unless
noted, concurrent nominal GDP weights calculated with current FX rates are used in computing our global and regional aggregates. Regional CPI aggregates exclude Argentina and
Ecuador. Source: J.P. Morgan. Any long-form nomenclature for references to China; Hong Kong; and Taiwan within this research material is Mainland China; Hong Kong SAR (Chi-
na) and Taiwan (China).
Carlton Strong (1-212) 834-5612 Global Data Watch
carlton.m.strong@jpmorgan.com May 13, 2022
G-3 economic outlook detail

2021 2022 2023
2021 2022 2023 4Q 1Q 2Q 3Q 4Q 1Q 2Q
United States
Real GDP 5.7 2.8 2.3 6.9 -1.4 3.3 3.5 2.5 2.5 1.8
Private consumption 7.9 3.5 2.9 2.5 2.7 4.0 3.3 3.0 2.8 2.7
Equipment investment 13.1 6.3 2.6 2.8 15.3 6.0 3.0 2.5 2.5 2.5
Non-residential construction -8.0 -0.5 5.0 -8.3 -0.9 3.0 9.0 7.0 4.0 4.0
Intellectual property products 10.0 8.0 5.6 8.9 8.1 7.0 6.0 6.0 6.0 5.0
Residential construction 9.2 -2.2 0.0 2.2 2.1 -8.0 1.0 1.0 0.5 0.5
Inventory change ($ bn saar) -32.6 180.3 159.4 193.2 158.7 166.6 197.8 197.9 206.5 177.2
Government spending 0.5 -0.4 2.3 -2.6 -2.7 1.2 3.5 2.9 2.3 1.9
Exports of goods and services 4.5 3.6 5.0 22.4 -5.9 5.5 3.0 3.0 6.0 6.0
Imports of goods and services 14.0 10.9 6.2 17.9 17.7 6.0 6.0 6.0 7.0 6.0
Domestic final sales contribution 6.5 2.9 2.9 1.8 2.6 3.6 3.7 3.3 3.0 2.8
Inventories contribution 0.4 1.1 -0.1 5.3 -0.8 0.2 0.6 0.0 0.2 -0.6
Net trade contribution -1.2 -1.2 -0.4 -0.2 -3.2 -0.5 -0.8 -0.8 -0.7 -0.5
Consumer prices (%oya) 4.7 7.5 3.4 6.7 8.0 8.0 7.7 6.3 4.7 3.4
Excluding food and energy (%oya) 3.6 5.6 3.3 5.0 6.3 5.8 5.5 4.9 4.0 3.3
Core PCE deflator (%oya) 3.3 4.6 2.9 4.6 5.2 4.8 4.6 4.0 3.4 3.0
Federal budget balance (% of GDP, FY) -12.1 -4.2 -3.6
Personal saving rate (%) 12.2 5.3 5.0 7.7 6.6 5.3 4.7 4.7 4.7 4.9
Unemployment rate (%) 5.4 3.5 3.3 4.2 3.8 3.5 3.4 3.4 3.3 3.3
Industrial production, manufacturing 6.2 4.7 1.7 5.4 5.5 7.0 1.5 1.5 1.5 1.5
Euro area
Real GDP 5.4 3.1 2.8 1.2 0.8 2.3 3.0 2.8 3.0 2.8
Private consumption 3.5 3.7 3.1 -1.3 -3.5 3.5 7.0 4.0 2.0 2.0
Capital investment 4.2 5.2 3.8 14.5 4.0 4.0 6.0 4.0 3.5 3.2
Government consumption 3.9 2.0 0.6 2.1 1.5 2.0 1.0 0.0 0.0 1.0
Exports of goods and services 11.0 6.3 4.5 11.9 3.0 4.0 6.0 4.3 4.3 4.3
Imports of goods and services 8.7 8.0 4.8 19.8 2.0 7.0 7.0 4.2 4.2 4.2
Domestic final sales contribution 3.6 3.5 2.6 2.6 -0.7 3.1 5.1 3.0 1.8 2.0
Inventories contribution 0.4 0.1 0.2 1.3 0.9 0.4 -1.8 -0.4 1.0 0.6
Net trade contribution 1.4 -0.5 0.0 -2.7 0.6 -1.2 -0.2 0.2 0.2 0.2
Consumer prices (HICP, %oya) 2.6 7.1 2.2 4.6 6.1 7.7 7.8 6.7 4.3 2.2
ex food, alcohol and energy 1.5 3.1 2.2 2.4 2.6 3.5 3.3 3.2 2.6 2.1
General govt. budget balance (% of GDP, FY) -5.7 -3.9 -2.3
Industrial production 7.8 2.1 3.2 -0.6 5.0 3.0 5.0 4.0 3.0 2.5
Japan
Real GDP 1.7 2.1 1.8 4.6 0.3 4.0 3.5 2.5 1.0 1.0
Private consumption 1.3 3.8 2.5 10.0 0.2 7.0 6.0 3.0 1.2 1.2
Business investment -0.4 1.1 3.7 1.4 -1.0 5.0 5.0 5.0 3.0 3.0
Residential construction -1.9 0.0 1.1 -3.8 3.0 2.0 1.0 1.0 1.0 1.0
Public investment -3.7 -5.5 -0.7 -14.4 0.0 -0.5 -1.0 -1.0 -0.5 -0.5
Government consumption 2.1 0.8 -1.3 -1.4 5.0 -3.0 -2.0 -1.0 -1.0 -1.0
Exports of goods and services 11.8 3.4 1.5 3.8 6.0 1.5 1.5 1.5 1.5 1.5
Imports of goods and services 5.2 3.3 1.3 -1.5 10.0 2.0 1.8 1.5 1.0 1.0
Domestic final sales contribution 0.8 2.1 1.7 4.2 1.1 3.9 3.6 2.2 0.9 0.9
Inventories contribution -0.2 -0.1 0.0 -0.6 -0.1 0.2 0.0 0.3 0.0 0.0
Net trade contribution 1.1 0.0 0.1 1.0 -0.7 -0.1 -0.1 0.0 0.1 0.1
Consumer prices (%oya) -0.2 1.7 1.3 0.5 0.9 1.8 1.9 2.1 1.8 1.4
ex food and energy -0.9 -0.1 0.9 -1.5 -1.8 0.1 0.4 1.0 1.1 0.9
General govt. net lending (% of GDP, CY) -8.0 -5.9 -4.4
Industrial production 5.8 1.5 4.4 4.2 3.1 3.2 5.0 6.6 5.0 5.0
Memo: Global industrial production 8.4 3.4 4.2 5.2 0.9 5.6 3.9 3.4 3.1
%oya 3.1 3.3 2.8 3.8 3.8 3.3 3.9
Source: Government agencies and J.P. Morgan Global Economics. Details on request.
Joseph Lupton (1-212) 834-5735 Global Central Bank Watch
joseph.p.lupton@jpmorgan.com May 13, 2022
Carlton Strong (1-212) 834-5612
carlton.m.strong@jpmorgan.com
Global Central Bank Watch

Official Current 4-qrtr change (bp) Forecast Forecast (%pa)
Last change Next mtg
rate rate (%pa) Last Next next change Jun 22 Sep 22 Dec 22 Mar 23 Jun 23
Global 2.00 68 111 2.21 2.59 2.83 3.08 3.12
excluding US 2.39 78 68 2.48 2.72 2.86 3.02 3.06
Developed 0.43 29 161 0.70 1.25 1.59 1.93 2.04
Emerging 4.44 129 34 4.53 4.65 4.76 4.86 4.78
Latin America 9.45 637 1 10.05 10.45 10.52 10.21 9.46
EMEA EM 9.23 378 45 9.17 9.19 9.29 9.88 9.68
EM Asia 2.81 8 37 2.86 2.96 3.07 3.14 3.18
The Americas 2.06 146 197 2.58 3.28 3.71 4.11 4.03
United States Fed funds 1.00 75 225 4 May 22 (+50bp) 15 Jun 22 Jun 22 (+50bp) 1.50 2.25 2.75 3.25 3.25
Canada O/N rate 1.00 75 225 13 Apr 22 (+50bp) 1 Jun 22 1 Jun 22 (+50bp) 1.50 2.25 2.50 3.00 3.25
Brazil SELIC O/N 12.75 925 -150 4 May 22 (+100bp) 15 Jun 22 June 22 (+50bp) 13.25 13.25 13.25 12.75 11.25
Mexico Repo rate 7.00 302 175 12 May 22 (+50bp) 23 Jun 22 23 Jun 22 (+50bp) 7.50 8.25 8.75 8.75 8.75
Chile Disc rate 8.25 775 -100 5 May 22 (+125bp) 7 Jun 22 6 Jun 22 (+75bp) 9.00 9.50 8.25 8.00 7.25
Colombia Repo rate 6.00 425 250 29 Apr 22 (+100bp) 30 Jun 22 30 Jun 22 (+150bp) 7.50 8.50 8.50 8.50 8.50
Peru Reference 5.00 475 -50 12 May 22 (+50bp) 9 Jun 22 9 Jun 22 (+50bp) 5.50 6.00 6.00 5.00 4.50
Europe/Africa 1.69 90 109 1.72 2.08 2.30 2.62 2.78
Euro area Depo rate - 0.50 0 125 12 Sep 19 (-10bp) 9 Jun 22 Jul 22 (+25bp) -0.50 0.00 0.25 0.50 0.75
United Kingdom Bank rate 1.00 90 125 17 Mar 22 (+25bp) 16 Jun 22 June 22 (+25bp) 1.25 1.50 1.75 2.00 2.25
Norway Dep rate 0.75 75 125 5 May 22 (+25bp) 23 Jun 22 23 Jun 22 (+25bp) 1.00 1.25 1.50 1.75 2.00
Sweden Repo rate 0.25 25 125 28 Apr 19 (+25bp) 29 Jun 22 30 Jun 22 (+25bp) 0.50 0.75 1.00 1.25 1.50
Czech Republic 2-wk repo 5.75 550 25 5 May 22 (+75bp) 22 Jun 22 June 22 (+75bp) 6.50 7.00 7.00 6.50 6.00
Hungary Base rate 5.40 480 210 26 Apr 22 (+100bp) 31 May 22 May 22 (+100bp) 7.40 8.50 8.50 8.25 7.50
Israel Base rate 0.35 25 115 11 Apr 22 (+25bp) 23 May 22 23 May 22 (+25bp) 0.60 1.10 1.35 1.50 1.50
Poland 7-day interv 5.25 515 125 5 May 22 (+75bp) 8 Jun 22 June 22 (+75bp) 6.00 6.50 6.50 6.50 6.50
Romania Base rate 3.75 250 425 10 May (+75bp) 6 Jul 22 6 Jul 22 (+100bp) 3.75 5.75 6.75 7.75 8.00
Russia Key pol rate 14.00 900 -300 29 Apr 22 (-300bp) 10 Jun 22 Jun 22 (-100bp) 13.00 12.00 12.00 11.50 11.00
South Africa Repo rate 4.25 75 225 24 Mar 22 (+25bp) 19 May 22 May 22 (+50bp) 4.75 5.50 5.75 6.25 6.50
Turkey 1-wk repo 14.00 -1900 400 16 Dec 21 (-100bp) 26 May 22 1Q 23 (+400bp) 14.00 14.00 14.00 18.00 18.00
Asia/Pacific 2.18 7 36 2.23 2.33 2.43 2.50 2.54
Australia Cash rate 0.35 25 165 4 May 22 (+25bp) 7 Jun 22 Jun 22 (+40bp) 0.75 1.25 1.50 1.75 2.00
New Zealand Cash rate 1.50 125 25 13 Apr 22 (+50bp) 25 May 22 May 22 (+25bp) 1.75 1.75 1.75 1.75 1.75
Japan Pol rate IOER1 - 0.10 -9 0 28 Jan 16 (-20bp) 17 Jun 22 On hold -0.10 -0.10 -0.10 -0.10 -0.10
Hong Kong Disc. wndw 1.25 -50 225 3 Mar 20 (-50bp) - Jun 22 (+50bp) 1.75 2.50 3.00 3.50 3.50
China 1-yr MLF 2.85 -10 -10 17 Jan 22 (-10bp) - 2Q 22 (-10bp) 2.75 2.75 2.75 2.75 2.75
Korea Base rate 1.50 100 125 14 Apr 22 (+25bp) 26 May 22 May 22 (+25bp) 1.75 2.25 2.50 2.75 2.75
Indonesia BI RRR 3.50 0 75 18 Feb 21 (-25bp) 24 May 22 23 Jun 22 (+25bp) 3.75 4.00 4.25 4.25 4.25
India Repo rate2 4.40 40 175 4 May 22 (+40bp) 8 Jun 22 Jun 22 (+50bp) 4.90 5.15 5.65 5.90 6.15
Malaysia O/N rate 2.00 -175 100 11 May 22 (+25bp) 6 Jul 22 3Q 22 (+25bp) 2.00 2.25 2.50 3.00 3.00
Philippines Rev repo 2.00 0 125 19 Nov (-25bp) 19 May 22 May 22 (+25bp) 2.25 2.50 2.75 3.00 3.25
Thailand 1-day repo 0.50 0 50 20 May 20 (-25bp) 8 Jun 22 1Q 23 (+25bp) 0.50 0.50 0.50 0.75 1.00
Taiwan Official disc. 1.375 25 63 17 Mar 22 (+25bp) 16 Jun 22 2Q 22 (+25bp) 1.63 1.75 1.88 2.00 2.00
Source: Government agencies and J.P. Morgan Global Economics. Details on request. 1 BoJ sets the policy rate on IOER (O/N) and targets 10-year JGB yields as policy guidance. 2 RBI raised the lower
end of the policy corridor 40 bps Apr22. Repo rate represents mid-point of policy corridor. Bold denotes move since last GDW and forecast changes. Underline denotes policy meeting during upcoming
week. Aggregates are GDP-weighted averages. Any long-form nomenclature for references to China; Hong Kong; and Taiwan within this research material is Mainland China; Hong Kong SAR (China) and
Taiwan (China).
6
Joseph Lupton (1-212) 834-5735 Global Data Watch
Bennett Parrish
bennett.parrish@jpmchase.com
Nowcast global GDP: Aligned growth are more balanced in DM and EM Asia (Figure 3 and
Table 1).
after China downgrade Figure 3: Risk bias, 2Q22
%-pts. Nowcast minus forecast
This week we once again lowered our forecast for 2Q global
GDP growth owing to a large downgrade to China. We now 10 Rus: +29
8
look for global GDP to grow at a below-potential 1.4%ar this
6
quarter, with a 1.5%ar contraction in China. Our forecast for 4
2Q real GDP growth in China has plunged 7.2%-pts since 2
early April. Somewhat surprisingly, 2Q GDP growth revi- 0
sions outside of China have moved in the opposite direction: -2
-4
we have revised up the rest of the world by 0.9%-pt over the -6
same time period. Normally, a large growth cut to China has a
Rus
Bra
Mex
Zaf
DM
EM
EMEA EM
Chl
Col
Per
Pol
Twn
Kor
UK
Chn
EMU
Jpn
Tur
Glob
US
EM Asia
Latam
Glob,wt
negative impact on GDP elsewhere, but we see resilience
from strong demand fundamentals and reopening dynamics Source: J.P. Morgan Global Economics. Note: Not all nowcasters shown
outside of China. That said, spillovers still could be felt with a

lag. The most recent activity data through April and some Table 1: Real GDP
surveys through early May suggest activity is holding up in %q/q, saar. Underline indicates J.P. Morgan forecast
1Q22 2Q22
the rest of Asia.
Actual/Fcst Nowcast Forecast Nowcast
Global 2.1 3.3 1.4 1.5
Figure 1: J.P. Morgan global GDP Weighted Avg* 1.9 4.1 0.9 1.6
% change saar; forecast by date made Developed* 0.0 3.6 2.9 2.5
6 2Q22 US -1.4 4.5 3.2 3.8
EMU 0.8 3.1 2.3 0.6
5 UK 3.0 2.9 0.5 1.7
Canada 5.0 5.2 3.5 5.4
4 2H22 Japan 0.3 0.9 4.0 1.4
Emerging* 5.3 5.0 -2.4 0.0
3
EM Asia* 6.4 5.8 -1.0 -0.6
1Q22 China 6.8 5.8 -1.5 -1.4
2
Korea 3.0 5.7 2.0 3.5
1 Taiwan 6.4 6.3 0.7 3.6
Apr 2, 21 Jul 12, 21 Oct 22, 21 Jan 31, 22 May 13, 22 Singapore 6.0 7.0 5.0 8.4
Source: J.P. Morgan Global Economics Latam* 3.5 3.5 -0.3 3.3
Brazil 4.2 2.6 0.0 3.6
Mexico 3.6 4.0 1.6 1.3
Figure 2: Global real GDP
Argentina 5.0 7.4 -4.5 6.0
%q/q, saar. J.P. Morgan projection through 2Q22; Nowcaster through May Chile -1.8 -2.1 -3.0 3.7
8 Nowcaster Colombia 3.0 4.9 0.0 5.4
6 (dashed is %m/m, saar) Peru 2.3 5.8 -1.8 3.6
EMEA EM* 1.9 2.6 -11.2 -0.3
4 Poland 8.3 3.9 0.0 3.1
2 Hungary 8.0 8.2 3.0 5.4
0 Czech Rep. 2.8 3.6 0.8 2.9
Actual/JPM Romania 7.0 7.2 3.6 5.0
-2 (%q/q, saar) Russia -2.0 2.0 -30.0 -1.5
-4 2Q20: -19%ar
Turkey 0.4 -2.1 0.0 -6.0
3Q20: +38%ar
-6 South Africa 3.7 5.9 1.5 2.3
13 14 15 16 17 18 19 20 21 22 * Aggregates are GDP weighted averages of constituents. Source: J.P. Morgan Global Econom-
Source: J.P. Morgan Global Economics. Details on request. ics. Any long-form nomenclature for references to China; Hong Kong; and Taiwan within this
research material is Mainland China; Hong Kong SAR (China); and Taiwan (China).
After a hefty cut to our 2Q global GDP growth forecast, the
top-down global nowcaster, at 1.5%ar, is now very closely This week in our Daily Economic Briefings, we updated our
aligned with the official forecast (Figure 2). At the national aggregate for April global auto sales and discussed recent
level, the story is skewed toward upside risk. The aggregate of forecast revisions. Global auto sales fell 13% in April. The
our bottom-up nowcasters for 2Q is tracking growth 0.7%-pt large decline was a consequence of sales collapsing close to
above our forecast for the same country set. Upside risks to 40% in both China and Russia. In China, the virus outbreak is
growth are pronounced in Latam and EMEA EM. Risks to causing a sharp pullback in activity; the war in Ukraine is the
culprit for Russia. Separately, we highlighted the surprising
Joseph Lupton (1-212) 834-5735 Nowcast global GDP
Bennett Parrish
resilience of our GDP growth forecasts outside of China, Figure 6: Euro area real GDP, 1Q22 JPM forecast
where we have cut 2Q growth by 7.2%-pts. Our VAR analysis %q/q, saar
suggests cutting China’s growth 7.2%-pts amounts to about JPM nowcast
an 0.8%-pt spillover to the rest of the world, yet activity data 4
out of Asia through April and mobility data through early 3

May show resilience. Next week, we expect China to report 2
April IP and retail sales contractions of 4% m/m and 9%, re- 1
spectively.
0
Table 2: J.P. Morgan global aggregates -1
Mar 04
Mar 11
Mar 18
Mar 25
Apr 01
Apr 08
Apr 15
Apr 22
Apr 29
Feb 04
Feb 11
Feb 18
Feb 25
May 06
May 13
May 20
%ch, sa (ar for qrt). PMIs are levels. Confidence is std.dev from 2010-pres avg
1Q22 2Q22 Mar22 Apr22 May22 Jun22 Source: J.P. Morgan Global Economics
PMI, mfg 51.5 48.6 50.9 48.5 48.5 48.9
PMI, serv 52.8 51.9 53.4 51.9 51.9 52.0
IP 6.4 -2.1 -0.2 -0.5 -0.3 0.0 Figure 7: EM Asia real GDP, 1Q22 JPM forecast
Retail sales -1.8 -2.7 -1.4 0.2 0.0 0.1 %q/q, saar
Auto sales
JPM nowcast
38.4 -52.4 -11.0 -13.0 1.0 0.8
8
G-3 cap. ship. 11.7 -5.1 -0.6 0.0 -0.5 -0.3
G-3 cap. orders 0.9 -5.7 -0.1 -0.2 -0.7 0.1
6
Cap. exports 22.8 6.7 -2.4 1.6 0.1 -0.3
Bus conf 0.5 -0.5 -0.1 -0.4 -0.5 -0.5 4
Cons conf -0.5 -0.9 -1.0 -0.9 -0.9 -0.8
Nowcast (ar) 3.3 1.5 0.8 1.3 1.3 1.6 2
Note. Shaded values show forecasts computed by the Kalman filter estimates from the dynam-
ic factor model. Underlined values are our estimates based on available data and our judg-
ment. Source: J.P. Morgan Global Economics, Markit, and national statistical agencies. 0
Feb 04
Feb 11
Feb 18
Feb 25
Mar 04
Mar 11
Mar 18
Mar 25
Apr 01
Apr 08
Apr 15
Apr 22
Apr 29
May 06
May 13
May 20
Figure 4: Global real GDP, 1Q22 Source: J.P. Morgan Global Economics
JPM forecast
%q/q, saar JPM Global nowcast
Nowcast, wghtd avg Figure 8: Latam real GDP, 1Q22
5 JPM forecast
%q/q, saar
4
4 JPM nowcast
3
3
2
1 2
0 1
Feb 04
Feb 11
Feb 18
Feb 25
Mar 04
Mar 11
Mar 18
Mar 25
Apr 01
Apr 08
Apr 15
Apr 22
Apr 29
May 06
May 13
May 20
0
Feb 04
Feb 11
Feb 18
Feb 25
Mar 04
Mar 11
Mar 18
Mar 25
Apr 01
Apr 08
Apr 15
Apr 22
Apr 29
May 06
May 13
May 20
Source: J.P. Morgan Global Economics

Figure 5: US real GDP, 1Q22 JPM forecast
%q/q, saar JPM nowcast
5 Figure 9: EMEA EM real GDP, 1Q22 JPM forecast
4 %q/q, saar
JPM nowcast
3 4
2
2
1
0 0
-1
-2 -2
Feb 04
Feb 11
Feb 18
Feb 25
Mar 04
Mar 11
Mar 18
Mar 25
Apr 01
Apr 08
Apr 15
Apr 22
Apr 29
May 06
May 13
May 20
-4
Feb 04
Feb 11
Feb 18
Feb 25
Mar 04
Mar 11
Mar 18
Mar 25
Apr 01
Apr 08
Apr 15
Apr 22
Apr 29
May 06
May 13
May 20
Source: J.P. Morgan
*For a primer on our nowcaster suite, see methodology report and podcast.
Selected recent research from

J.P. Morgan Economics
Global Japan
Business spending fuels 1Q22 IP surge, Apr 29, 2022 Yen depreciation should not cause BoJ's YCC adjustment, Apr 14, 2022
Central banks have more work to do, Apr 29, 2022
Japan: Golden opportunity to end low inflation equilibrium, Apr 14, 2022
Corporate challenge: Healthy margins to face headwinds, Apr 22, 2022
Geopolitical shifts could end Japan’s disinflation, Mar 25, 2022
FX reserve diversification away from US dollar accelerating, Apr 22, 2022 Japan: Bottlenecks stand in the way of strong plans, Mar 11, 2022
Consumers stressed but not out: A case for resilience, Apr 14, 2022 Global structural trends likely will boost Japan's capex, Feb 25, 2022
Global financial conditions tighten, but not yet stressed, Mar 25, 2022
Japan: Not enough wage growth for sustainable inflation, Feb 25, 2022
There may be trouble ahead: Tail risk in a world of shocks, Mar 18, 2022
Before the fog of war: Resilience and signs of a pickup, Mar 11, 2022 Non-Japan Asia and Pacific
EM: A slow post-pandemic recovery in female labor markets, Mar 11, 2022 Bank of Korea: Toward neutral without hesitation, May 6, 2022
So far, no good: War intensifies global growth drag, Mar 4, 2022 India: Beware nominal illusion, May 6, 2022
What a difference a day makes? Feb 25, 2022 Korea: External account outlook amid terms of trade drag, Apr 22, 2022
Females outperform in DM labor market recovery, Feb 25, 2022 ASEAN's policy response to the Russia-Ukraine crisis, Apr 8, 2022
United States and Canada India: A strong case for a weaker rupee, Apr 8, 2022
Australia: Participation growth running out of puff, Apr 8, 2022
US: Higher gas prices, less in the tank, less demand overall, May 6, 2022
Assessing the impact of China’s housing market policies, Mar 25, 2022
US: Wars, plagues, and inflation, May 6, 2022
Russia-China trade: Reassessing the diversion potential, Mar 18, 2022
US: Making sense of food price inflation, Apr 22, 2022
Australia: Not all wage measures are created equal, Mar 18, 2022
The US real economy: Same as it ever was, Apr 14, 2022
Indonesia's terms of trade = current account surplus, Mar 18, 2022
Canada: on to the next shock, Apr 8, 2022
RBA: Neutral observer, Mar 11, 2022
US: Consumer demand to endure purchasing power pinch, Mar 18, 2022
India: Economy and policy amid the oil price shock, Mar 11, 2022
US: Inertial inflation to pressure prices in 2022, Mar 4, 2022
Measuring China's housing policy stance, Mar 4, 2022
Western Europe Thailand: FX as a policy instrument to counter inflation, Mar 4, 2022
Indonesia's inflation transformation and policy implications, Feb 25, 2022
UK: Broadening inflation is a problem for the MPC, May 6, 2022
Germany: Bundesbank sees large impact from energy ban, Apr 29, 2022 Latin America
Italy: Debt still likely to fall gradually, despite headwinds, Apr 29, 2022 Colombia's election: A closer look at Petro’s proposals, Apr 14, 2022
Assessing Euro area recession risk: Low, but watch the shock, Apr 22, 2022
Mexico’s tough policy trade-off, Mar 25, 2022
Germany: The huge debate about a gas import ban, Apr 8, 2022
Brazil's labor market may be tighter than it looks, Mar 18, 2022
Euro area: Wide country-level energy price dispersion, Apr 8, 2022
South America: Positive terms of trade shock a bright silver lining, Mar 4, 2022
Europe's dependence on Russian energy: History and future. Mar 18, 2022
UK: Pressure for more fiscal support as energy bills rise, Mar 18, 2022 Special Reports and Global Issues
Will Sweden and Finland join NATO? Mar 18, 2022 Living with COVID-19, May 9, 2022
\A bird’s eye view on EU enlargement after Ukraine, Mar 11, 2022 EM: When it rains it pours, Apr 8, 2022
Europe: On Russian energy and country-level exposures, Mar 4, 2022 Ten questions about China in 2022, Jan 9, 2022
Italy and Spain: Fiscal over-performance meets new shock, Mar 4, 2022 Japan 2022 Outlook: Tomorrow will be a good day, Dec 3, 2021
Euro area: Cost squeeze meets healthy private incomes, Feb 25, 2022 A resiliency test: 2022 EM Economic Outlook, Nov 30, 2021
BoE QT: Taking the plunge on asset sales, Feb 25, 2022 Greater China 2022 Economic Outlook, Nov 28, 2021
Riksbank: Last dove standing, but not for long, Feb 25, 2022 The Euro area economic outlook: bouncing back stronger, Nov 23, 2021
Central Europe, Middle East, and Africa This time IS different: 2022 Global Economic Outlook, Nov 22, 2021
The 2022 US economic outlook: Help wanted, Nov 17, 2021
Poland: Russia's gas supply halt in context, Apr 29, 2022 Know thyself: Policy rate forecast revision indexes, Nov 17, 2021
South Africa: Fiscal policy amid evolving imbalances, Apr 22, 2022
EM's incomplete and uneven recovery from the pandemic. Oct 27, 2021
Ukraine's refugees and CEE labor markets, Apr 8, 2022
Green growth strategy will drive investment in Japan, Oct 17, 2021
GCC: High oil, low financing needs, still some issuance, Apr 8, 2022 India: Looking for post-COVID-19 growth drivers, Jul 26, 2021
Exposure to Russia-Ukraine: Focus on select frontiers, Mar 25, 2022 China: From post-pandemic recovery to sustainable growth, Jul 8, 2021
Egypt FX reserves: The volatility behind the curtain, Mar 25, 2022 Breaking the waves: Vaccines pave the way for normalization, Jul 7, 2021
Russia-China trade: Reassessing the diversion potential, Mar 18, 2022
US Mid-year economic outlook: After the gold rush, Jun 25, 2021
Russia invasion and sanctions: The fallout on EMEA EM, Mar 11, 2022
Riders on the storm: CEE CBs and the fallout from the crisis, Mar 4, 2022
Note: Research notes listed have been published in GDW; Special Reports and Global Issues are stand-alone features, but may also have appeared in some form in GDW.
J.P. Morgan Securities LLC J.P. Morgan Securities plc Economic Research
Marko Kolanovic, PhD (1-212) 622-3677 Nikolaos Panigirtzoglou (44-20) 7134-7815 Global Data Watch
marko.kolanovic@jpmorgan.com nikolaos.panigirtzoglou@jpmorgan.com May 13, 2022
Bram Kaplan, CFA (1-212) 272-1215 Federico Manicardi (44-20) 7742-7008
bram.kaplan@jpmorgan.com federico.manicardi@jpmorgan.com
J.P. Morgan Market Watch dip, we would recommend: i) liquid indices, such as QW5A
or iTraxx Main; ii) corporate hybrids; and iii) REITS. We
Bonds think the risk-reward is becoming more balanced, but it is still
too early to call the wide in spreads. Last week, we offered
Bonds reversed much of the previous week’s sell-off amid three criteria for turning more constructive on euro credit
renewed growth/recession concerns and increased concerns markets: i) equity and rates volatility declining; ii) primary
over Russian gas supplies to Europe. In the US, the increased markets returning to normal functioning; and iii) retail funds
sensitivity of USTs to risk assets, some softness in activity seeing inflows. In our view, we have still seen far too little
data, and only a modest undershoot in market pricing of Fed progress on these factors to turn outright bullish on credit risk
hikes relative to our forecast keeps us tactically neutral on (European Credit Weekly, May 13).
outright duration. Instead, we prefer to position for higher
yields in the medium term via more carry-efficient 5s/20s
Figure 1: Year-to-date returns
flatteners. %
Commodities 29
In the Euro area, the headwinds posing a resiliency test for MSCI Brazil ($) 9
USD trade-wtd 6
the outlook have stiffened, and markets are showing signs of FTSE 0
USD 3M cash 0
accepting that the Russia-Ukraine conflict is a disproportion- Euro linkers -1
JGBs -2
ate shock to the Euro area economy. We stay long 5Y Germa- US Lev Loans -2
Australia equities -5
ny vs. US and stay short 3Mx5Y EUR payer gamma. Intra- Topix -6
US linkers -7
EMU, we stay short 10Y Italy vs. Germany. In the UK, de- GBI Global -7
Euro HG credit -8
spite the recent rally, the market implied rate in mid-2023 at US Treasuries -8
EMU Bonds -8
2.3% remains excessive given mounting growth risks, and we S&P500 Value -8
Euro HY credit -8
continue to receive 5Y SONIA vs. 5Y USD OIS. US HY credit -10
EM Bonds (GBI-EM) -10
EM FX (ELMI) -10
In EM, the environment for fixed income remains challenging EM Corporates -12
US HG credit -12
given tightening financial conditions and a slowing China. MSCI India ($) -13
EM Sovereigns -16
We stay short local duration given continued upward revi- MSCI EMU -16
S&P500 -16
sions to inflation and rising global terminal rates. We are UW S&P500 Momentum -16
EM Frontier Sovs -17
Malaysia and Thailand in EM Asia, Hungary, Poland, and S&P500 Quality -17
Convertibles -18
Romania in EMEA EM, and Chile and Colombia in Latam MSCI ACWI -18
MSCI EM (in $) -20
(EMOS, May 9th) Russell 2000 -21
MSCI Korea ($) -22
Nasdaq -25
S&P500 Growth -26
Credit MSCI China ($) -26
US HG spreads remain below the March peak even as -30 -25 -20 -15 -10 -5 0 5 10 15 20 25 30 35
equity markets and other risky assets are much weaker. Source: J.P. Morgan Global Economics
We see two drivers of this: higher yields and less supply. The
supply trend between March and May is quite different as The risk backdrop has become increasingly difficult for
well. In March US$234bn was issued, while in contrast there EM sovereigns. However, what has and should continue to
has been only US$30bn of supply through May 10. Would cushion EM credit is a combination of front-loaded pain and
yields be higher or lower in a recession? In all of the selloffs cleaner technicals. The EMBIGD began repricing well before
over the past 10 years yields were never higher than they are other credit markets, and positioning has been lightened with
now. This includes the COVID selloff in Mar’20, the energy higher-than-average cash balances. The average bond price in
rout in Feb’16 and the various selloffs around the Euro crisis the EMBIGD is now below COVID lows registered in early
in 2011-2012. Spreads were meaningfully wider in those peri- 2020, and among the C-rated bucket, bond prices currently
ods of weakness but yields were not higher. The non-Financial average 36, sitting on the lower end of historical recovery
10s30s spread curve has flattened by 9bp since the beginning of values for EM sovereigns. Oil exporter outperformance looks
April and is currently around 30bp, a level that has not been to have run its course, in our view, and we dial back some of
breached for most of the past decade (CMOS, May 13). our oil exposures. Stay MW the EMBIGD (EM Sovereign
Credit Strategy, May 9).
In Europe, we are neutral at current levels, and prefer to
focus on RV trades including: i) HY / IG decompression; ii) Currencies
corporate hybrids over HY; and iii) OW Financials vs Non- Our long USD strategy in recent months has been in-
Financials. For investors looking to more aggressively buy the formed by the regime of soft growth-high inflation, com-
10
J.P. Morgan Securities LLC J.P. Morgan Securities plc Economic Research
Marko Kolanovic, PhD (1-212) 622-3677 Nikolaos Panigirtzoglou (44-20) 7134-7815 Global Data Watch
marko.kolanovic@jpmorgan.com nikolaos.panigirtzoglou@jpmorgan.com
May 13, 2022
Bram Kaplan, CFA (1-212) 272-1215 Federico Manicardi (44-20) 7742-7008
bram.kaplan@jpmorgan.com federico.manicardi@jpmorgan.com
bined with rising US real yields. Macro conditions in the knock-on impact on demand remain the top concern driving
past month have become even more conducive to a bullish the sharp selloff (Metals Weekly, May 13th).
USD view. The growth slowdown has broadened with even
the US not immune, and China spillovers to the rest of the The USDA’s May WASDE detailed an outlook of persis-
world are a risk, with the Eurozone more vulnerable. This tent draws in world 2022/23 wheat, corn and cotton inven-
macro deterioration is coming amid substantially shallower tories, while soybeans are likely to build. Wheat markets led
liquidity in macro markets and increased USD scarcity and the post-report gains after earlier de-risking. We remain con-
warrants increasing defensive exposure and marking down structive on the complex and we see upside for prices through
key FX forecasts. We stay long dollar and defensive (short 2Q22, particularly for wheat and corn (Agricultural Markets
EM). The primary change has been that we had substantially Weekly, May 13).
cut commodity FX longs in recent weeks.
JPM Forecasts
Broad-dollar forecasts are upped by an average of 4% Rates Current Jun-22 Sep-22 Dec-22 Mar-23
US (SOFR) 0.79 1.05 1.85 2.45 2.95
across the forecast horizon. Key FX target changes include:
10-year yields 2.91 3.05 3.15 3.20 3.25
EUR/USD 3Q22 at 1.00 (prior 1.05). Cable 3Q 1.14 (from Euro area (depo) -0.50 -0.50 0.00 0.25 0.50
1.27) on recession risk. USD/CNY 6.95 (prior 6.80). 10-year yields 0.94 0.85 0.80 0.75 0.80
EUR/CHF 1y 1.02 (from 1.03) (KCV, May 13th). Italy-Germany 10Y (bp) 192 160 170 180 180
Spain-Germany 10Y (bp) 106 85 90 95 95
United Kingdom (repo) 1.00 1.25 1.50 1.75 2.00
Commodities 10-year yields 1.73 1.80 1.90 1.95 2.00
Japan (call rate) -0.10 -0.10 -0.10 -0.10 -0.10
Global crude runs enough to keep fuel prices from climb- 10-year yields 0.24 0.20 0.20 0.20 0.25
ing higher, but not enough to fix market before 2023. We EM Local (GBI-EM yield) 7.03 6.52
Currencies Current Jun-22 Sep-22 Dec-22 Mar-23
expect global refinery throughput to increase 2.6 mbd yoy in JPM USD Index 129 130 131 132 132
2022, matching the increase in global oil demand. While we EUR/USD 1.04 1.02 1.00 1.01 1.02
think this pace of runs is sufficient to stop draws from global USD/JPY 129 130 131 132 133
diesel inventories, diesel stocks are unlikely to recover to GBP/USD 1.22 1.18 1.14 1.15 1.16
AUD/USD 0.69 0.69 0.71 0.73 0.75
normal levels before the end of the year. If global refiners are USD/CNY 6.80 6.85 6.90 6.95 6.95
unable to increase runs, the market will be left with only one USD/KRW 1284 1270 1290 1310 1330
balancing tool: further demand destruction. USD/MXN 20.19 20.90 21.20 21.40 21.60
USD/BRL 5.12 5.00 5.20 5.30 5.30
USD/TRY 15.47 16.50 17.50 18.50 19.50
Even as Brent prices fell from highs, fuel prices have re- USD/ZAR 16.22 16.00 16.25 16.50 16.75
mained high. A combination of low inventory levels, low Commodities Current Jun-22 Sep-22 Dec-22 Mar-23
refining capacity, and still-recovering demand drove fuel Brent ($/bbl, qtr end) 111 104 104 101 95
WTI ($/bbl, qtr end) 109 101 101 98 91
prices up with crude oil in late February and up further since Gold ($/oz, qtr avg) 1,805 1,850 1,800 1,720 1,670
then. Last week, US diesel fuel inventories fell to their lowest Copper ($/ton, qtr avg) 9,105 10,650 10,000 9,750 9,400
levels in 17 years while Gasoil inventories in Europe are near Aluminum ($/ton, qtr avg) 2,712 3,550 3,300 2,900 2,850
Iron ore (US$/dt, qtr avg) 131 150 140 125
the lowest levels in more than a decade. With supply from Wheat ($/bu, qtr avg) 11.7 15.0 14.0 12.0 11.5
Russian refiners off-limits for European consumers, insuffi- Soybeans ($/bu, qtr avg) 16.3 18.5 17.0 16.0 15.5
cient local capacity and the US and Canada unlikely to bridge
Credit Current Dec-22
the diesel supply gap, European refiners need to look to other
US High Grade (bp over UST) JPM JULI 168 125
regions. If Middle East refiners can shift some of their 300- Euro High Grade (bp over Bunds) iBoxx HG 188 175
400 kbd of Asia-bound diesel flows toward the Atlantic, they US High Yield (bp vs. UST) JPM HY 513 350
may be able to keep European and US East Coast fuel mar- US Lev Loans (bp vs. 3Y Index) JPM Lev Loans 551 380
Euro High Yield (bp over Bunds) iBoxx HY 551 525
kets from drifting further into crisis. In China, cuts to fuel EM Sovereigns (bp vs. UST) JPM EMBIGD 474 350
export quotas limit the country’s ability to deliver the fuel the EM Corporates (bp vs. UST) JPM CEMBI 343 260
rest of the world needs (Oil Weekly May 13). Source: J.P. Morgan, Bloomberg Finance L.P., Datastream
Base metals prices have hit a China-sized air pocket but

we still see a summer rebound in the offing. We foresee
prices eventually averaging back at these levels next year, but
in the shorter term the selloff will likely reverse as an eventual
rebound in Chinese demand once again stresses markets with
relatively little buffer. China COVID lockdowns and the
11
J.P. Morgan Securities plc Economic Research
Raphael Brun-Aguerre (44-20) 7134-8308 Euro area: Tracking consumer oil
raphael.x.brun-aguerre@jpmorgan.com prices
May 13, 2022
Economic Research Note Small size, strong impact

Euro area: Tracking consumer Energy represents only 11% of the Euro area inflation basket,
but due to large swings in energy prices, this component is a
oil prices very important driver of headline inflation (Figure 2). Since
the start of 2021, energy prices have been responsible for
 Models have failed to track consumer oil prices on some most of the rise in headline inflation.
occasions
The energy price basket has two main components. The first
 We present interesting EC weekly price data that are relates to oil prices and includes fuels for transport and heat-
useful to track HICP oil components ing oil for housing, which we focus on in this note. The sec-
 These data point to a significant price decline in April, ond comprises gas and electricity prices, a topic we have al-
followed by a decent rebound in May ready covered extensively.
 Beyond the near term, we expect Euro area energy price Together, fuel for transport and heating oil prices represent
inflation to decline sharply and turn negative in 2H23 about 5% of the HICP basket and about half of the energy
basket. More specifically, fuel for transport represents 4.4%
Energy prices have been the main driver of headline inflation of the HICP basket while heating oil represents 0.7% of the
since 2021. And within energy prices, oil prices have played a HICP basket. Both are strongly correlated with Brent prices.
significant role. Historically, there has been a tight relation- Figure 2 shows that the price of Brent of is a significant driv-
ship between the price of Brent and HICP fuel prices (for ers of energy price inflation. Since the autumn, a significant
transport and heating), but in the last two years this relation- portion of energy price inflation is not explained by Brent.
ship has been challenged: our model suggested larger swings This part is linked to the rise in gas and electricity prices.
in consumer fuel prices than actually occurred after the start
Figure 2: Euro area HICP energy prices and Brent prices
of the COVID-19 pandemic and then failed to capture the
2015=100 €/barrel
strong increase seen in March this year. Going forward, this
relationship also will not capture consumer price changes 160 150
Brent 130
linked to lower taxes and excise duties as governments try to HICP energy
140 110
offset higher Brent prices for consumers. As an alternative to
our model to track HICP prices, we present useful weekly 90
120
data from the European Commission (EC). These data cover 70
transport fuel and heating oil prices and hint at a significant 100 50
price decline in April followed by a modest rebound in May. 30
Beyond this near-term tracking, Brent futures are downward 80 10
sloping, as are gas and electricity futures in the coming quar- 15 16 17 18 19 20 21 22 23
Source: Eurostat, EIA, J.P. Morgan
ters. We thus expect headline inflation to decline sharply go-
ing forward (Figure 1). In our view, energy price inflation will
turn negative in 2H23 and will bring headline inflation below We can model the oil-related component of the HICP energy
2%. basket with the price of Brent. To do so, we aggregate
transport fuel prices and heating oil in our analysis and re-
Figure 1: Euro area inflation forecast gress its %m/m changes on Brent prices (also %m/m, with
%oya %oya some lags). This model normally does a very good job of
10 50 explaining monthly price changes in oil-related HICP energy
8 40 components (Figure 3). But this relationship has been chal-
Headline
Energy 30 lenged in the last two years. At the time of the COVID out-
6
20 break the model suggested larger swings in consumer oil pric-
4 es than actually occurred because consumer prices include tax
10
2
0
and excise duties―a sticky component. In March this year,
0 -10
the model failed to capture the jump in heating oil prices
(concentrated in Germany).
-2 -20
15 16 17 18 19 20 21 22 23
Source: Eurostat, J.P. Morgan
12
Raphael Brun-Aguerre (44-20) 7134-8308 Global Data Watch
raphael.x.brun-aguerre@jpmorgan.com May 13, 2022
Figure 3: Euro area oil-related HICP energy Figure 4: Consumer prices: fuel for transport
%m/m (aggregate of fuel of transport and heating oil prices) %m/m
20 Actual 20 HICP
15 EC weekly prices
Model 15
10
10
5
5
0
0
-5
-10 -5
-15 -10
15 16 17 18 19 20 21 22 23 19 20 21 22
Source: Eurostat, J.P. Morgan Source: Eurostat, EC, J.P. Morgan
Figure 5: Consumer prices: heating oil

Going forward, the model also won’t be able to pick up con- %m/m
sumer price changes linked to government measures. Gov- 45 HICP
ernments are offsetting the rise in the price of Brent by reduc-
35 EC weekly prices
ing taxes and excise duties on fuel for transport prices. In
Germany, the impact of the measures is a 25-cent decline in 25
fuel prices for transports between June and September. The 15
decline represents 30 cents between April and June in Italy 5
and 20 cents over the same period in Spain. In France, the
-5
government provided a rebate worth 18 cents between April
and July. -15
19 20 21 22
Source: Eurostat, EC, J.P. Morgan
EC weekly prices help track inflation
An alternative to our Brent-based model is to use weekly data Overall, the 2Q weekly fuel prices and heating oil prices so
for fuel for transport and heating oil prices published by the far stand 40.6%ar and 103.1%ar above their 1Q levels. The
European Commission (Figures 4 and 5). These prices include data thus hint at still-significant price pressure in 2Q, but less
tax and excise duties decided at the government level and so than in the first quarter when price increases were 63.1% ar
correlate nearly one-to-one with monthly consumer prices. and 187.0% ar, respectively. We expect these price pressure
For April, these data suggest that HICP fuel for transport and to continue to fade.
heating oil prices are set to decline significantly (by 5.0% and
9.5%, respectively). The official April HICP details will be Energy to turn into a drag next year
available next week for comparison. Data are also already
Market energy prices have jumped in recent months but fu-
available for the first two weeks of May. So far, these data
tures prices generally hint at lower prices ahead (Figures 6
hint at a decent rebound this month (2.1% and 4.1%, respec-
and 7). Our forecast assumes that the price of Brent will aver-
tively). Instead, our model suggests that oil-related HICP (the
age close to US$104 in 2H22, broadly in line with market
aggregate transport fuel prices and heating oil) would have
prices. We then expect it to slip to US$97.5 next year (vs.
increased by 1.9%m/m in April and a further 1.4%m/m in
US$93.2 according to market participants). We expect gas
May. The model thus missed the April decline, linked to the
prices to move down from €110/Mwh for the rest of this year
implementation of government measures for fuel for transport
to €90/Mwh next year. We assume that electricity prices will
and the payback after the strong heating oil price increase in
average €210/Mwh for the rest of the year and will come
March.
down to €170/Mwh next year. Market prices for gas (about
€103/Mwh in 2H22 and €80/Mwh in 2023) are lower than we
assume, but market prices for electricity (about €253/Mwh in
2H22 and €229/Mwh in 2023) are higher than we assume
after their recent increase.
Overall, we expect the price pressure coming from energy

commodities to fade sharply in the coming quarters. As a re-
sult, we expect HICP energy price inflation to decline sharply,
from 39%oya in 2Q22 to close to 0% in 2Q23. In 2H23, we
13
Raphael Brun-Aguerre (44-20) 7134-8308 Euro area: Tracking consumer oil
raphael.x.brun-aguerre@jpmorgan.com prices
May 13, 2022
expect HICP energy price inflation to average -6.5%oya,

which will be a significant drag on headline inflation. In our
view, headline inflation will gradually decline to a level be-
low 2% in 2H23.
Figure 6: Commodity prices

US$/barrel, shaded area is forecast €/Mwh
120 Gas 350
100 Electricity 280
80 Brent 210
60 140
40 70
20 0
2019 2020 2021 2022 2023
Source: Bloomberg Finance L.P., J.P. Morgan
Figure 7: Brent and oil-related HICP

US$/barrel 2015=100
120 Brent 160
100
140
Oil-related HICP
80
120
60
100
40
20 80
2019 2020 2021 2022 2023
Source: Eurostat, Bloomberg Finance L.P. J.P. Morgan
14
Marco Protopapa (44-20) 7742-7644 Global Data Watch
marco.protopapa@jpmorgan.com May 13, 2022
Economic Research Note Figure 2: Spain - GDP components
Spain: Consumption weakness 4Q19 = 100, shaded area shows forecast
remains a key concern 100

Capex
 Spanish growth has been disappointing since COVID, GDP

with domestic demand weakness leaving open questions
90
 Capex has rebounded smartly, but consumption re-
mains puzzlingly weak, despite solid labor markets Consumer spending
 A deep consumption contraction in 1Q22 aligns with a 80

hefty impact from energy-related income shock 2019 2020 2021 2022
Source: INE, J.P. Morgan
 But policy supports and a solid tourist season are likely
to support a gradual recovery from the spring This underperformance looks even more striking compared to
the other major Euro area economies (Figure 3), even dis-
Spanish macroeconomic data have been puzzling for quite counting some weakness in the yet-to-be-released GDP de-
some time. In particular, consumption remains stubbornly tails for Germany and Italy. And, one should bear in mind that
weak, despite a sharp labor market recovery. Downside risks Spain’s COVID restrictions have been on the light end of the
to growth seem balanced by recent news about a step up in spectrum by regional norms during 1Q22, and certainly much
fiscal policy measures. laxer than those in the other largest economies of the region.
Upward revisions to the past data are possible, but we doubt
The consumer remains downbeat, while in- that they would be large enough to change the existing picture
substantially (imports were also notably weak in 1Q22).
vestment spending rebounds smartly
Since the beginning of the pandemic, Spain has stood out as Figure 3: Euro area consumption recovery
an isolated laggard in the Euro area, mostly due to its under- 100 = 4Q19
Germany France
whelming growth performance following the reopening pro- 100
cess in the spring of 2021 (Figure 1). Our key concern was a
puzzling weakness in Spanish domestic demand, both con- 95
sumption and capex (Figure 2). We expected that over time 90
these issues would be resolved, by a combination of a faster
85 Italy
catch-up and possible upward revisions to earlier data.
80 Spain
Figure 1: Euro area GDP France
4Q19=100, shaded area shows forecast 75
2019 2020 2022 2023
105 Source: Eurostat, J.P. Morgan
Germany
100
Following deep downward revisions to account for the impact
95
of the war in Ukraine, our growth outlook for Spain in 2022
90 already discounts consumption weakness through the end of
85 Spain Italy the year. In particular, we project a flat 4Q/4Q profile, but
even that hinges on some recovery starting from the spring. In
80 fact, we expect the key growth driver to be capex, which is set
2019 2020 2021 2022
Source: Eurostat, J.P. Morgan to benefit from large EU-sponsored recovery fund resources
(worth about 2% of GDP). However, if consumption weak-
However, with the recently released 1Q22 data at hand, it is ness in the next months were to extend beyond our already
apparent that only capex has conformed to our expectations, subdued expectations, that would raise significant downside
rebounding sharply in recent quarters. By contrast, after an risk over growth in 2H22, and arguably beyond.
outsized 14%ar decline in 1Q22, household spending has
plunged to about 10%-pts below its pre-pandemic norm and Fiscal policy to the rescue
on par with end-2020—a time when COVID mortality was With an arguably modest Omicron impact, the recent weak-
elevated and associated restrictions were tighter, in the wait ness of Spanish private spending in 1Q22 looks very much
for the deployment of the vaccination campaign. related to the energy-price-driven inflation shock unleashed
15
Marco Protopapa (44-20) 7742-7644 Spain: Consumption weakness
marco.protopapa@jpmorgan.com remains a key concern
May 13, 2022
by high oil and gas prices. While this shock affected all of the sessment: (i) a ramp up in policy measures since April (in-
Euro area, it likely had a more adverse effect on consumption cluding fuel subsidies), especially a planned cap that should
in Spain due to an earlier and larger inflation shock (Figure stabilize electricity prices at about 50%-60% of the recent
4), arguably amplified by a sluggish fiscal response, that came peaks (Figure 6; the electricity price shock has been mostly a
on top of an incomplete recovery in income. We estimate that Southern Europe peculiarity), (ii) the fact that inflation is ar-
higher inflation pushed real household disposable income guably near the peak and set to fall significantly as a result of
around 6%-pts lower in 1Q22 versus 4Q19. policy measures, and (iii) an expected strong recovery of tour-
ist flows in the forthcoming holiday season, which is likely to
Figure 4: Euro area HICP headline inflation rebuild confidence in an economy very dependent on seasonal
%oya nonresident spending.
Germany
10
9 France Figure 6: HICP electricity prices
8 Italy Italy
7 Jan 2021=100
6 Spain
200 Spain
5
4 180
France
3 160
2 Germany
1 140
0 120
-1
2018 2019 2020 2021 2022 2023 100
Source: Eurostat, J.P. Morgan 80
602019 2020 2021 2022 2023
More puzzling has been the breakdown of the usually tight
relationship between consumption and hours worked (Figure Source: Eurostat, J.P. Morgan
5). Until 1Q21, the decoupling between these series was un-
derstandable on account of excess savings, both forced (due to An alarm bell for the rest of the region?
COVID restrictions) and precautionary (due to uncertainty While the persistent weakness in Spanish household spending
about the speed of normalization of the economy). And it partly reflects idiosyncratic factors, the deep contraction in
seems quite likely that the diverging trend in 1Q22 (consump- 1Q22 consumption in Spain also sounds a warning signal for
tion contracting sharply in the face of a strong pickup in em- the rest of the region, given that the inflation shock material-
ployment) is a stark reminder of the intensity of the income ized slightly earlier in Spain. There is a risk that Euro area
shock due to energy inflation. However, the gap did not show consumption weakness may stretch well into the current quar-
any signs of closing during 2021, when the economy’s pro- ter. Plunging consumer confidence prints align with that, alt-
spects brightened and COVID restrictions eased. This inabil- hough the drop was much more pronounced in Spain than
ity of private spending to rise in line with labor market devel- elsewhere (Figure 7). The relaxation of COVID restrictions in
opments even in good times is a key risk to the outlook, espe- Germany, France, and Italy should provide an offset by sup-
cially as financing conditions are set to tighten in the next porting spending in high-contact services (possibly on the
quarters. back of accumulated excess savings). In this sense, it will be
important to see whether the PMI sustains the services lift
Figure 5: Consumption and hours worked seen in April through the rest of the quarter.
4Q19 = 100 Hours worked
100 Figure 7: Euro area consumer confidence
Balance, sa
95
0
90
GDP Germany
85 Household -10
consumption France
80
75 -20 Italy
2015 2016 2017 2018 2019 2020 2021 2022
Source: INE, Eurostat, J.P. Morgan
Spain
-30
2020 2021 2022 2023
At this stage, we remain confident that the trend will improve
from the spring onwards. Three main factors inform our as-
16
JPMorgan Securities Japan Co., Ltd. Economic Research
Hiroshi Ugai (81-3) 6736-1173 Global Data Watch
hiroshi.ugai@jpmorgan.com May 13, 2022
Economic Research Note nese government is also discussing how to increase plants’
capacity utilization rates while ensuring that operations are
Japan: Restarting nuclear both safe and sustainable.
power could ease high energy Figure 1: Share of electric power generation
costs % of total electricity generated

Hydropower Thermal power
 Japan imports most of its energy needs, and likely will Nuclear power New energy power etc.
2010 2021
incur high energy costs due to Russia’s invasion of
Ukraine
 Japan has cut nuclear power generation significantly
since the Great Earthquake in 2011; restarting plants
could take considerable time
 Restarting idle nuclear power plants more quickly could Source: Agency for Natural Resources and Energy
reduce energy costs, though not by much

 This could replace LNG imports from Russia, but in- Around 80% of nuclear plant capacity is idle
creases the current account surplus by only 0.3% of GDP In Japan only seven nuclear plants are active, meaning around
 Restarting nuclear power generation would not be a 80% of total nuclear capacity is idle (Figure 2). If the Japa-
panacea, requiring the government to present a credible nese government accelerates the restarting of plants that are
strategy for using renewable and nuclear energy operable but currently inactive, permitted but not yet operable,
and under examination, the country’s electricity-generating
electricity capacity will grow significantly. If plants that have
Russia’s invasion of Ukraine has revealed the vulnerability of not yet applied are also quickly approved, capacity will grow
Japan’s energy security to external shocks. Japan produces only even more (Figure 2). Given that the nuclear plants can oper-
11.8% of its primary energy supply, the second-lowest percent- ate for a maximum of 60 years, the total capacity for generat-
age among OECD countries. Japan is also vulnerable in that its ing electricity would peak in 2030 then decrease to zero by
renewable energy is more than twice as costly as global average. 2090 unless new plants are constructed.
In the past, one of Japan’s main energy sources was nuclear
power. However, the country shuttered many of its plants after Figure 2: Outlook for installed capacity of nuclear power plants
the Great Earthquake in 2011, greatly reducing the amount of MW
Japan’s energy supply produced by nuclear power (Figure 1). 40,000
35,000
After the earthquake, electric power companies decommis- Unapplied
30,000
sioned 24 of the country’s 60 operable nuclear reactors. Now, 25,000 Inactive/permitted/
the Japanese government’s latest Strategic Energy Plan aims to 20,000 under examination
increase the share of nuclear power in the country’s energy 15,000
supply to 20%-22% by FY2030, which could reduce the power 10,000
generating cost and the risk of an energy supply shortage. Ten 5,000 In operation
0
plants have been restarted but three of those are currently inac- 2021 2030 2040 2050 2060 2090
tive; 17 are in various stages of the approval process with the
Source: Agency for Natural Resources and Energy
Nuclear Regulatory Authority, and the remaining nine are
dormant. However even at the plants now operating, capacity
utilization rates are lower than before. If this trend continues,
even the government’s 2030 target may not be realistic.
Quite recently, the government announced that it will try to

shift to a swifter restart of nuclear power plants. In this note,
we provide a rough estimate of Japan’s potential maximum
nuclear power generation and examine to what extent Japan
could reduce energy costs and increase the current account
surplus by swiftly and efficiently restarting all idle nuclear
power plants. For simplicity, our simulation assumes this will
be achieved this year, though that is not realistic. The Japa-
17
Hiroshi Ugai (81-3) 6736-1173 Japan
Cost sav- Share of

Figure 3: Plans for energy supply-demand conditions Cost, ing by trading
Share of
Fossil-fuel power Hydrogen/ammonia GWh nominal
% JPY/kWh nuclear gains/losses,
GDP, %
JPY bn %
Nuclear power Renewable energy
100 1. Restart of plants stopped/permitted/under examination (Case 1)
Nuclear 124,812 1.7 - - -
80 Oil 16.8 263 2.8 0.05
60 LNG 11.3 1,193 12.6 0.22
Coal 11.8 1,266 13.3 0.23
40
2. Restart of all plants (Case 2)
20 Nuclear 182,628 1.7 - - -
0 Oil 16.8 263 2.8 0.05
2010 2020 2030 LNG 11.3 1,746 18.4 0.32
Source: Agency for Natural Resources and Energy Coal 11.8 1,852 19.5 0.34
Note: Share of trading gains/losses and nominal GDP are as of 4Q21.
Source: Agency of Natural Resources and Agency, MoF, J.P. Morgan estimates
However if this extent of reopening is not realized, the gov-
ernment is unlikely to meet its FY2030 (year ending March
2031) target to bring the share of nuclear power generation in Restart could reduce LNG imports from
the energy supply from the current 6% to 20%-22% (Figure 3). Russia, but with limited impact on current
Thus with Russia’s invasion of Ukraine as a catalyst, Prime
account surplus
Minister Kishida and the LDP are seeking to accelerate the
examination and approval process. Our next focus is to what extent restarting nuclear power plants
could reduce energy imports from Russia. Currently, 8.7% of
Cost savings of nuclear power plant restart Japan’s LNG imports, 9.7% of its coal imports, and 3.7% of its
could mitigate trading losses, but macro oil imports come from Russia. The government has stated that
Japan will ban oil imports from Russia, but has not announced
impact would be small a schedule for doing so. If the war in Ukraine continues, Ja-
Here we estimate the benefits of restarting nuclear power pan’s government may also consider banning imports of LNG
plants for Japan’s economy. Assuming all currently inactive and coal from Russia. The restart of all inactive, permitted, and
plants, permitted plants, and plants under examination are under-examination nuclear power plants (Case 1) could substi-
restarted (Case 1), the additional capacity for electricity gen- tute for all LNG imports from Russia (Table 2). The restart of
eration could reduce costs by substituting thermal power gen- all plants including those that have not yet applied for permits
eration for using LNGs or coal. The substitution effect for (Case 2) could substitute for all coal imports from Russia. Ja-
using oil would be small because Japan relies little on oil giv- pan cannot substitute oil imports from Russia, but its electric
en its high cost and Japan’s focus on clean energy policy. power companies rely on only marginally on oil thermal power
generation. All these suggest that restarting its nuclear power
In Japan, reflecting the rise in import costs, the terms of trade plants would be enough for Japan to build a sufficient energy
has deteriorated, which can be captured by trading gains/losses supply structure without relying on Russia, if needed.
defined by the difference between real gross domestic income
Table 2: Reduction of fossil energy imports
(the purchasing power of total income generated by domestic
Share of imports, %
production) and real GDP. The restart of nuclear power gen-
Reduction of each import Imports from Russia
eration would save 13% of the trading losses of 4Q21 (annu-
1. Restart of plants stopped/permitted/under examination (Case 1)
alized) if they substitute thermal power generation for using
Oil 1.1 3.7
LNGs or coal (Table 1). Since this estimation is based on the
LNG 11.1 8.7
CIF prices in March, its cost saving effect may increase this Coal 8.5 9.7
year, while the trading losses will also grow. If even nuclear 2. Restart of all plants (Case 2)
power plants that have not yet applied for approval are also Oil 1.1 3.7
restarted (Case 2), Japan could expect to save 18%-19% of the LNG 16.2 8.7
trading losses by substituting for LNGs or coal. Coal 12.4 9.7
Note: Each column shows the share of 2021 import results.
That said, this cost savings would be small, making up only Source: Agency of Natural Resources and Energy, MoF, J.P. Morgan estimates
0.3%-0.4% of nominal GDP (Table 1). However, since its impact on the macroeconomy would be
Table 1: Cost saving by restart of nuclear plants small, substituting nuclear energy for LNG imports would
increase the current account balance (as a % of GDP) from
2.1% in the baseline outlook in 2022 to 2.3% in Case 1 or
18
2.4% in Case 2 (Figure 4). This would not be enough to sig-

nificantly affect the JPY rate.
Figure 4: Current account simulation by restarting nuclear plants

% of GDP, shading shows JPM forecast
5 Case 2 for
LNG imports
4
1 Case 1 for
LNG imports
0
05 08 11 14 17 20
Note:Case 1 is utilizing plants stopped/permitted/under examination while Case 2 is utilizing
all plants, while . Source: MoF, Cabinet Office, J.P. Morgan estimates.
Remaining challenges and implications for

the economy
If the unused nuclear plants are restarted promptly, this could
help mitigate the rise in imported energy costs, and Japan
could weather the potential ban on primary energy imports
from Russia, all of which would be positive for Japanese
economy. That said, the impact on the overall macroeconomy
and the current account balance would be small and thus have
little impact on the JPY.
The simulation in this note assumes that the entire process of

restarting the nuclear plants will be largely accelerated. If the
current process continues, potential total nuclear capacity may
not be realized in time for the government to meet its energy
supply targets for FY2030. While the Nuclear Regulatory
Authority’s rigorous examination process is necessary, there
may be ways to accelerate that process and increase its effi-
ciency. It remains to be seen how the government’s more ag-
gressive position on restarting nuclear plants will affect the
review process. In addition, even if the plants are permitted,
there remain many hurdles, like getting the support of the
local communities, implementing periodic safety inspections,
and installing systems for responding to specific serious acci-
dents.
Nuclear energy alone will not solve all of Japan’s energy

problems. But in combination with the continued develop-
ment of renewable energy resources, it could anchor a con-
crete energy supply strategy that would help dispel the uncer-
tainty regarding the medium-term supply shortage of energy.
19
JPMorgan Chase Bank, N.A., Singapore Branch Economic Research
Sin Beng Ong (65) 6882-1623 EM Asia: It's getting hot in here
sinbeng.ong@jpmorgan.com May 13, 2022
Nur Raisah Rasid (65) 6882 7375
raisah.rasid@jpmorgan.com
Economic Research Note covery this year. This non-goods recovery forms the basis for
the rise in core inflation that we think will have legs to run
EM Asia: It's getting hot in here beyond the inflection in headline inflation.
 We expect EM Asia’s goods and non-goods sectors to Figure 1: EM Asia ex CN GDP
converge after period of COVID-related decoupling %2q/2q,saar
Goods
 Global capex in focus for the goods sector, with slowing 30
Overall
expected as goods output returns to earth 20
 Core inflation to follow non-goods recovery, interplay 10
between supply, demand, and diminishing slack is key
0
 Central banks expected to focus on core CPI, which has
-10 Non-goods
upside risk, even as headline inflects around midyear
-20
10 13 16 19 22
In EM Asia, the 2022 expansion marks an unusual departure Source: National sources and J.P. Morgan forecasts in shaded area
from past recoveries, with anticipation of easing in goods out-
put and firming in the non-goods sector as the region moves
toward an endemic equilibrium. We expect that this growth Figure 2: Global capex nowcaster and EM Asia exports
convergence will create atypical conditions whereby slowing %6m/6m, saar %6m/6m, saar, US$ terms
external demand will be met with rising and broadening infla- 36 Global capex 45
tionary pressures. 21
nowcaster 30
15
Even though we have penciled in some easing in headline 6
0
inflation around the middle of the year as energy prices stabi- -9
lize, we expect that core inflation could continue to rise over -15
-24 y=2.61 + 1.59*x
much of this year. Specifically in focus is that the inflation R-sq=0.65,StdErr=9.25 EM Asia exports -30
process over the next two quarters represents the intersection -39 -45
of factors not seen since 2007/2008: the ongoing passthrough 06 08 10 12 14 16 18 20 22
from a broad-based rise in commodity prices, still-elevated Source: National sources and J.P. Morgan
household savings rates, and a recovery in incomes as the

region embraces reopening. We believe that we are in the Figure 3: EM Asia exports and ADXY
early stages of the conjuncture of these developments. And %6m/6m, saar, US$ terms %6m/6m, ar
the risk is that core inflation could continue to surprise to the 67
y=-1.73 + 0.25*x
15
EM Asia exports R-sq=0.63,StdErr=2.98
upside and central banks may have to move beyond our fore-
10
casts. 39
5
11 0
An unusual cyclical recovery; goods cool- -5
-17
ing, services heating up -10
-45
The cyclical profile that we anticipated is broadly progressing ADXY -15
as expected, with goods output easing and non-goods activity -74 -20
firming as the region moves to an endemic posture (Figure 1). 06 08 10 12 14 16 18 20 22
Source: National sources and J.P. Morgan
With the nonmanufacturing sector accounting for around 75%
of activity, we expect the reopening dynamic to offset at least
in the near term—and barring a goods recession—the antici- Inflation and central banks on the move
pated easing in goods output. Already, the slowing in the Recent revisions to both headline and policy rates have been
global capex nowcaster is evident in the rolling off of EM biased to the upside (Figure 4), except in Mainland China and
Asia’s exports from very elevated levels last year, and curren- Hong Kong, likely on account of the zero-tolerance COVID-
cy movements are resonating with these developments (Fig- 19 policy spilling over into domestic activity. Within the re-
ures 2 and 3). How much more capital spending decelerates gion, the policy rate forecast revisions have not been focused
remains to be seen but suffice to say, a repeat of last year’s so much on the economies where inflation revisions have
gangbuster gains is unlikely. Instead, we expect domestic ac- been highest—Singapore and Thailand—but in economies
tivity especially in the services sector to drive the growth re- where inflation is surpassing the upper bound of the inflation
20
Sin Beng Ong (65) 6882-1623 Global Data Watch
target ranges—India, Korea and the Philippines—while in into our thinking around central bank reaction functions and
Singapore, the MAS has surprised the markets hawkishly with core inflation elevated, we expect central banks to con-
(Figures 5 and 6). Taiwan’s CPI inflation has also surpassed tinue hiking even as headline CPI peaks (Figure 8).
the central bank’s medium-term comfort zone of 0-2% though
the recent rise in COVID-19 cases could temporarily slow the Figure 7: EM Asia headline and core CPI
move up in core prices. Standing out in the region, the Bank %oya, equal weighted
of Thailand has reiterated that it will look through the rise in 5
inflation. 4 Headline
3
Figure 4: EM Asia CPI and policy rate forecast revisions
Index, both scales 2
Core
102 96 1
CPI 0
100 Policy rate
95
-1
98 12 13 14 15 16 17 18 19 20 21 22
94 Source: National sources and J.P. Morgan forecasts in shaded area
96
93
94
Figure 8: EM Asia core CPI and policy rate
92 92 %oya and %p.a., eop, equal weighted
13 15 17 19 21 23
5 Policy rate
Source: National sources and J.P. Morgan
4
Figure 5: EM Asia CPI and policy rate forecast revisions 3
Change, year-to- May 5
2
5 Headline CPI Policy rate
4 1
Core CPI
3 0
12 13 14 15 16 17 18 19 20 21 22
2 Source: National sources and J.P. Morgan forecasts in shaded area
1
0 This is where the inflation readings over the next few months
-1 will be critical in calibrating the degree of policy tightening,
SG TH KR IN ID PH MY TW CN which we currently expect to progress in a relatively unhur-
Source: National sources and J.P. Morgan ried manner. And depending on the incoming core inflation
prints, the pace and extent of hikes could well be revised
Figure 6: EM Asia central bank inflation targets higher, as has recently occurred in India, Korea, and Malay-
%p.a., blue bars denote central bank inflation target range sia.
8
Latest A conjuncture of factors that could bias up
6 Dec 21 core inflation
4
Mechanistically, we think of core inflation as a two-stage pro-
cess, the first reflecting the trend in input prices, or upstream
2 prices, as captured in commodity prices. Upstream price pres-
sures then pass through into final prices via a markup, which
0 reflects, among other things, labor market slack and demand
IN PH KR TH ID CN conditions. In this context, the current set of conditions have
Source: National sources. KR and CN adopt medium-term average point targets
little precedent in the past decade.
Core in focus even as headline ebbs For a start, commodity price inflation is the broadest and
We expect headline CPI to inflect around midyear, but that highest in over a decade and is imparting a material lift to
core inflation readings through this year will remain sticky upstream producer prices, effectively reversing the period of
(Figure 7). This focus on core inflation has been a key input margin expansion that had run for a good part of the past dec-
21
Sin Beng Ong (65) 6882-1623 EM Asia: It's getting hot in here
ade (Figures 9 and 10). A simple margin proxy of the PPI-CPI Figure 12: EM Asia ex CN/IN PPI/CPI passthrough
passthrough suggests a degree margin compression and thus Coefficient of passthrough, PPI to CPI
ongoing buildup of latent price pressures that has not been 2.0
seen since 2010 (Figure 11). Dec. 2006-Jul. 2008
1.5 Dec 2009 - July 2012
Figure 9: Commodity price index and breadth
%oya % of index above 2-year moving average Dec. 2020 to Mar. 2022
1.0
50 Change 100%
Diffusion index
0.5
80%
25
60% 0.0
0 ID KR MY PH SG TH TW
40% Source: J.P. Morgan
-25
20%
Figure 13: EM Asia-51 employment income and core CPI
-50 0%
%oya, both scales, local currency terms, equal weighted
06 08 10 12 14 16 18 20 22
Source: Bloomberg Finance L.P. 12 Employment income, 4
advanecd 2-quarters
9 Core CPI 3
Figure 10: Commodity prices and EM Asia ex CN/IN PPI
6 2
%oya, both scales y=2.48 + 0.21*x
R-sq=0.59,StdErr=3.4 3 1
85 20
15 0 0
51 PPI
10
17 5 -3 -1
06 08 10 12 14 16 18 20 22
-17 0 Source: National sources; 1. HK, KR, SG, TH, TW
-5
-51
Commodity price index -10 These pricing developments are interacting with a broadening
-85 -15 cyclical recovery that is already evident in labor incomes and
06 08 10 12 14 16 18 20 22
Source: National sources core inflation (Figure 13). Notably, labor vacancy rates in
Korea and Singapore, where the economic structures are dis-
similar, are well above pre-COVID levels and speak to a
Figure 11: EM Asia ex CN/IN margin proxy growing tightness in labor markets in recent months (Figure
Ratio, CPI/PPI, 2010=1, sa 14).
1.20
Figure 14: Korea and Singapore labor vacancies
1.15
Ratio, vacancies/unemployed, sa, both scales
1.10
0.30 2.5
1.05
Korea
0.25
1.00 2.0
0.95 0.20
1.5
0.90 0.15
06 08 10 12 14 16 18 20 22
1.0
Source: National sources 0.10
Singapore
0.05 0.5
Upstream prices meet tightening labor 2018 2019 2020 2021 2022 2023
Source: National sources
markets and elevated savings rates
Moreover, the current coefficient of passthrough from PPI to While incomes should continue to rise in line with the recov-
CPI inflation remains below those of prior expansions in ery this could also interact with elevated household savings,
much of the region, except in Indonesia and the Philippines, which we proxy via household deposits, and remain above the
suggesting that there could be further passthrough from up- average of the pre-COVID decade (Figure 15). This rise in
stream to downstream prices (Figure 12). deposits is evident across countries, and generally higher in
22
Sin Beng Ong (65) 6882-1623 Global Data Watch
the more developed countries, and could reflect a combination sumer prices is more complete, which we expect to coincide
of precautionary savings and fiscal transfers (Figure 16). with some stabilization in labor market conditions.
Whether the expected winding down of accrued savings acts
on consumer prices via firming consumer demand or via Figure 17: EM Asia-41 food prices
higher labor reservation wages—with savings providing an %3m/3m, saar, equal weighted
intertemporal income buffer—remains to be seen. 15
Food services
Figure 15: EM Asia-41 household bank deposits 10
Food at home
2010=100, sa, avg., % of GDP Over year ago, %-pt.
130 15 5
2010-19 avg.
Index
Change
120 10 0
110 5
-5
100 0 06 08 10 12 14 16 18 20 22
Source: National sources; 1. KR, SG, TH, TW
90 -5
80 -10 Figure 18: EM Asia food services inflation

08 10 12 14 16 18 20 22 %3m/3m, saar
Source: National sources; 1. Simple avg. of ID, KR, MY, TW
25 Max. 2008 2010-2019 ave. Latest
20
Figure 16: EM Asia-41 household bank deposits
% of GDP, 4Q21 less 2010-19 average 15
6
10
5
4
0
TH TW KR MY SG
2 Source: National sources; 1. KR, TW, TH: April, rest March
0 In an environment in which the sequential path of food ser-

KR TW EM Asia-4 MY ID vices prices—given its proxy for core price-setting behav-
Source: National sources; 1. Simple avg. of ID, KR, MY, TW ior—continues on an uptrend, this would suggest that central
banks would maintain if not accelerate their tightening stanc-
Nonetheless, the anticipation of some normalization in sav- es.
ings back to the pre-COVID trend suggests that cost pressures
will rise, regardless of mechanism of transmission to consum-
er prices.
Food services a useful metric of pass-

through
In this regard, the sharp rise in regional food service prices,
which includes catering services and restaurants, is notable,
reaching rates not seen since 2008 (Figures 17 and 18).
This sub-index provides a useful nexus that incorporates sev-

eral pricing behaviors, including discretionary spending, sup-
ply-side factors, and ability of consumers to bear the cost
passthrough. We expect all of these factors to be in play over
the next few months and—barring a material slowing in
commodity prices or easing in labor market conditions—
could keep food service inflation elevated through 2Q22 and
likely 3Q22 until the passthrough of upstream prices into con-
23
Nur Raisah Rasid (65) 6882 7375 Malaysia:
raisah.rasid@jpmorgan.com May 13, 2022
Abbas Keshvani (65) 6801-3723
abbas.keshvani@jpmorgan.com
Economic Research Note goods in Malaysia, which arguably dulls the overall price sig-
nal. In that context, the NEER historically has exhibited broad
Malaysia: Monetary policy stability, barring periods of strong financial outflows as was
the case in 2015/16. Thus, despite the recent positive com-
management starts with growth modity tailwind, which in theory should raise the bias for the
 Bank Negara’s mandate is to maintain monetary system tightening in monetary conditions, the NEER has remained
stability through the NEER and OPR broadly stable year-to-date, despite there being appreciation
pressures as evidenced by strong accumulation in gross FX
 Monetary conditions have yet to tighten considerably as reserves (Figures 1 and 2).
its reaction function is guided by growth not inflation
Figure 1: Malaysia gross FX reserves and NEER
 NEER could remain broadly stable in the coming US$ bn Index, 2012=100
months despite further monetary policy tightening amid
150 Gross FX reserves 105
a cloudy external demand outlook
100
 The risk is that FX policy liberalization and CNY effect
130
could hinder appreciation in the NEER NEER 95
90
110
Bank Negara’s primary mandate is to maintain monetary sys-
85
tem stability through the nominal effective exchange rate
(NEER) and the overnight policy rate (OPR). We have noted 90 80
that this process is guided by growth rather than inflation, due 12 14 16 18 20 22
Source: BNM, J.P. Morgan
in part to the raft of price controls for basic consumer goods
that dulls the price signal. Despite recent external develop-
ments, which arguably will deliver positive spillovers onto the Figure 2: Malaysia trade balance
economy, this has yet to materialize in the tightening of mon- US$bn, nsa
etary conditions as the growth recovery remains incomplete 5 Commodity1
with the firming in goods activity amid the cloudy external 4 trade balance
demand outlook. In our view, achieving a firm footing for 3
2
domestic growth will be key to guiding the OPR path while 1
the bias around NEER levels hinges on the external demand 0
outlook. Thus, while Bank Negara continues on its path to- -1
-2 Others
ward more OPR hikes in 2H22, the NEER could remain -3
broadly stable in the coming months reflecting the downside -4
risk around the goods sector. 12 14 16 18 20 22
Source: DOS, J.P. Morgan. 1. Sum of net rubber, LNG, CPO and oil (crude & processed)
We expect the MYR to weaken against the US dollar into

year-end, in line with its peers in the region. First, loosened Looking ahead, a slowing in external demand amid the re-
export conversion rules will allow corporates to retain their bound in the non-goods sector implies that this recovery is
proceeds in dollars, resulting in a “phantom current account markedly different from previous post-crisis recoveries due to
surplus” that is not felt in FX. Second, dollar strength may the unusual decoupling of the goods and non-goods sector,
spur residents and foreign investors to pivot away from MYR which, in our view, could influence monetary policy man-
deposits and debt holdings respectively. Finally, the high sen- agement (Figure 3).
sitivity of the MYR to the CNY given the strong trade linkag- In our view, achieving a firm footing for domestic growth will
es is likely to remain a drag on the currency. On an NEER be key to guiding the OPR path while the bias around NEER
basis we expect stability to continue. levels hinges on the external demand outlook. In the past dec-
ade, we have observed that a material tightening occurs in the
Growth recovery remains key to BNM’s NEER levels ahead of the policy rate hikes (Figure 4). Evi-
monetary policy framework: NEER & OPR dent in this week’s surprise OPR hike, the NEER did not
Bank Negara’s primary mandate is to maintain monetary sys- tighten much from its COVID lows.
tem through control over the NEER and the OPR. In our
view, this process is primarily guided by growth rather than
inflation given the nature of price controls for basic consumer
24
Nur Raisah Rasid (65) 6882 7375 Global Data Watch
Figure 3: Malaysia GDP by sector Under the new rules, exporters have been converting less of
Index, sa, 4Q19=100 their export proceeds, but importers continue to demand dol-
115 Manufacturing lars. Unless BNM starts requiring greater conversion or an
exogenous factor spurs exporters to voluntarily convert more
110
of their proceeds, the MYR is unlikely to enjoy much support
105 from Malaysia’s robust export growth. A change in the export
100 conversion rules, tantamount to capital controls, would be
95 unlikely unless there is an emergency. But voluntary conver-
sion may come along next month, when we note a seasonal
90 Services Overall
drawdown in corporate FX deposits (Figure 6). Over a longer-
85
term horizon, continued NEER appreciation will require pro-
2019 2020 2021 2022
Source: DOS, J.P. Morgan forecasts in shaded region tracted voluntary conversion by corporates, for which there is
no clear driver at this stage.
Figure 4: Malaysia NEER and OPR Figure 6: Average monthly change in companies' FX deposits
Index, 2012=100 %p.a. USD bn
105 3.25 0.6
100 3.00 0.4

OPR
2.75 0.2
95
2.50 0.0
90
2.25 -0.2
85 NEER 2.00 -0.4
80 1.75 -0.6
12 13 14 15 16 17 18 19 20 21 22 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Source: BNM, Period 2012-2018 Source: Haver, J.P. Morgan
Dollarization is a drag on the MYR Aside from exporters hesitating on converting their proceeds,
dollarization could also play out in capital markets. In the past
The MYR has failed to benefit from the commodity rally due
we have observed a strengthening dollar has resulted in de-
to BNM management of the currency, corporates holding onto
positors in Malaysia rotating from local to foreign currency.
dollars, and the CNY effect. Although the central bank may
Indeed, the last Fed hiking cycle saw such a rotation play out
turn more tolerant of appreciation (in the NEER), the other
(Figure 7).
two factors remain a drag on the currency. In April last year,
Bank Negara liberalized its foreign exchange policy, relaxing
Figure 7: Malaysia deposits of business enterprises
the export conversion rule for resident exporters and permit-
MYR bn, change from year ago
ting domestic trade settlement in foreign currency with other
residents in the global supply chain. Since the change in the 70
60 LC deposits
rules, Malaysian companies’ FX deposits have increased sig- 50
nificantly, outpacing most of their peers in the region (Figure 40
30
5). 20
10
Figure 5: FX deposits in banking system 0
-10 FX deposits
Indexed to Jan 2019 level
-20
1.5 -30
1.4 2012 2014 2016 2018 2020 2022
1.3 Source: BNM, J.P. Morgan
1.2
1.1
1.0 Foreigner investors, faced with the double whammy of cur-
0.9 rency losses and higher yields, could react by reducing their
0.8
holdings of MYR debt. Again, we saw this happen during the
2019 2020 2021 2022
MYR THB PHP last Fed hiking cycle: foreign holdings of MYR debt reached
IDR KRW TWD a low of US$40.3bn in March 2017 (the low point of hold-
Source: Haver, J.P. Morgan ings) from US$501.bn in December 2015 (the first hike). For-
25
Nur Raisah Rasid (65) 6882 7375 Malaysia:
tunately for the ringgit in 2017, a relatively healthy global

growth backdrop and the strengthening in CNY supported the
currency. Today’s macro backdrop offers no such comfort and
therefore the depreciation-dollarization feedback loop could
be starker.
Malaysia is not the only country where exporters seem to be

holding onto their dollars. In China, de-anchored expectations
for the CNY have created a negative feedback loop whereby
corporates appear to be delaying selling their dollars, which in
turn weakens a source of support for the currency (see “China
Local Markets Monthly Outlook – April 22”). This has
knock-on effects for the MYR, which has one of the highest
sensitivities to the CNY in EM Asia. We conduct a sensitivity
analysis where we perform multivariate regressions of month-
ly currency changes against changes in the CNY and global
PMI (to control for growth conditions)—USDTWD,
USDKRW, and USDMYR exhibit the highest betas to
USDCNY (Figure 8). The good news for the ringgit is that its
weakness over this period has been commensurate with CNY
weakness, so the MYR is not vulnerable to “catch-up” weak-
ness, but it remains exposed to any further CNY weakness.
Figure 8: USDMYR has relatively high beta to CNY

Beta of USDXXX to USDCNY in 24 month regression
1.0
0.8
0.6
0.4
0.2
0.0
TWD MYR SGD KRW THB PHP INR IDR
Source: Bloomberg Finance L.P., J.P. Morgan; Note: X-variables expressed as Z-scores
26
Daniel Silver (1-212) 622-6039 Global Data Watch
daniel.a.silver@jpmorgan.com May 13, 2022
Michael Feroli (1-212) 834-5523
michael.e.feroli@jpmorgan.com
point over the next few years (Figure 1). However the eco-
United States nomic data still suggest that a recession over the next year is
 Core CPI surprised to the upside, with strong 0.6% unlikely.
April gain
Figure 1: Estimated probabilities of recession
 Jobless claims and SLOOS point to momentum loss Odds of recession starting over specified horizon
 Tightening financial conditions signal more moderation 100%

ahead 80% 4 years
 But we think April retail sales report will be strong, 60% 3 years
including 1.5% headline gain
40% 2 years
Data reports this week mainly focused on inflation. Most im- 20%
1 year
portantly, the April consumer price index (CPI) showed a 0%
stronger-than-expected 0.6% increase in core inflation during Jan 21 Apr 21 Jul 21 Oct 21 Jan 22 Apr 22
Source: Various sources, J.P. Morgan
the month. Not only was the core reading above expectations,
the core inflation firmness has shifted recently from goods to
services, with the services strength more likely to be persis- CPI strength now in core services
tent given the tightness in the labor market. The CPI increased 0.3% in April, a tick above the consensus
forecast and a tick below our own estimate. Away from the
Strong inflation has been a key factor pushing the FOMC to changes in food (0.9%) and energy (-2.7%), the core CPI in-
tighten policy and we think that strength in the April CPI creased 0.6% in April (0.569% to three decimals), beating
keeps pressure on the Committee to raise rates by 50bp at the expectations by two-tenths. While year-ago inflation rates
next two meetings. Comments from Powell on Thursday sig- moderated for both the headline and the core measures be-
naled his continued support for 50bp hikes at the next two tween March and April, they remained firm in the latest
meetings, consistent with his messaging from the May FOMC prints, with the headline at 8.3%oya and the core at 6.2%oya
press conference. (Figure 2).
Fed hikes are designed to tighten financial conditions and Figure 2: Broad CPI aggregates
financial conditions have responded accordingly. While the % change over 12 months
latest daily changes have varied, interest rates are noticeably 10 Headline Core
higher since the start of the year while the dollar has appreci- Trimmed mean Median
8
ated significantly and equity markets have dropped. Not as
clear is whether the tightening in conditions to date is more or 6
less than the FOMC desires and how the economy will re- 4
spond over time. For now, we see some downside risk to our 2
growth outlook based on the tightening in financial conditions
0
to date. There are already some signs that the economy has
-2
lost momentum, including news this week on jobless claims
15 16 17 18 19 20 21 22 23
filings and the Senior Loan Officer Opinion Survey. It hasn’t Source: BLS, Cleveland Fed, J.P. Morgan
been all bad news, however, and our Chase consumer card
data signal that consumer spending had a strong start to the But the trimmed mean and median alternative measures of
second quarter in April. We expect total retail sales to be up trend CPI inflation kept climbing into April (Figure 2) and
1.5% in next week’s April report, with control sales rising core services prices looked particularly firm within the April
1.4%. CPI, rising 0.7%. Core goods prices were much softer on net
in April, rising 0.2% during the month, and we are seeing
While the Fed is trying to slow the economy in an effort to signs that some of the factors that had pushed core goods
lower inflation, it remains to be seen whether it can achieve a prices up significantly earlier in the pandemic are starting to
“soft landing.” Powell has noted that a move down in job va- moderate (or reverse). If supply chain issues keep easing and
cancies would be desirable, but past meaningful declines in demand shifts back from goods to services, core goods prices
job openings historically have been associated with reces- likely will move down closer to the pre-pandemic trend (Fig-
sions. With the tight labor market, our recession risk models ure 3). But the firmness in core services prices could be sus-
show fairly high probabilities that a recession starts at some tained, particularly if the labor market remains tight and wag-
27
Daniel Silver (1-212) 622-6039 United States
Michael Feroli (1-212) 834-5523
michael.e.feroli@jpmorgan.com
es keep rising. Inflation expectations also could be important Figure 4: SLOOS responses on residential mortgages
in determining the path for wages and consumer prices going Net % of responses Reporting tightening
forward. The University of Michigan’s main inflation expec- standards
80
tation measures have moved up noticeably since the start of
60 Reporting more
the pandemic, but they have not changed much in recent demand
months and remain below many of the readings from the 40
1970s and 1980s. 20
Figure 3: Core goods and core services CPI 0

Index, 4Q19=100, dashed lines represent pre-pandemic trends -20
114 Core -40
goods 10 12 14 16 18 20 22
110 Source: Federal Reserve Board, J.P. Morgan
106
102 Jobless claims data are timelier broad economic indicators
98
and also suggest that the economy has lost momentum. While
Core services initial claims filings have remained very low by historical
94
standards, the level of filings has increased from the recent
2019 2020 2021 2022
Note: Pre-pandemic trend extrapolates avg. growth from 2018/2019 beginning January 2020
weekly best of 166,000 reported for mid-March to 203,000 in
Source: BLS, J.P. Morgan the latest data for early May. Continuing claims have kept
trending lower through the latest report, but the rate of decline
While the core CPI was strong in April, the details of the PPI has moderated relative to earlier stages of the recovery (Fig-
that factor into our core PCE tracking looked soft on net, and ure 5).
we think that the core PCE price index will be up only 0.20%
Figure 5: Jobless claims filings
in April (4.7%oya). This monthly change would be signifi-
Mn, sawr, both scales
cantly below the 0.6% increase reported for the core CPI
0.9 6
measure in April, and there are a few key differences that we
think are worth noting. One is that the PCE price index incor- 5
0.7
porates data on airfares from the PPI, and the April change in Continuing claims 4
the relevant PPI series (2.7% using our seasonal adjustment) 0.5
looked much softer than the change in the CPI for airfares 3
(18.6%). The PCE price index also incorporates PPI data on 0.3
Initial claims 2
used vehicle prices that showed a much larger April drop (-
6.0% using our seasonal adjustment) than the related CPI se- 0.1 1
ries (-0.4%). Additionally, the PCE price index will incorpo- Jan 21 Apr 21 Jul 21 Oct 21 Dec 21 Apr 22
Source: Department of Labor, J.P. Morgan
rate some data from the PPI related to financial services prices
that showed large drops in pricing between March and April.
Also this week, the University of Michigan consumer senti-
Signs of slowing ment index disappointed in the flash May print, showing a
new low for sentiment since the start of the pandemic and a
The recent tightening in financial conditions may already be downbeat reading by broader historical standards. The rela-
weighing on the economy. The housing market historically tionship between this sentiment gauge and consumer spending
has been particularly responsive to changes in rates and vari- (or overall GDP) is not very strong, but this is another timely
ous housing indicators have weakened throughout the year so signal suggesting that the economy has softened.
far. This past week, the Fed’s Senior Loan Officer Opinion
Survey showed a drop in demand for mortgages along with
less easing in related lending standards than earlier recent
quarters (Figure 4). There was also less easing in standards
reported for the other main types of loans relative to earlier
releases, although the SLOOS did not show outright tighten-
ing in standards for most of the broad aggregates. Away from
mortgages, changes in the demand indicators were mixed.
28
Michael Feroli (1-212) 834-5523 Peter B McCrory (1-212) 622-5252 Global Data Watch
michael.e.feroli@jpmorgan.com peter.mccrory@jpmchase.com May 13, 2022
Daniel Silver (1-212) 622-6039
daniel.a.silver@jpmorgan.com
Data releases and forecasts hough auto industry production schedules signal little
change in related output in April following the surge re-
Mon Empire State survey ported for March. Overall, we look for a 0.4% increase
May 16 Diffusion indices, sa in manufacturing output in April, with a similar 0.4%
8:30am Feb Mar Apr May gain for the total excluding motor vehicles and parts.
General bus. conditions 3.1 -11.8 24.6 12.0 Away from manufacturing data, we believe utilities out-
New orders 1.4 -11.2 25.1 put increased 2.3% in April with changes in weather
Shipments 2.9 -7.4 34.5 likely generating increased demand for utilities relative
Unfilled orders 14.4 13.1 17.3 to seasonal norms. We also expect some moderation in
Prices paid 76.6 73.8 86.4 the mining output data (-0.5%) in April following a solid
Prices received 54.1 56.1 49.1 run over the prior few months.
Composite 56.1 55.0 60.2
We believe the Empire State manufacturing survey’s Tue Business inventories
headline composite fell from 24.6 in April to 12.0 in May 17 %m/m, sa, unless noted
May. The survey surprisingly improved significantly be- 10:00am Dec Jan Feb Mar
tween a downbeat March report and an upbeat April re- Inventories 2.4 1.3 1.5 1.9
port, but we think that activity in the manufacturing sec- Manufacturing 0.4 0.8 0.7 1.3
tor could be cooling, particularly given the recent dollar Wholesale 2.5 1.2 2.8 2.3
appreciation. We therefore expect moderation in the Em- Retail inventories 4.3 1.8 1.5 2.0
pire State survey to be reported for May. Ex autos 3.6 1.6 1.5
Autos 6.5 2.3 1.4
Inventory/sales ratio 1.29 1.27 1.27 1.30
Tue Retail sales We believe nominal business inventories increased 1.9%
May 17 %m/m, sa in March, with reported data on the underlying compo-
8:30am Jan Feb Mar Apr nents already pointing to strong growth that month.
Total 2.7 1.7 0.7 1.5 There have been strong gains for inventories lately (in
Ex autos 1.6 1.8 1.4 0.8 both real and nominal terms).
Ex autos and gas 2.0 1.3 0.7 1.5
Building materials 2.3 0.4 0.2 -1.4
Control group¹ 3.0 0.3 0.7 1.4 Tue Homebuilders survey
Ex. autos and building mat. 1.5 1.9 1.5 1.0 May 17 Sa
1. Total ex. gasoline, automotive dealers, building materials, and food serv. 10:00am Feb Mar Apr May
We forecast that retail sales increased 1.5% in April. Our Housing market 81 79 77 76
Chase consumer card data point to strong growth in sales Present sales 89 87 85
of food services (forecast: 3.4%) and sales of the im- Prospective buyer traffic 65 66 60
portant control group (forecast: 1.4%) in April. And an
We look for the NAHB survey’s headline to move down
increase in unit auto sales already reported for the month
1pt to 76 in March. We believe that the recent move up
bodes well for sales at motor vehicle and parts dealers,
in mortgage rates has weighed on homebuilder sentiment
for which we forecast a 4.6% increase in the relevant re-
and we think that this continued to play out over the past
tail sales series. We think there could be some weakness
few weeks.
in certain other major components, as price declines
weigh on the related nominal figures; with gas prices
down, we expect a 4.3% drop in gasoline station sales in
April and with lumber prices falling, we look for a 1.4%
decline in building material sales.
Tue Industrial production

May 17 %m/m,sa, unless noted
9:15am Jan Feb Mar Apr
Industrial production 1.0 0.9 0.9 0.5
Manufacturing 0.2 1.2 0.9 0.4
Motor vehicles and parts 1.1 -4.6 7.8 -0.2
High-tech 0.3 2.6 1.4
Mfg ex motor vehicles 0.1 1.6 0.4 0.4
Business equipment -0.4 1.8 1.8
Capacity utilization (%,sa) 77.0 77.7 78.3 78.6
Manufacturing 77.2 78.1 78.7 79.0
We estimate that industrial production increased 0.5% in Sources: ADP/Moody’s Analytics, BEA, BLS, Census Bureau, Conference Board, Department of
April. Data from the April employment report pointed to Labor, Federal Reserve Board, ISM, J.P. Morgan forecasts, NAHB, NAR, NFIB, NY Fed, Markit,
a decent gain in manufacturing output that month alt- Philadelphia Fed, Standard & Poor’s, University of Michigan, US Treasury
29
Michael Feroli (1-212) 834-5523 Peter B McCrory (1-212) 622-5252 United States
Wed Housing starts May 19 Diffusion indices, sa

May 18 Million units, saar 8:30am Feb Mar Apr May
8:30am Jan Feb Mar Apr General bus. conditions 16.0 27.4 17.6 9.0
Starts 1.68 1.79 1.79 1.71 New orders 14.2 25.8 17.8
Single-family starts 1.17 1.22 1.20 1.17 Shipments 13.4 30.2 19.1
Multifamily starts 0.51 0.57 0.59 0.54 Inventories 4.0 0.5 11.9
Permits 1.90 1.86 1.87 1.83 Prices paid 69.3 81.0 84.6
We believe that housing starts declined 4.9% to 1.705mn Prices received 49.8 54.4 55.0
saar in April while related permits fell 2.4% to 1.825mn Composite 58.7 63.5 60.8
saar. We think that the recent increase in rates is weigh-
We estimate that the Philadelphia Fed manufacturing
ing on the housing market and a variety of related survey’s headline declined from 17.6 in April to 9.0 in
measures have moderated lately. The single-family starts
May. The manufacturing sector could be negatively im-
and permits data have not cooled much so far, but we
pacted by the stronger dollar and we think that the Phila-
expect declines to be reported for April, with starts fall-
delphia Fed survey’s headline will move down for the
ing 2.9% and permits slipping 0.5%. The multifamily da-
second straight month in May.
ta on starts and permits actually have looked very strong
recently, but these series can be noisy and we expect
drops to be reported for April, with starts down 9.0% and
permits down 5.5%. Thu Existing home sales
May 19
Total (mn, saar) 6.49 5.93 5.77 5.65
Thu Jobless claims
%m/m 6.6 -8.6 -2.7 -2.1
May 19 Thousands, sa
%oya nsa -3.8 -3.8 -5.8 -5.2
8:30am New claims (wr.) Continuing claims Insured Months’ supply (nsa) 1.6 1.7 2.0
Wkly 4-wk avg Wkly 4-wk avg Jobless,% Single-family 1.5 1.7 1.9
Mar 5 198 197 1594 1629 1.2 Median price (%oya) 15.3 15.6 15.0
Mar 12¹ 177 189 1542 1606 1.1 We believe that existing home sales declined 2.1% to
Mar 19 166 181 1506 1577 1.1 5.65mn saar in April, marking the third straight monthly
Mar 26 171 178 1529 1543 1.1 decline for this series. A variety of housing indicators
Apr 2 168 171 1474 1513 1.1 have weakened lately and we think that higher rates are
Apr 9 186 173 1407 1479 1.0 weighing on the housing market. With pending home
Apr 16¹ 185 178 1403 1453 1.0 sales trending lower into March and pending home sales
Apr 23 181 180 1387 1418 1.0
typically a leading indicator of existing home sales, we
expect to see additional softening in the upcoming exist-
Apr 30 202 189 1343 1385 1.0
ing home sales report.
May 7 203 193
May 14¹ 195 195
1. Payroll survey week
We forecast that initial claims declined 8,000 to 195,000 Review of past week’s data
during the week ending May 14. The claims data can be CPI (May 11)
noisy and we think that a portion of the 22,000 jump in %m/m, sa, unless noted
claims reported over the prior two weeks will be re- Feb Mar Apr
versed in the upcoming report. But even so, it looks like Total 0.8 1.2 0.4 0.3
filings have trended higher lately since the recent low of %oya (nsa) 7.9 8.5 8.3 8.3
Core 0.51 0.32 0.39 0.57
166,000 reported in the middle of March. %oya (nsa) 6.4 6.5 5.9 6.2
Core services 0.5 0.6 0.7
Core goods 0.4 -0.4 0.2
Food 1.0 1.0 0.8 0.9
Energy 3.5 11.0 -0.2 -2.7
Housing 0.5 0.7 0.6
Owners' eq.rent 0.45 0.43 0.43 0.45
Rent 0.57 0.43 0.47 0.56
Lodging away from 2.2 3.3 2.2 1.7
Apparel 0.7 0.6 0.7 -0.8
New vehicles 0.3 0.2 0.1 1.1
Used vehicles -0.2 -3.8 -2.0 -0.4
Sources: ADP/Moody’s Analytics, BEA, BLS, Census Bureau, Conference Board, Department of Public transportation 3.5 7.1 2.0 12.1
Labor, Federal Reserve Board, ISM, J.P. Morgan forecasts, NAHB, NAR, NFIB, NY Fed, Markit, Communication -0.1 -0.5 -0.2 -0.4
Philadelphia Fed, Standard & Poor’s, University of Michigan, US Treasury Medical care 0.2 0.5 0.4 0.4
The consumer price index (CPI) increased 0.3% in April, a
tick above the consensus forecast and a tick below our own
Thu Philadelphia Fed survey estimate. Away from food and energy, the core CPI increased
0.6% in April (0.569% to three decimals), beating expecta-
30
Michael Feroli (1-212) 834-5523 Peter B McCrory (1-212) 622-5252 Global Data Watch
tions by two-tenths. While year-ago inflation rates moderated Feb Mar Apr
for both the headline and the core measures between March Import prices 1.6 1.8 2.6 2.9 0.5 0.0
%oya 11.3 11.4 12.5 13.0 12.0 12.0
and April, they remained firm in the latest prints (headline at Ex-fuel import 0.7 0.9 1.2 0.4 0.4
8.3% oya, core at 6.2% oya). And the persistent strength in %oya 7.3 7.4 7.5 7.7 7.1 7.2
core inflation is probably keeping pressure on the FOMC to The import price index was softer than expectations in April,
raise rates by 50bp at upcoming meetings. with the headline figure unchanged relative to March. Fuel
In some of the broad details of the report, energy prices did prices declined 2.4% in April (offsetting a small part of their
come off somewhat in April (-2.7%) following their March March surge), weighing on the headline figure. And away
surge (11.0%), and food prices continued to rise at a rapid from fuels, prices were up 0.4% in April, a figure in line with
rate, up another 0.9% in April. There were mixed changes our forecast. While the underlying trend in nonfuel import
across core CPI categories, but firmness overall. Core services price inflation remained solid, there are some signs that we
prices looked particularly strong, up 0.7% in April, marking may have moved past peak inflation rates (though keeping in
the largest monthly gain since 1990. And while an 18.6% mind that one month doesn’t make a trend). The April month-
surge in airfares helped push up core services prices, the data ly change in the nonfuel index was the softest reported since
looked firm even away from this specific category. Core last September, and the year-ago inflation rate for the nonfuel
goods prices were much softer on net in April, rising 0.2% price index moved down from 7.7% in March to 7.2% in
during the month, and we are seeing signs that some of the April.
factors that had pushed core goods prices up significantly ear-
lier in the pandemic are starting to moderate (or reverse); per- Consumer sentiment (May 13)
haps most notably, used vehicle prices declined 0.4% in April, Michigan preliminary
the third straight monthly decline for this series. Mar Apr May
As mentioned above, airfares surged 18.6% in April, and with Univ. of Mich. Index 59.4 65.2 66.0 59.1
Current conditions 67.2 69.4 63.6
big increases in recent months, are now noticeably above the Expectations 54.3 62.5 56.3
pre-pandemic trend. We think that this surge in airfares added Inflation expectations
about 0.2%-pt to the April change in core services prices and Short term 5.4 5.4 5.4
about 0.1%-pt to the April change in the broader core CPI. Long term 3.0 3.0 3.0
The CPI’s rent measures continued to look firm, with tenants’ The preliminary May print for the University of Michigan
rent up 0.56% in April and owners’ equivalent rent rising consumer sentiment index was downbeat and below expecta-
0.45%. And the lodging away from home index kept rising at tions. The headline declined from 65.2 in April to 59.1, with
a solid clip, with prices up 1.7% in April. Used vehicle prices this latest figure marking a new low since the start of the pan-
did decline 0.4% in April, although inflation for new vehicles demic and showing a very low level of sentiment by broader
was firm again in April (1.1%) following a few softer months. historical standards. A range of factors can influence consum-
Apparel prices also cooled somewhat in April (-0.8%) undo- er attitudes, but we think that the recent strength in inflation
ing a small portion of earlier gains. and weakness in equity markets probably have weighed on
sentiment.
Producer price index (May 12) Elsewhere in the survey, the main inflation expectations were
%m/m, sa, unless noted unchanged between April and May, with the median one-
Feb Mar Apr year-ahead measure holding at 5.4% and the median five-
Final demand 0.9 1.1 1.4 1.6 0.8 0.5 year-ahead expectation holding at 3.0%. These gauges of in-
%oya (nsa) 10.3 10.4 11.2 11.5 11.3 11.0
Core 0.4 0.5 1.0 1.2 0.8 0.4 flation expectations have increased noticeably relative to
%oya (nsa) 8.7 8.8 9.2 9.6 9.3 8.8 where they were before the pandemic began but there has not
Energy 7.5 7.2 5.7 6.4 1.3 1.7 been much change in the data in recent months.
Core goods 0.8 1.1 0.8 1.0
Services 0.3 0.5 0.9 1.2 0.7 0.0
Construction 0.5 0.6 2.0 4.0
Intermed. processed gds 1.5 2.1 2.2 2.2
Core intermed. processed 0.3 0.8 0.7 1.4
The producer price index (PPI) increased 0.5% in April, a
gain in line with the consensus forecast. The main underlying
details showed strong increases for both food prices (1.5%)
and energy prices (1.7%) and another solid increase in the
core measure that excludes food and energy (0.4%). While the
April change in the core index was easily above the pre-
pandemic trend, it did come out below expectations and rep-
resented one of the softer monthly readings we have seen in
over a year. Year-ago rates for both the headline and core PPI
measures moderated between March and April, so while infla-
Sources: ADP/Moody’s Analytics, BEA, BLS, Census Bureau, Conference Board, Department of
tion is still looking strong, there are some signs that we may Labor, Federal Reserve Board, ISM, J.P. Morgan forecasts, NAHB, NAR, NFIB, NY Fed, Markit,
have moved past peak rates. The details of the PPI that factor Philadelphia Fed, Standard & Poor’s, University of Michigan, US Treasury
into our core PCE tracking looked soft on net.
Import prices (May 13)
%m/m, nsa, unless noted
31
Michael Feroli (1-212) 834-5523 Focus: The Dudley rule applies
michael.e.feroli@jpmorgan.com to vacancies, too
May 13, 2022
economy and have a recession and have unemployment rise

Focus: The Dudley rule applies materially.” To be sure, Powell recognized that staying on this
to vacancies, too path “will be very challenging.”
Last week Fed chair Powell laid out a path to a soft landing: job One issue with assessing the feasibility of Powell’s argument
vacancies could come down without unemployment going up. is that the vacancy data he’s referring to—from the Job Open-
What’s nice about this idea is that it seems to get around the ings and Labor Turnover Survey, or JOLTS—are only availa-
challenges posed by the Dudley rule: the regularity that when- ble since late 2000. To address this limitation, Fed researcher
ever the smoothed (3-month moving average) unemployment Regis Barnichon has created a longer series, using help want-
rate moves up 0.3%-pt or more, over any time period, it’s a sign ed data from newspapers and online sources.1 That series is
the economy is in recession or about to enter one (Figure 1). In presented in Figure 3.
other words, it’s hard to push up the unemployment rate just a
little bit without tipping the economy into recession. Figure 3: Job vacancy rate
Vacancies as % of employment
Figure 1: The Dudley rule 7
Unemployment rate, 12-mo change in 3mma
6
4
5
2 4
0.3pp 3
0
2
-2 1
51 56 61 66 71 76 81 86 91 96 01 06 11 16 21
Source: BLS, Barnichon
-4
48 53 58 63 68 73 78 83 88 93 98 03 08 13 18 As is apparent, the recent vacancy rates are well above previous
Source: BLS, J.P. Morgan
historical highs. Perhaps somewhat less obvious, the vacancy rate
Against this dispiriting observation, Chair Powell happily displays some of the same asymmetries and nonlinearities of the
offered: “There’s a path by which we would be able to have unemployment rate. And, mirroring the unemployment rate,
demand moderate in the labor market, and…have vacancies whenever the vacancy rate goes down a little it goes down a lot,
come down without unemployment going up, because vacan- and the economy lands in recession. More specifically, when the
cies are at such an extraordinarily high level. They’re 1.9 va- 3-month average vacancy rate goes down 0.5%-pt or more the
cancies for every unemployed person, eleven and a half mil- economy is in recession (Figure 4). The late 1960s slowdown is
lion vacancies, six million unemployed people.” The ratio the closest the economy has come to a vacancy soft landing.
Powell mentioned is in Figure 2.
Figure 4: The Dudley rule, vacancy corollary
Figure 2: Vacancies per unemployed worker Vacancy rate, 12-mo change in 3mma
Ratio 3
2.0 2
1.5 1
0
1.0 -1 -0.5pp
0.5 -2
-3
0.0 51 56 61 66 71 76 81 86 91 96 01 06 11 16 21
00 05 10 15 20 Source: BLS, Barnichon, J.P. Morgan
Source: BLS, J.P. Morgan
Relabeling the Fed’s task ahead as lowering the vacancy rate
Powell went on to say: “So in principle, it seems as though by rather than increasing the unemployment rate may be good
moderating demand, we could see vacancies come down. And branding, but it doesn’t change the difficulty of completing
as a result, and they could come down fairly significantly. that task without slipping into recession.
And I think put supply and demand at least closer together
than they are. And that would give us a chance to…get wages 1
“Building a composite Help-Wanted Index,” Economics Letters,
down, and get inflation down without having to slow the Dec 2010.
32
Marco Protopapa (44-20) 7742-7644 Greg Fuzesi (44-20) 7134-8310 Global Data Watch
marco.protopapa@jpmorgan.com greg.x.fuzesi@jpmorgan.com May 13, 2022
Raphael Brun-Aguerre (44-20) 7134-8308
raphael.x.brun-aguerre@jpmorgan.com
Euro area Figure 1: Euro area manufacturing output Manufacturing,

Dec 19= 100 ex. motor vehicles
 IP fell sharply in March, driven by Germany and the 130
auto sector, bearing the brunt of the energy price shock
110
 PMI points to activity staying resilient through April, as 90
a services rebound offsets energy-driven weakness 70
 Since the start of 2021, energy prices have been respon- 50
sible for most of the rise in headline inflation 30
Motor vehicles
 As Brent and gas futures are downward sloping, we ex- 10

pect headline inflation to decline sharply 2018 2019 2020 2021 2022
This week, the data flow was quite limited. The key release
The country details for March show an uneven picture. Ger-
was March IP, with a large drop providing the first indication
man IP ex. construction fell 5.0%m/m while the decline was
of the impact of the Russia-Ukraine war on Euro area produc-
tion. At the same time, the composite PMI suggests that activ- overall much more modest in the rest of the region (Figure 2):
ity remained resilient through April, even though sentiment, France was down 0.5%, Italy was flat, and Spain was down
and especially consumer confidence remained depressed. 1.8%. Germany also continues to underperform sharply in
Looking into the current quarter, we think that the relaxation comparison to the pre-pandemic norm. At the sector level,
of COVID restrictions (including to cross-border travel) will production in the transport sector (auto and trailers) dropped
boost spending in high-contact services (possibly on the back 7.2%m/m. Significant declines also took place in chemical
of accumulated excess savings) and more than offset the and pharma (-5.2%), rubber and plastics (-2.9%), basic metal
weakness related to the income shock from high inflation. In (-1.7%), and machinery and equipment (-2.6%).
this sense, it will be important to see whether the PMI sustains
the services lift seen in April through the rest of the quarter. Figure 2: Euro area IP ex. construction
Jan20=100 Germany
France
IP fell sharply in March
100
Euro area IP ex. construction contracted 1.8%m/m in March.
Despite this large drop, IP is still showing a 3.7% ar sequen-
tial gain in 1Q22, due to the strong momentum seen late last 90
year. Manufacturing output also fell 1.6%m/m, for a 5.0% ar Italy
gain in 1Q22. The flash 0.8% ar GDP print for 1Q22 was al- Spain
ready released at the end of April and we do not think that this 80
week’s IP data will warrant any significant revision. 2019 2020 2021 2022 2023
Source: Eurostat, Destatis, INSEE, Istat, INE, J.P. Morgan
The Ukraine conflict started in late February, and the large

March IP contraction suggests that it had a negative impact on Timely data for April point to some rebound in auto produc-
Euro area production. The data show that this impact was tion in Germany. More generally, the April composite PMI
concentrated in (i) Germany, which is more integrated along (Figure 3) suggested that activity in the region has been resili-
the supply chain with Eastern Europe, and (ii) the auto sector, ent since the start of the Ukraine conflict with the services
affected by shortages of components produced in Ukraine sector benefiting from the easing of restrictions after the Omi-
including wire harnesses (Figure 1). The industrial sector is cron wave. The PMI survey also signaled that the German
also bearing the brunt of ongoing supply bottlenecks linked to manufacturing sector was hit harder than those of the other
the COVID crisis and, more broadly, of a persistent increase main economies of the region.
in energy prices (which started to rise before the Ukraine con-
flict).
33
Marco Protopapa (44-20) 7742-7644 Greg Fuzesi (44-20) 7134-8310 Euro area
Figure 3: Euro area PMI - Output Looking forward, futures prices hint at lower prices ahead
DI, sa (Figure 4). Our forecast assumes that the price of Brent will
65 Manufacturing average close to US$104 in 2H22, in line with market prices.
We then expect it to slip to US$97.5 next year (vs. US$93.2
60 according to market participants). We expect gas prices to
55 move down from €110/Mwh for the rest of this year to
€90/Mwh next year. We assume that electricity prices will
50
average €210/Mwh for the rest of the year and will come
45 Services down to €170/Mwh. Market prices are lower than we assume
for gas, but higher than we assume for electricity.
40
2016 2017 2018 2019 2020 2021 2022 2023
Source: Markit and J.P. Morgan Figure 4: Commodity prices
$/barrel Gas €/Mwh
Inflation forecasts: Key energy price as- 120 350

Electricity
sumptions 100 280
Energy represents only 11% of the Euro area inflation basket, 80 Brent 210
but due to large swings in energy prices, this component is a
60 140
very important driver of headline inflation. Since the start of
2021, energy prices have been responsible for most of the rise 40 70
in headline inflation. Within energy prices, oil prices have
20 0
played a significant role. Historically, there has been a tight 2019 2020 2021 2022 2023
relationship between the prices of Brent and HICP fuel prices Source: Bloomberg Finance L.P., J.P. Morgan
(for transport and heating), but in the last two years this rela-
tionship has been challenged: the model suggested larger Overall, we expect the price pressure coming from energy
swings in consumer fuel prices than actually occurred after commodities to fade sharply in the coming quarters. As a re-
the start of the COVID-19 pandemic and then failed to cap- sult, we expect HICP energy price inflation to decline sharply,
ture the strong increase seen in March this year. from 39%oya in 2Q22 to close to 0% in 2Q23. In 2H23, we
expect HICP energy price inflation to average -6.5%oya,
We also think that our models won’t be able to pick up con- which will be a significant drag on headline inflation. In our
sumer price changes linked to government measures. Gov- view, headline inflation will gradually decline to a level be-
ernments are offsetting the rise in the price of Brent by reduc- low 2% in 2H23 (Figure 5).
ing taxes and excise duties on fuel for transport prices. In
Germany, the impact of the measures is a 25-cent decline in Figure 5: Euro area inflation forecast
fuel prices for transports between June and September. The %oya, shaded area shows forecast %oya
decline represents 30 cents between April and June in Italy 10 50
and 20 cents over the same period in Spain. In France, the 8 40
Headline
government provided a rebate worth 15 cents to consumers in Energy 30
6
April but that rebate did not impact consumer prices directly. 20
4
10
An alternative is to use weekly data for fuel for transport and 2
0
heating oil prices published by the European Commission. 0 -10
These prices include tax and excise duties decided at the gov-
-2 -20
ernment level and correlate nearly one-to-one with monthly 15 16 17 18 19 20 21 22 23
consumer prices. For April, these data suggest that HICP fuel Source: Eurostat, J.P. Morgan
for transport and heating oil prices are set to decline signifi-
cantly (by 5.0% and 9.5%, respectively). The official April
HICP details will be available next week for comparison. Da-
ta are also already available for the first two weeks of May.
So far, these data hint at modest rebounds in May (1.2% and
2.8%, respectively).
34
Marco Protopapa (44-20) 7742-7644 Greg Fuzesi (44-20) 7134-8310 Global Data Watch
Data releases and forecasts External trade and payments

Week of May 16 - 20 Foreign trade
Dec Jan Feb Mar
Fri Euro area
Output and surveys May 20 € bn, values, sa
11:00am Trade balance -11.9 -7.7 -9.4
Real GDP year earlier 27.2 27.7 23.5
2Q21 3Q21 4Q21 1Q22 Exports 213.2 221.9 223.6
Tue Euro area (2nd estimate) %m/m -0.6 4.1 0.8
May 17 %q/q, sa 2.2 2.2 0.3 Imports 225.1 229.6 233.1
11:00am %q/q, saar 9.1 9.3 1.2 0.8 %m/m 3.3 2.0 1.5
%oya 14.6 4.1 4.7
According to the flash estimate, Euro area GDP was up Inflation
0.8%q/q ar in 1Q22. No expenditure or production detail
will be released next week. In our view, the 1Q print has
been impacted by a number of factors. First, COVID- Consumer prices
related restrictions were tight at the start of the year due to Jan Feb Mar Apr
the Omicron wave. Restrictions were to a large extent Wed Euro area (final)
eased during February and March, and are now generally May 18 HICP (%m/m, nsa) 0.3 0.9 2.4 0.6
limited to mandatory mask wearing in public transport 11:00am HICP ECB (%m/m, sa) 1.1 0.8 1.7 0.2
across countries. Second, the sharp rise in energy prices hit HICP (%oya, nsa) 5.1 5.9 7.4 7.5
household purchasing power and sometimes constrained HICP core ECB (%m/m,
sa) 0.4 0.3 0.2 0.5
production in the energy-intensive industrial sector. The
HICP core (%oya, nsa) 2.3 2.7 2.9 3.5
energy price rise started late last summer but was also di-
HICP (%m/m, ex-tob.) 0.3 1.0 2.5 0.6
rectly impacted by the Ukraine conflict this year. Third, the
conflict had a large negative impact on sentiment. Fourth,
it also caused some disruption in the car sector due to the According to Eurostat’s flash estimate, Euro area headline
sudden unavailability of wire harnesses from Ukraine. inflation was up a tenth to 7.5% in April. Based on the
ECB data, headline prices were up 0.2%m/m, sa. This is a
modest price increase compared to recent months. The av-
Construction output erage monthly gain was 0.6%m/m, sa in 4Q and increased
to 1.2%m/m, sa in 1Q due to higher energy prices. The
Dec Jan Feb Mar
lower April gain generally reflects lower inflationary pres-
Thu Euro area
sures coming from higher energy prices but is also linked
May 19 %m/m, sa -1.0 3.9 1.9
to temporary government measures aimed at reducing con-
11:00am %oya, sa -0.9 4.5 8.3
sumer fuel prices (lower taxes and excise duties in some
countries).
Consumer confidence (prelim)
Feb Mar Apr May
Jan Feb Mar Apr
Fri Euro area (European Commission survey)
Tue Italy (final)
May 20 % balance of responses
May 17 %m/m, nsa 1.6 0.9 1.0 0.2
11:00am Consumer confidence -9.5 -21.6 -22.0 -20.0
10:00am %oya, nsa 4.8 5.7 6.5 6.2
We think consumer confidence will improve only modestly HICP (%oya, nsa) 6.2 6.2 6.8 6.6
in May. The Ukraine conflict had a negative impact on
confidence. There are no signs that the conflict will be re-
Producer prices
solved anytime soon. Also inflation remains high (partly
Jan Feb Mar Apr
due to the Ukraine conflict) which is hitting households’
Fri Germany
purchasing power.
May 20 %m/m, nsa 2.2 1.4 4.9
8:00am %m/m, sa 1.9 1.4 4.8
%oya, nsa 25.0 25.9 30.9
Demand and labor markets
Unemployment
2Q21 3Q21 4Q21 1Q22 Source: European Commission, Eurostat, ECB, FSO, Bundesbank, IFO, INSEE, ISAE, Istat, INE,
Tue France CBS, BNB, Markit, and J.P. Morgan forecasts
May 17 %, sa
7:30am ILO unemployment rate 8.0 8.0 7.4
ILO mainland unemp. rate 7.8 7.8 7.2
35
Marco Protopapa (44-20) 7742-7644 Greg Fuzesi (44-20) 7134-8310 Euro area
Financial activity and public finance

Money and credit data
Jan Feb Mar Apr
Tue Euro area
May 17 M3 (%m/m sa) 0.3 0.4 0.4
10:00am M3 (%oya) 6.5 6.4 6.3
M3 (%oya 3mma) 6.9 6.6 6.4
Loans (%oya)1. 4.6 4.8 4.7
Loans (m/m, €bn)1. 63.4 64.1 46.4
Of which
To households 23.8 29.4 27.5
To nonfinancial corps 2.8 15.3 34.8
1. Loans to nonbank private sector, adjusted for securitization
Review of past week’s data

Output and surveys
Industrial production
Jan Feb Mar
Euro area
Ind production (%m/m, sa) -0.7 -0.8 0.7 0.5 -2.2 -1.8
%oya, sa -0.9 1.5 1.3 -0.9
Manuf prod (%m/m, sa) -0.3 -0.4 0.7 -1.6
See Euro area essay for details.
Jan Feb Mar

Italy
Ind production (%m/m, sa) -3.4 -3.3 4.0 -0.8 0.0
%oya, sa -2.2 -2.1 3.2 3.3 2.9
Manufacturing (%m/m, sa) -3.5 -3.4 4.3 -0.2
Inflation
Consumer prices
Feb Mar Apr
Germany (final)
%m/m, nsa 0.9 2.5 0.8
%oya, nsa 5.1 7.3 7.4
HICP (%oya) 5.5 7.6 7.4 7.8
Feb Mar Apr

France (final)
%m/m, nsa 0.8 1.4 0.4
Index ex tobacco, nsa 108.14 109.70 110.17 110.19
%oya, nsa 3.6 4.5 4.8
HICP (%oya) 4.2 5.1 5.4
Feb Mar Apr

Spain (final)
%m/m, nsa 0.8 3.0 -0.1
%oya, nsa 7.6 9.8 8.4
HICP (%oya, nsa) 7.6 9.8 8.4
1. Excluding food, alcohol, tobacco and energy.
Source: European Commission, Eurostat, ECB, FSO, Bundesbank, IFO, INSEE, ISAE, Istat, INE,
CBS, BNB, Markit, and J.P. Morgan forecasts
36
Ayako Fujita (81-3) 6736-1172 Hiroshi Ugai (81-3) 6736-1173 Global Data Watch
ayako.fujita@jpmorgan.com hiroshi.ugai@jpmorgan.com May 13, 2022
Yuka Mera (81-3) 6736-1167
yuka.mera@jpmorgan.com
time since December 2021 (Figure 1). The April rise was
Japan modestly short of our and market expectations for a 3.2pt rise
 The economy continues to move toward an endemic to 51.0, yet indicated a solid recovery continuing after the
equilibrium, with a plan to further ease restrictions initial bounce in business sentiment in March. Among sub-
components, the employment index rose the most, with a
 Private consumption picked up in March, with services 3.1pt rise to 62.6, the highest level since January 2014 (Figure
consumption rising firmly 2). Firms indicated strong hiring demand among services as
 Small firms’ sentiment improved in April, but supply business resumes post the Omicron wave. Business resump-
bottlenecks continued to weigh on the recovery tion also pushed up the household-related DI, with a firm
2.8pt rise to 49.6. However, some retailers, such as auto deal-
 The BoJ’s mini-minutes of the April meeting revealed ers and home appliance stores, noted persistent sales drags
its strong commitment to the current policy stance from supply-chain disruptions, noting that some consumers
stopped shopping due to a lack of desired products. The sup-
The normalization of economic activity in the run-up to the ply bottlenecks appear still to weigh on production, and the
endemic equilibrium has continued since the March lifting of recovery in the business-related DI continues to lag behind
the quasi-emergency measures. And this week’s economic those of others, remaining at 47.4 even after a 1.9pt rise in
indicators confirmed an ongoing economic recovery, with a April. The outlook DI indicated a further recovery for house-
further improvement in small firms’ business sentiment in holds and businesses, but a softening in employment, com-
April, following a solid rise in real consumption in March. pared to the current DIs. This indicates that firms expect the
Restrictions on the number of people at events and dining out economic recovery to continue, but that the current improve-
and on travel between prefectures had already been substan- ment in employment conditions will be short-lived, viewing it
tially reduced, and public transportation use during the Gold- as reflecting a temporary surge in demand after the Omicron
en Week Holidays through last week rose significantly com- wave.
pared to the same periods in 2020 and 2021, although remains
below the pre-pandemic level. The government plans to fur- Figure 1: Economy Watchers' current conditions and outlook DIs
DI, sa
ther ease COVID-19 restrictions starting from June, close to
levels comparable to those of global peers, including receiv- 60 Outlook
ing foreign tourists and easing the requirement to wear masks. 55
50
We expect this to further push up business and consumer sen-
45
timent, supporting the expected strong economic bounce in
40
coming quarters. 35
30 Current conditions
Ahead of the next week’s release of the first estimate of 1Q22 25
GDP, this week, we revised up our 1Q GDP growth estimates 20
from a 1.5%q/q, saar decline to a 0.3% rise. Against our orig- 2015 2016 2017 2018 2019 2020 2021 2022
Source: CAO, J.P. Morgan
inal expectation of a 3.0% contraction, this week’s consump-
tion data indicated a modest 0.2% rise in private consumption,
with a strong bounce in March. As business activity continues Figure 2: Economy Watchers' assessment of current conditions
to normalize after the March lifting of the quasi-emergency DI, sa
measures, we expect consumption to become the main growth 70
Employment
driver ahead and look for a 7.0% jump in 2Q. This likely will Corporate
be fueled by the upcoming easing of the COVID-19 border 60
controls starting from June. We expect this to be confirmed 50
by the May Reuters’ Tankan survey due next week, where we Household
look for the second consecutive monthly rise in the nonmanu- 40
facturing index from 8 in April to 10. April trade statistics 30
will also be released next week.
20
2015 2016 2017 2018 2019 2020 2021 2022
Small firms’ sentiment continued to recover Source: CAO, J.P.Morgan
The April Economy Watchers’ survey, a business sentiment

survey of small firms sensitive to economic conditions, indi-
cated a further recovery in business momentum. The current
conditions DI rose 2.6pts to 50.4, back above 50 for the first
37
Ayako Fujita (81-3) 6736-1172 Hiroshi Ugai (81-3) 6736-1173 Japan
ayako.fujita@jpmorgan.com hiroshi.ugai@jpmorgan.com May 13, 2022
Yuka Mera (81-3) 6736-1167
Consumption picked up in March tic inflation largely attributable to recent elevated import costs,
real wages turned negative for the first time in three months,
The BoJ’s Consumption Activity Index (CAI, travel balance
declining 0.2%oya in March. We continue to expect nominal
adjusted) rose 1.9%m/m, sa in March, leaving the 1Q22 aver-
wage growth to recover firmly from the modest gain in 2021,
age 12.8%q/q, saar below 4Q21. With the gradual lifting of
especially supported by the increase in overtime and special
quasi-emergency measures, consumption regained momentum
payments, reflecting the economic reopening and the past
in March after declining for two consecutive months in Janu-
growth in corporate earnings. However, in response to ex-
ary and February. Services consumption rose 2.9% in March,
pected higher inflation, real wages should decline slightly this
reflecting a rise in mobility in response to the lifting of
year. That said, we also expect that the negative impact of a
COVID-19 behavioral restrictions throughout the month (Fig-
decline in real wages on consumption will be limited, since
ure 3). We expect services consumption to rise further in the
excess savings as a result of large cash payouts will provide a
coming months, back close to the early 2020, pre-pandemic
solid base for consumption.
level, reflecting the recent normalization of business activity.
Durable goods consumption jumped 4.7%, the largest month- Figure 4: Total cash earnings (monthly)
ly gain since October 2021, but this was partial payback after %oya
the 5.4% plunge in February. With the persistent supply bot- 4 Constant sample
tlenecks, particularly for autos, durable goods consumption 3
has been volatile since late last year, and we expect this to 2
continue as automakers have announced some temporary fac- 1
tory shutdowns due to the supply shortage caused by the 0
Omicron wave in China. This strong durable goods consump- -1
tion, together with a modest 0.2% gain in nondurable goods -2 Official series
consumption, led to a total goods consumption rise of 1.0%, -3
after three consecutive monthly declines since December -4
2015 2016 2017 2018 2019 2020 2021 2022 2023
2021. Source: MHLW
Figure 3: BoJ consumption activity index

BoJ committed to the current policy stance
2015=100, sa
The BoJ released the Summary of Opinions of the April poli-
130
cy meeting this week. The Summary showed that no policy
120 Durable goods
board members expected the official CPI (ex. fresh food &
110 incl. energy) to reach the 2% target on sustainable basis.
100 Three members stressed that the current rise in CPI inflation
90
Nondurable goods will not be sustainable, considering the expected easing of
energy prices, household income constraints, the negative
80 Services output gap, and low inflation expectations. Another three said
70 that underlying inflation excluding the energy factor has been
2015 2016 2017 2018 2019 2020 2021 2022 2023
Source: BoJ, J.P. Morgan
extremely low and has yet to rise. Also, there was no concern
about the negative impact of yen depreciation, as many appear
The February Cabinet Office Index (COI), the best monthly to view it as reflecting differences in economic conditions
indicator of GDP-based consumption, showed the second between Japan and the other countries. The Board appears
consecutive monthly contraction, with a 1.2% decline after a have not discussed the potential YCC adjustment, as the ma-
0.6% fall in January. However, the March CAI indicated that jority of members supported the continuation of the current
the COI likely will rise 1.4%m/m, sa, pointing to a modest accommodative policy. We think it will likely take time for
gain in GDP-based consumption in 1Q22, against our earlier the BoJ to start discussing policy normalization.
expectations of a 3.0% decline, leading us to revise up our
1Q22 GDP estimates.
Nominal wages rose firmly

Total cash earnings increased 1.2%oya in March after the
same gain in February (Figure 4). The March print was slight-
ly firmer than the 1.0% rise we expected, reflecting the recov-
ery of business activity in response to the declining number of
infections. However, because of the gradual pickup in domes-
38
Ayako Fujita (81-3) 6736-1172 Global Data Watch
ayako.fujita@jpmorgan.com May 13, 2022
Yuka Mera (81-3) 6736-1167
Data releases and forecasts negative net external demand contribution, due to higher
imports of pharmaceuticals and other products.
Week of May 16 – 20
Thu Machinery orders
Mon Producer prices index May 19 %m/m, sa
May 16 %oya, nsa, 2015-based 8:50am Dec Jan Feb Mar
8:50am Jan Feb Mar Apr Total 1.8 -3.3 -10.6 __
Domestic PPI 9.2 9.7 9.5 9.7 Core private domestic orders1 3.1 -2.0 -9.8 5.0
(%m/m) 0.7 1.2 0.8 1.0 Manufacturing 3.5 -4.8 -1.8 __
Export prices 12.9 12.9 13.1 Core nonmanufacturing 0.4 -1.9 -14.4 __
Import prices 37.4 34.3 33.4 Public 1.5 -13.6 -5.3 __
We expect the producer price index (PPI) to rise 1.0%m/m, Foreign -2.8 0.9 -2.8 __
sa in April and, given the recent run of strong PPI increas- 1. Domestic private sector, ex for ships and from utilities
es, annual PPI inflation to mark 9.7%oya. Although PPI in- We project core domestic machinery orders to rise
flation had eased slightly in March reflecting the recent 5.0%m/m, sa in March, in partial payback after a 9.8%
moderation of import prices, we look for it to accelerate plunge in February. The Omicron wave since the begin-
again in response to the recent sharp yen depreciation. ning of the year, coupled with lingering supply bottlenecks,
caused orders to fall sharply in January and February, but
Wed Reuters Tankan survey
some of this decline likely will be reversed in March, re-
May 18 Diffusion index
flecting the gradual normalization of economic activity
8:00am Feb Mar Apr May
starting that month. Nevertheless, we expect 1Q22 core
Manufacturing 6 8 11 11
private orders to contract for the first time since 1Q21.
Nonmanufacturing 3 -1 8 10
In the May Reuters Tankan, we expect the current condi- Thu Customs-cleared international trade
tions DIs to move sideways in the manufacturing index, May 19
but rise in the nonmanufacturing index for the second con- 8:50am Jan Feb Mar Apr
secutive month. We think the manufacturing index will Balance (¥bn sa) -792 -1067 -900 -1222
remain unchanged at 11 in April, reflecting renewed con- Exports %m/m 0.9 -0.4 1.7 4.1
cern about supply bottlenecks and cost pressures caused by Imports %m/m 5.8 3.0 -0.5 7.5
the war in Ukraine and an extension of lockdown measures Balance (¥bn nsa) -2199 -670 -412 -938
in China. Meanwhile, we expect the nonmanufacturing in- Exports %oya 9.6 19.1 14.7 14.5
dex to rise from 8 in April to 10, in response to the ongo- Imports %oya 38.8 34.1 31.2 31.7
ing normalization of business activity after the late-March BoJ real export index -0.7 1.4 0.7 -1.2
lifting of the COVID-19 quasi-emergency measures. BoJ real import index 2.6 0.6 -2.4 0.5
Wed GDP - 1st estimates We expect the nominal trade deficit to expand in April.
Based on the first-20-days’ customs trade data, we project
May 18 %q/q, saar
real exports to decline after two consecutive monthly in-
8:50am 3Q21 4Q21 1Q22
creases, falling 1.2%m/m, sa. We look for real imports to
Real GDP -2.8 4.6 0.3 rise 0.5%, only a small increase even after the March de-
Private consumption -3.8 10.0 0.2 cline reflecting the supply shortages. We estimate that BoJ
Residential investment -6.3 -3.8 3.0 real exports, the proxy for GDP-based real trade, fell
Bus. capital investment -9.3 1.4 -1.0 1.2%m/m, sa, while imports rose 0.5% in April.
Government consumption 4.5 -1.4 5.0
Public investment -11.6 -14.4 0.0 Fri Nationwide consumer prices
May 20 2020-based
Exports -1.2 3.8 6.0
Imports -3.8 -1.5 10.0
%oya
%-pt contrib. to q/q saar GDP growth
Overall 0.5 0.9 1.2 1.9
Domestic final sales -3.5 4.2 1.1
Core (ex. fresh food) 0.2 0.6 0.8 1.9
Net exports 0.5 1.0 -0.7 Core (ex. fresh food and energy) -1.1 -1.0 -0.7 0.6
Inventories 0.2 -0.6 -0.8 Core (ex. food and energy) -1.9 -1.8 -1.6 0.2
GDP deflator (%oya) -1.2 -1.3 -1.1 %m/m, sa
We expect the first estimate of 1Q22 real GDP to show Overall 0.1 0.5 0.4 0.1
weak growth momentum in response to the Omicron wave Core (ex. fresh food) 0.0 0.4 0.4 0.3
since the beginning of the year. We expect real GDP Core (ex. fresh food and energy) 0.1 0.2 0.2 0.2
growth to slow significantly to 0.3%q/q, saar, in 1Q22 Core (ex. food and energy) -0.1 0.0 0.2 0.2
from 4.6% in 4Q21. Domestic private demand likely will We forecast that the core CPI (ex. food & energy) rose
be weak, as we expect private consumption to remain al- 0.2%m/m, sa in April after a 0.2% rise in March. We look
most flat under the quasi-emergency measures, while ris- for core goods prices to have risen firmly, reflecting the
ing uncertainty in the nonmanufacturing sector and pro- lagged effect of the increase in imported durable goods
longed supply constraints in the manufacturing sector are prices. Moreover, in oya terms, since the large drag from
also likely to have dragged on capex. We also expect a the sharp reduction of mobile phone charges should drop
39
Ayako Fujita (81-3) 6736-1172 Japan
ayako.fujita@jpmorgan.com May 13, 2022
Yuka Mera (81-3) 6736-1167
out of the annual inflation calculation from April, we ex- rower services deficit reflecting the recovery of service activity
pect the core measure to turn positive for the first time in a from the pandemic-related plunge.
year, rising 0.2%oya. Meanwhile, we expect the core CPI
(ex. fresh food) to rise 0.3%m/m, sa, leaving the oya rate at Bank lending (May 12)
1.9%, very close to 2%, in April, buoyed by energy and %oya
food prices. We project electricity and gas prices to accel- Feb Mar Apr
erate further in April reflecting the lagged effect of past oil Bank lending 0.3 0.5 ___ 1.1
price rises. %m/m, sa by J.P. Morgan 0.2 0.2 ___ 0.2
Bank lending edged up 0.2%m/m, sa in April (seasonally ad-
Review of past week’s data justed by J.P. Morgan), leaving annual loan growth at 1.1%oya
Employers’ survey – preliminary (May 9) after a 0.5% increase in March. Reflecting a moderation in
firms’ demand for operating funds during the pandemic, bank
%oya, official base
lending had slowed since 2Q21, especially lending at major
Jan Feb Mar banks, which mainly target large firms. However, lending start-
Monthly wages per employee 1.1 1.2 1.0 1.2 ed to increase again in late 2021 reflecting an increase in the
Scheduled earnings 0.9 0.8 ___ 0.5 value of foreign currency-denominated loans due to yen depre-
Full-timers monthly 0.8 0.8 ___ 0.6 ciation, and recently marked a historical high. Having said that,
Part-timers hourly 0.4 2.0 ___ 1.8 according to the BoJ, firms’ demand for funds hasn’t been ris-
Overtime payments 4.3 4.9 ___ 2.5 ing much, even in the lending at regional banks, which tend to
Special payments 2.3 8.1 ___ 10.7 target small and medium-sized firms. Therefore, excluding the
impact of yen depreciation, we continue to expect bank lending
Real wages (total) 0.5 -0.1 ___ -0.2
to slow in 2022, as economic activity gradually normalizes.
See main essay.
Economy Watchers survey (May 12)
Consumption activity index (May 11) DI
%m/m, sa
Feb Mar Apr
Jan Feb Mar
Current conditions (sa) 37.7 47.8 51.0 50.4
CAI (BoJ) -3.7 -3.4 -1.1 -1.5 ___ 1.9
Households (sa) 33.7 46.8 ___ 49.6
See main essay.
Business (sa) 43.1 45.5 ___ 47.4
Real private consumption composite index (May 11) Employment (sa) 52.1 59.5 ___ 62.6
%m/m, sa See main essay.
Dec Jan Feb
Source: BoJ, CAO, EJCS, JADA, JCSA, JDSA, JFA, JLM, VMA, Markit, METI, MHLW, MILT,
Cabinet office index 0.1 0.3 -0.3 -0.6 ___ -1.2 MoF, Reuters, Statistics Bureau, J.P. Morgan forecast
See main essay.
Balance of payments (May 12)
¥bn sa
Jan Feb Mar
Current account 184 179 517 522 489 1556
Trade balance -399 -775 -761 ___ -562
Exports 7360 7559 7572 ___ 7661
Imports 7759 7758 8334 8333 ___ 8223
Services -610 -607 -416 -419 ___ -467
Primary income 1371 1364 1994 1988 ___ 2820
Secondary income -178 -179 -286 ___ -235
Current account -1196 1648 758 2549
The March current account surplus expanded to ¥1,556 billion
(3.5% of GDP, annualized) from ¥522 billion (1.2%) in Febru-
ary. This was mainly due to the larger primary income balance,
which reflected a temporary increase in direct income receipts
due to a large dividend receipt from an overseas subsidiary at
the end of the fiscal year. Meanwhile, the trade balance deficit
narrowed in March, reflecting the increase in exports supported
by the economic reopening in DM countries, and decline in im-
ports due to supply bottlenecks. Ahead, we project the current
account surplus to narrow to 2.1% of GDP in 2022 from 2.9%
in 2021. The merchandise trade surplus likely will slide into
deficit in 2022 on strong imports reflecting the deterioration of
the terms of trade due to the surge in energy prices. This deficit
likely will be partly offset by a modest rise in the primary in-
come surplus in response to yen depreciation and a slightly nar-
40
Silvana Dimino (1-212) 834-5684 Global Data Watch
silvana.dimino@jpmorgan.com May 13, 2022
Gopal Kumar (91-22) 6157-3080
gopal.x.kumar@jpmchase.com
investment. If these conditions continue, the likely result will

Canada be some renewed strength in non-residential construction for
 Our Nowcaster signals upside risk to our 1H22 forecasts 2022/23.
 Despite the constructive signaling, we believe growth in Figure 2: Value of building permits
the current quarter will decelerate %,3m/3m, saar
 A surge in building permits is a favorable harbinger of 50

Nominal
future new construction
25
 Oil and gas rig counts are up dramatically Real
0
In a light week for data, we note that our Nowcaster is signal- -25
ing upside risk to our 1H22 forecasts—modest upside risk to
our 5.0%ar 1Q22 real GDP forecast but significant upside risk -50
to our 3.5%ar growth forecast for the current quarter. Indeed, 2015 2016 2017 2018 2019 2020 2021 2022 2023
Source: Statistics Canada, J.P. Morgan
the momentum at the end of the first quarter is very favorable.
The early reads on manufacturing and retail sales indicate
they rose in March creating a solid trajectory at the start of the Fossil fueling activity
second quarter in those key activity indicators. However, we The dramatic increase in energy prices over the past few
believe growth is likely to decelerate this quarter. We believe months has pushed up headline inflation. The increase has
the purchasing power squeeze and tightening financial condi- taken a bigger slice out of family budgets and raised the cost
tions will temper growth in real consumer spending and resi- of doing business in myriad industries. Higher prices appear
dential investment. The tightening is spilling over into less- to be boosting activity in the energy sector and sentiment in
supportive loan supply. This is backed up by the BoC’s 1Q22 the energy-based provinces. Demand for rigs in the last two
Senior Loan Officer Survey, which showed a general move months has risen dramatically (Figure 3) and the summer
toward less easing in lending standards. We think the tighten- drilling season appears to have started earlier than usual. On
ing in financial conditions is weighing on consumer sentiment our seasonal adjustment the rig count in April (oil and gas
(Figure 1). combined) was up 42% following a 23.5% increase in March.
Figure 1: Economic mood among homeowners and renters Past correlation suggests this is an important tailwind for real
diffusion index GDP growth in March and April.
70 Figure 3: Real extraction output in the GDP accounts and rig count
65 Homeowners #, sa by JPM %ch, m/m, sa
60 rigs (lagged 1 mth)
40 15
55
20 10
50 Renters
5
45 0
40 0
-20
35 Real oil & gas -5
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 -40 extraction output
Source: Bloomberg Finance L.P./Nanos Research Corporation, J.P. Morgan
-10
-60 -15
2016 2017 2018 2019 2020 2021 2022 2023
The one notable release this week wrapped up building inten- Source: Baker Hughes, Statistics Canada, J.P. Morgan
tions in the first quarter. The quarterly growth rate surged
23%ar (19% in real terms) as a substantial increase in nonres- The surge in activity has led to a jump in employment, which
idential permits last quarter offset a decline in residential has already returned to pre-pandemic levels along with capac-
permits (Figure 2). The strong growth built on a close to ity utilization in the sector. The positive impact can be seen in
50%ar increase in the fourth quarter. These permits are for- other parts of the economy. Increased sales of petroleum and
ward-looking and a favorable harbinger of future new con- coal products pushed up sales of manufactured products in
struction. Permits can be quite volatile and two large projects nominal terms in all three months of the first quarter.
boosted values last quarter. Nevertheless, as the construction
proceeds it will continue to boost real GDP growth and the
data potentially signal increasing expectations for business
41
Silvana Dimino (1-212) 834-5684 Canada
silvana.dimino@jpmorgan.com May 13, 2022
Gopal Kumar (91-22) 6157-3080
gopal.x.kumar@jpmchase.com
Data releases and forecasts Review of past week’s data

Week of May 16 – 20 Building permits (May 9)
%m/m, sa, unless as noted
Mon Housing starts Jan Feb Mar
May 16 Saar Total -8.2 -7.6 21.0 24.6 -6.4 -9.3
8:15am Jan Feb Mar Apr %oya -0.6 26.7 32.7 4.8 11.1
Total (000) 234.3 250.2 246.2 265.0
(%m/m) -1.9 6.8 -1.6 7.6
(%oya) -25.7 -6.3 -25.4 -4.0 Source: Statistics Canada, Ivey Business School, CMHC, Markit/S&PGlobal, Teranet/National
Bank of Canada, CREA, CFIB, Bank of Canada, J.P. Morgan forecasts
Mon Manufacturing report
May 16 %m/m, sa, unless noted
8:30am Dec Jan Feb Mar
Sales 0.6 0.9 4.2 1.7
New orders 0.7 1.8 2.4 2.4
Unfilled orders 1.5 2.1 0.9 0.9
Inventories 1.6 2.4 1.0 1.0
Inventory-shipments ratio 1.60 1.63 1.58 1.57
Mon Wholesale sales

May 16 Sa
8:30am Dec Jan Feb Mar
Total,%m/m 1.3 3.0 -0.4 -0.3
%oya 14.5 13.6 14.2 10.3
Mon Existing home unit sales

May 16 Sa
Total, %m/m 0.8 6.3 -5.4
%oya -10.5 -8.2 -16.3
Wed Consumer price index

May 18 %m/m nsa, unless noted
Total CPI 0.9 1.0 1.4 0.7
%oya 5.1 5.7 6.7 6.8
CPI-common (%oya) 2.5 2.7 2.8
CPI-median (%oya)* 3.3 3.5 3.8
CPI-trim (%oya)* 4.1 4.4 4.7
Ex food & energy 0.6 0.6 0.9 0.6
%oya 3.5 3.9 4.6 4.6
*seasonally adjusted
Thu Industrial PPI

May 19 %m/m, nsa, unless noted
Total 2.6 2.6 4.0 1.0
%oya 16.2 15.8 18.5 17.2
Ex energy 1.8 2.0 2.3 0.5
%oya 13.3 13.1 13.9 12.0
Thu New house prices

May 19 Nsa
Total,%m/m 0.9 1.1 1.2 0.6
%oya 11.8 10.9 11.0 9.7
42
Banco J.P.Morgan, S.A., Institución de Banca Múltiple, Economic Research
J.P.Morgan Grupo Financiero Global Data Watch
Gabriel Lozano (52-55) 5540-9558 May 13, 2022
gabriel.lozano@jpmorgan.com
Steven Palacio (52 55) 5382-9651
steven.palacio@jpmorgan.com
Mexico Figure 1: Quarterly inflation forecasts comparison

%oya, quarterly
 Banxico hiked 50bp to 7% and sticks to a hawkish rhet- 10
oric
8 J.P. Morgan's
 Terminal rate still expected at 8.75% but we see the forecast
6 Observed
board hiking 50bp in June and August Banxico's
4 forecast
 Inflation reached 7.7% in April, consumer prices at
2 Banxico's target
their highest level since January 2001
 IP disappointed in March as manufacturing fell short of 0
19 20 21 22 23
expectations
Source: INEGI, Banxico and J.P. Morgan forecasts
This week Banxico hiked its reference rate 50bp to 7%, from
6.5%. While the decision was widely expected, some uncer- Figure 2: Banxico vs. Fed policy rate outlook
%
tainty remained in terms of the bias of the statement and 9.0 8.75 4.0
whether some members, or at least one, would push for a 8.25
more aggressive action given the behavior of inflation (and 8.0 3.25 3.0
Banxico
expectations). In the end, and in our view, the statement was
2.75 7.75
outright hawkish in terms of the main inflation concerns for 7.0 FOMC 2.0
the board (inflation expectations, core inflation persistence,
and inertial forces at play) in the context of a challenging 6.0 1.0
global policy outlook. All in, we now see Banxico staying in
the 50bp camp for a little longer, with 50bp hikes in June and 5.0 0.0
August. Jan 22 Apr 22 Jul 22 Oct 22 Jan 23 Apr 23 Jul 23 Oct 23
Source: J.P. Morgan forecasts. Updated May 12 (Banxico) and May 4 (FOMC)
The communiqué was quite similar to March’s, underscoring

upside risks to inflation and an uncertain outlook for econom- Inflation fears unabated in April
ic activity. However, in addition to confirming that one mem- Headline inflation for April came in at 0.54%m/m, slightly
ber (Irene Espinosa) dissented as we expected, the Board said below expectations for a 0.58% increase. The downside miss
that given a more complex outlook for inflation and its expec- was largely due to a drop in agricultural prices, while core
tations, they will consider acting with more strength to services saw again a small decline in telecom prices, seeming-
achieve its target. Whether that means front-loading the hikes ly related to the implementation of 5G technology—and noth-
or taking a longer path with a higher terminal rate remains to ing to do with the Price Plan. Core services were in fact flat in
be seen. The bank updated its inflation path for this year and 2H April with a little help from tourism and airfares, which
next, now expecting year-end inflation at 6.4% from 5.5% and tend to decline after Easter. Still, core prices rose more than
core prices at 5.9% from 5.2% (Figure 1). We are still eyeing expected (0.78% vs. 0.73%), with broad-based pressures on
inflation at 7% but we will revisit our path if the recently her- core goods.
alded Plan from the government announced last week proves
to be effective. On this latter point, the board did mention the Annual core inflation now stands at 7.22%, the highest annual
Plan as a downside risk to inflation, but did not elaborate print since January 2001. Processed food was the main driver,
much on Banxico’s assessment. In our view, the plan could and while it should ease some in May if the government plan
lower inflation by 40-50bp by year-end, which would be clos- is implemented, the momentum in overall core inflation con-
er to the central bank’s updated path. If the plan fails to ease tinues to point to fast inertial inflation that is unlikely to sub-
price pressures, a second dissenter in June could come for- side soon, something also perceived in PPI and wage dynam-
ward, but for the time being we see Banxico settling in for ics (Figure 3). In seasonally adjusted terms, core inflation
50bp and ending the cycle in December at 8.75% (Figure 2). reached 0.68%m/m (8.4% 3m/3m, saar) a scenario that con-
firms the momentum is still concerning.
43
Banco J.P.Morgan, S.A., Institución de Banca Múltiple, Economic Research
J.P.Morgan Grupo Financiero Mexico
Gabriel Lozano (52-55) 5540-9558 May 13, 2022
gabriel.lozano@jpmorgan.com
Steven Palacio (52 55) 5382-9651
Figure 3: PPI and core goods CPI in the sector hit a three-year high, and national and external
%oya demand were equally solid. In other details, construction
10 jumped 3.2%m/m and mining was down 0.6%.
PPI* (t+3)
8 The downside miss in IP leaves the trajectory into 2Q looking
6 weaker than expected, with industrial output tracking a rough-
ly 0.7%ar decline early in the quarter. But, as said, April data
4 should reset this trajectory. Outside IP news has been more
Core goods
2 upbeat, specifically regarding the services sector. Survey-
based demand and income perceived by firms surged, as busi-
0 ness-related services are finally recovering from the labor
Jan 06 Jan 09 Jan 12 Jan 15 Jan 18 Jan 21
Source: INEGI. *PPI of goods destined to consumption. regulation-induced dip that took hold in late 3Q. But other
service-sector industries also printed on the strong side.
Hence, while this week’s data were disappointing, we remain
We keep our forecast unchanged, with inflation still tracking
confident in our call for 2.5%ar GDP growth this quarter.
our projection of headline inflation at 7% and core prices at
7.2%. The likelihood of a sharp correction to the downside on
the back of the Price Plan is quite low in our view, and we Data releases and forecasts
believe the impact on annual inflation will not exceed 50bp. Week of May 16 - 20
Of note, we already anticipated a partial policy-induced cor- No data releases.
rection when we cut our 2022 forecast to 7%.
March IP fails to deliver Review of past week’s data

March IP was well below our expectations for a 1.1%m/m Consumer prices
gain, printing at 0.4% instead. Earlier data had pointed toward Mar 2H Apr 1H Apr 2H
%2w/2w 0.59 0.16 0.24 0.18
strong factory output in the month, and we looked for a 1.7%
Core 0.40 0.44 0.21 0.27
jump. Instead, manufacturing edged 0.2% lower (Figure 4). %oya 7.62 7.72 7.71 7.65
The big miss is hard to square and rested largely on non-auto Core 6.88 7.16 7.21 7.27
output. But still, auto production was also weaker than sug- Feb Mar Apr
gested by light-vehicle production in the month. Manufactur- All items (%m/m) 0.83 0.99 0.57 0.54
ing could face some headwinds ahead, conspicuously from %oya 7.28 7.45 7.72 7.68
potential renewed supply constraints. Contrary to our previous Core (%m/m) 0.76 0.72 0.75 0.78
expectation for a meaningful upward revision to 1Q GDP at %oya 6.59 6.78 7.19 7.22
the end of this month, we now see risks roughly balanced
around the 3.6% saar flash release.
%oya, unless noted
Jan Feb Mar
Figure 4: Industrial production and manufacturing
%oya, nsa 4.3 2.4 2.50 2.6
%m/m, sa
Manufacturing 3.7 6.9 5.20 3.6
3 %m/m, sa 1.4 -1.2 1.10 0.4
IP Manufacturing
Manufacturing 0.3 0.5 1.70 -0.2
2
1 Source: INEGI and J.P. Morgan forecasts
-1
-2
Oct 21 Nov 21 Dec 21 Jan 22 Feb 22 Mar 22
Source: INEGI
That said, survey data were very robust across the board in
April, hence we expect output to have bounced back at the
beginning of 2Q. In particular, the IMEF output PMI was
strong, as were new orders. Furthermore, business confidence
44
Banco J.P. Morgan S.A. Economic Research
Cassiana Fernandez (55-11) 4950-3369 Global Data Watch
cassiana.fernandez@jpmorgan.com May 13, 2022
Vinicius Moreira (1-212) 834-4144
vinicius.moreira@jpmorgan.com
across the board. Core inflation was the highest since 2003 in
Brazil April and the recent IPCA releases were significantly higher
 COPOM meeting minutes left BCB with options for the than BCB’s scenarios by March and even suggest upside risks
next steps to our higher-than-consensus call for inflation ending 2022 at
9.1%. A potential source of downside risk to this forecast is
 Economic growth has been stronger than expected in that the government and Congress enact measures to curb or
1Q, but performance in 2H22 will deteriorate cut controlled prices, such as fuel and electricity.
 We now forecast 1Q GDP rose 4.2%q/q, saar and GDP
will expand 1%y/y in 2022 Uncertainty in the land of uncertainty
 We continue seeing the IPCA at 9.1% this year and In a more dovish message in the statement, the COPOM dis-
4.2% in the next, both above the targets for these years cussed that the monetary tightening already implemented was
quite intense and that much of its effect is still to be seen. The
Committee also highlighted that the tightening of financial
The COPOM minutes of last week’s meeting came out with a conditions poses some downside risk to activity going for-
balanced tone, reinforcing the uncertainty about the outlook
ward.
for inflation and growth. The COPOM again avoided more
explicit guidance on the terminal SELIC rate, giving the
By contrast, the COPOM acknowledged an additional deterio-
Committee more degrees of freedom to adjust the message as
ration in both short-term inflationary dynamics and the long-
the upcoming data and news are released. At this point, we
er-term projections, which despite the uncertainty of the mo-
still see the cycle ending with an additional 50bp hike in June
ment we believe justifies the message of a more prolonged
at 13.25%, but now with upside risks, given the strength of
cycle, versus previous guidance. In addition, the members of
activity and inflation.
the Committee discussed that global inflationary pressures
intensified due to high demand and supply shocks, and debat-
The economic fundamentals continue suggesting that a hawk-
ed that the differences between the COPOM scenarios and the
ish approach is appropriate. March retail sales and services
analysts’ projections may come from a slower reversal in in-
output were significantly stronger than we expected, reinforc-
dustrial goods inflation, different assumptions of neutral rates,
ing the surprising strength of economic growth in 1Q. We
and different assumptions about oil price dynamics.
then raised our 1Q GDP estimate from 2.4%q/q, saar to 4.2%,
pulling the 2022 GDP forecast up to 1%y/y from 0.6% before.
The crosscurrents of these effects probably led the COPOM to
While this stronger-than-expected outcome was in line with
give a more cautious message on the pace of tightening. As in
BCB’s view, we still think headwinds will prevent Brazil’s
last week’s statement, the COPOM reiterated that it is likely
GDP from growing strongly this year. Our models suggest
to extend the tightening cycle with a smaller adjustment in the
that the effect of tighter real rates will start impacting eco-
next meeting to anchor long-term inflation expectations and
nomic growth particularly in the second half of this year. Al-
ensure the convergence of inflation to the target. This overall
so, the global deceleration underway, particularly in EM Asia,
seems in line with our call for a final 50bp in June at 13.25%.
should weigh on Brazil as well through trade and confidence.
We thus have kept our 2Q-4Q forecasts unchanged (Figure 1).
No relief in April CPI
Figure 1: GDP 2021-2022 quarterly forecasts Not only did the IPCA rise 1.06%m/m, higher than the con-
%q/q saar sensus of 1.01% and our call of 0.96%, but also core IPCA
New Old
5 4.2 rose 0.93%, 15bp above our call. Most of the surprise came
4 2022 old: +0.6% from food and hygiene goods prices. Even though the month-
2.4 2022 new: +1.0%
3 ly IPCA decelerated from March to April, seasonally adjusted
2 core inflation increased 1.06%m/m, sa, the highest monthly
1 0.0 0.0 rise since 2003, from 1% in March. As a result, the IPCA ac-
0 celerated from 11.3%oya to 12.1% in April with the core
-1 moving from 8.5%oya to 9.2% and reaching 12.4%3m/3m,
-2 -1.2 -1.2 saar (Figure 2).
-1.8 -1.8
-3
22Q1 22Q2 22Q3 22Q4
Source: J.P. Morgan Last week, we revised up our 2022 IPCA forecast to 9.1%,
largely on the back of expectations of a significant hike in
gasoline prices this week, but only a diesel price hike of 8.9%
Meanwhile, there have been no meaningful signals of relief of
was announced with negligible direct impact on the IPCA.
inflationary pressures, with multi-year record-high numbers
45
Banco J.P. Morgan S.A. Economic Research
Cassiana Fernandez (55-11) 4950-3369 Brazil
cassiana.fernandez@jpmorgan.com May 13, 2022
Vinicius Moreira (1-212) 834-4144
vinicius.moreira@jpmorgan.com
Given the still-elevated gap between domestic and foreign us to upgrade our 1Q GDP growth forecast from 2.4%q/q,
gasoline prices, we continue expecting additional gasoline saar to 4.2% (Figure 4).
price hikes this year. We now look for hikes of 6% in June
and 5% in November, smoothing the adjustment throughout Figure 4: Brazil 1Q nowcaster 1Q forecast
the year, and keeping our year-end forecast at 9.1%. If this %q/q, saar
1Q nowcaster
bears out, IPCA inflation peaked in May at 12.1%oya and 5
4.2
should starting trending down from now onwards (Figure 3). 4
However, the peak—as happened at the end of last year and
beginning of this year—depends on the timing and magnitude 3 2.4 2.4 2.4
of this potential gasoline price increase; an earlier and strong- 2
er price hike could postpone the peak level to June. 1.2 1.2 1.2 1.2 1.2 1.2
1 0.4 0.4 0.6 0.6 0.6 0.6 0.6
Figure 2: BCB average of core metrics (IPCA)
0
%change 7-Jan-22 7-Feb-22 7-Mar-22 7-Apr-22 7-May-22
14 %3m/3m saar Source: J.P. Morgan
12 %oya
10 Data releases and forecasts
8
6
4 Tue Wholesale prices (IGP-10)
Headline
2 IPCA target May 17 Feb Mar Apr May
7:00am %m/m 1.98 1.18 2.48 0.15
0
12 14 16 18 20 22 %oya 16.69 14.63 15.65 12.20
Source: IBGE, BCB, and J.P. Morgan
Figure 3: Headline and core IPCA forecasts Review of past week’s data
%oya IPCA Retail sales
13 Jan Feb Mar
12 Core %m/m, sa 2.4 1.3 0.0 1.0
11
10 Core %oya, nsa -1.5 1.3 1.8 4.1
9 Broad %m/m, sa 0.4 2.1 -1.6 0.7
8 Broad %oya, nsa -1.4 0.3 0.3 4.5
7 Target ceiling
6
5
4
3 Core Consumer prices (IPCA)
2
1 Feb Mar Apr
2018 2019 2020 2021 2022 2023 %m/m 1.01 1.62 0.96 1.06
Source: IBGE, BCB, and J.P. Morgan %oya 10.54 11.30 12.02 12.13
Economic activity remained solid in March

Services sector report
Even following two months of strong growth, core sales ex- Jan Feb Mar
panded 1%m/m after which we expected stability. Headline %m/m, sa -1.8 -0.2 0.7 1.7
sales (includes vehicle and building material sales) grew %oya, nsa 9.3 7.4 9.3 11.4
0.7%, above the consensus of -0.1% and our call at -1.6%.
Consequently, retail sales are about 2% above the pre-
pandemic level after expanding 9.5% in 1Q22, the strongest Source: BCB, FGV, IBGE, and J.P. Morgan forecasts
performance since 2Q21, from -2.7% in 4Q21.
Meanwhile, services output rose 1.7%m/m, sa, above our call

at 0.7% and consensus of 0.8%, and reached the highest level
since May 2015. Services output ended 1Q22 growing
7.4%q/q, saar, up from 3.2% in 4Q21. Both are a testament to
the strength of growth at the beginning of this year, which led
46
J.P. Morgan Securities LLC Economic Research
Diego W. Pereira (1-212) 834-4321 Global Data Watch
diego.w.pereira@jpmorgan.com May 13, 2022
Lucila Barbeito (54-11) 4348-7229
lucila.barbeito@jpmorgan.com
Argentina Figure 2: Core CPI

3mma, annualized rate
150%
 Headline CPI logged 6.0%m/m in April (58%oya); core
CPI remains on the rise, scratching the 7% level Core CPI Ex. Food core CPI
100%
 Wage increases in the pipeline will add upside pressure
on inflation
 We continue to mark our Dec-22 inflation forecast high- 50%
er, now to 70%oya
 The BCRA hiked the policy rate again by 200bp, to 0%
Jan-18 Sep-18 May-19 Jan-20 Sep-20 May-21 Jan-22
49%
Source: INDEC
Headline CPI logged 6.0%m/m in April (58%oya), a bit We continue to mark our Dec-22 inflation forecast higher to
above our expectations (5.9%m/m), and BCRA’s survey con-
70%oya, and still flag that risks remain skewed to the upside
sensus (5.6%). The monthly print thus decelerated from
in the absence of structural anchors. Our baseline assumes 2Q
March’s peak (6.7%) but is still well above the already-high
inflation averages 4.8%m/m, and decelerates to a still-high
1Q22 average of 5.1% (Figure 1). YTD inflation logged
4.1%m/m monthly average in 2H22 assuming pressures from
at 23.1% (compared to 17.5% in same period last year).
international prices ease and without additional utility tariff
price adjustments. Yet, admittedly, the risks are that wage
Figure 1: Headline and core National-CPI
%m/m pressures and further fuel price increases push headline infla-
8.0 Headline
tion even higher in 2H22, despite the expected slowdown in
7.0 the crawling peg and the tightening of price controls. Of note,
6.7
6.0 Core 6.0 half of the unions have already closed wage negotiations with
5.0 increases above 55% (59.5% on average YTD), while the
4.0 other half will revise their agreements between June and Sep-
3.0 tember. We thus still flag upside risk to our revised 70%oya
2.0 Dec 22 forecast.
1.0
Low-dose monetary policy not enough to
Jan-17
Apr-17
Jul-17
Oct-17
Jan-18
Apr-18
Jul-18
Oct-18
Jan-19
Apr-19
Jul-19
Oct-19
Jan-20
Apr-20
Jul-20
Oct-20
Jan-21
Apr-21
Jul-21
Oct-21
Jan-22
Apr-22
fight rising prices

Source: Indec and J.P. Morgan
Following the April CPI print, the BCRA hiked the policy
rate again by 200bp, to 49%. On an effective annualized basis
Core CPI remains on the rise, scratching the 7% level. More the policy rate is equivalent to 61.8%, up from 58.7% previ-
important to gauge the underlying inflationary pressures, core ously. The new policy rate level compares to 58% trailing
inflation accelerated further to 6.7%m/m in April (118% an- headline inflation by April, and 61% for the next-12-month
nualized rate), the highest print since September 2018, follow- inflation as per our own forecast (58.8% as per April’s BCRA
ing the August 2018 devaluation jump. Meanwhile, regulated Survey). Thus, when deflating by last-12-month trailing head-
prices and seasonal prices decelerated from March to line inflation by April the real ex-post policy rate climbed to
5.4%m/m and 3.9%m/m, respectively, partially offsetting the 2.4%, while when deflating by our own forecast the ex-ante
acceleration in core inflation. By category, food CPI again real policy rate finally converged to positive territory, yet a
printed at a very high 5.9%m/m (adding 1.7%-pts to the head- very low +0.5% (Figure 3).
line print), followed by clothing prices (9.9%m/m and a 1.1%-
pt contribution). Moreover, our metric of underlying inflation
(adjusting core inflation by excluding food prices) printed at
6.4%m/m (109.5% annualized rate), also showing a strong
acceleration from the 5.3% reported in March. Against this
backdrop, we expect core CPI to continue to prove sticky,
evidencing strong and persistent underlying inflation pres-
sures (Figure 2).
47
Diego W. Pereira (1-212) 834-4321 Argentina
diego.w.pereira@jpmorgan.com May 13, 2022
Lucila Barbeito (54-11) 4348-7229
lucila.barbeito@jpmorgan.com
Figure 3: Real monetary policy rates

%, annualized effective rate
10
Ex-ante Ex-post
-10
Feb-20 Jun-20 Oct-20 Feb-21 Jun-21 Oct-21 Feb-22
Source: BCRA and J.P.Morgan
As discussed last month, without a more decided fiscal consoli-

dation effort, the additional peso supply embedded in the IMF
program is likely to further de-anchor inflation expectations.
Moreover, amid lack of credibility, a high positive real ex-ante
policy rate would only aggravate the inter-temporal monetary
disequilibrium. Thus, we don’t foresee a more decided monetary
contraction associated with a much higher ex-ante real rate.
In all, amid an unstable political and social scenario, we con-
tinue to emphasize the urgent need for the IMF program to be
recalibrated in order to provide structural anchors that keep
inflation expectations from de-anchoring further and contrib-
ute toward a sustainable reduction in realized inflation and in
FX reserves accumulation (see “The challenges of accumulat-
ing FX reserves”).
The author wishes to thank Juan Goldin, of the Latin America
Economics Research team, J.P.Morgan Chase Bank Sucursal
Buenos Aires, for his contribution to this report.
Data releases and forecasts

Economic activity
Thu Dec Jan Feb Mar
May 19 %m/m 10.0 5.1 9.1 7.0
Trade balance
Thu Jan Feb Mar Apr
May 19 $bn 0.3 0.8 0.3 1.0
Primary deficit
Fri Jan Feb Mar Apr
May 20 ARS$bn -16.7 -76.3 -99.7 -130.0

CPI
Feb Mar Apr
%m/m 4.7 6.7 5.9 6.0
Source: INDEC, Ministry of Economy, and J.P. Morgan
48
Ben Ramsey (1-212) 834-4308 Lucila Barbeito (54-11) 4348-7229 Global Data Watch
benjamin.h.ramsey@jpmorgan.com lucila.barbeito@jpmorgan.com May 13, 2022
Diego W. Pereira (1-212) 834-4321 Katherine Marney (1-212) 834-2285
diego.w.pereira@jpmorgan.com katherine.v.marney@jpmorgan.com
referendum to convene an assembly to draft a new constitu-

Andeans tion. Following the lawmakers’ decision, the head of the Cab-
 Colombia: Tax revenues surpassing targets inet, Hannibal Torres, stated the Congress resolved the issue,
which, “of course, ends there.” But the lack of an agenda
 Peru: The attempt to convene a Constituent Assembly amid a very low approval rate and lack of resolution to face
dissolved in Congress the challenges undermining the population’s real purchasing
 A new pension fund withdrawal: fuel to inflation amid power, as well as low economic dynamism, make that state-
de-anchored inflation expectations ment relative. After all, this administration has been charac-
terized by its shifting political strategy and lack of consisten-
 The BCRP hiked the policy rate 50bp; we now expect cy: Torres tempered the defeat in the commission with “we’ll
policy rate to climb to 6.0% by July see what the population will do.”
Colombia: Tax revenue surpassing targets Last Wednesday the Congress approved the ability to with-
draw up to PEN18,400 (4 UIT) from pension savings in the
On the positive side for Colombia, the tax agency has un-
private capitalization pillar, with 107 votes in favor, eight
veiled that gross tax revenue reached a cumulative
against and two abstentions,. As we discussed days
COP$74.53tn (5.6% GDP) between January and April. This
ago, lawmakers are hoping that this measure will help allevi-
level means that year-to-date tax revenue reached 114.6% of
ate the great economic stress produced by the COVID-19
the target set for the period, or 37.9% of the total tax revenue
pandemic. But lawmakers are disregarding any nega-
target for 2022. Tax revenue between January and April 2022
tive impact on financial stability and inflation. In
is 34.6% above the 2021 level, likely reflecting strong mo-
fact, reflecting the populist leanings of the region, lawmakers
mentum for nominal GDP stemming both from real activity
approved the sixth withdrawal of funds against the advice of
and higher prices (Figure 1).
technical entities such as the Ministry of Economy, the
Figure 1: Cumulative Nominal Gross Tax Revenue BCRP, or the Superintendence (SBS).
COP$trn
250 Tax revenue target for The Executive will now evaluate the law, and has 15 days to
2022: 196.7
Ytd tax revenue in April reached present observations on the proposal to Congress. If after 15
200 114.6% of the cumulative target
2021 days the president has not formalized any observations, the
150 2019 law is enacted.
100 2020
2022 The BCRP Board hiked the policy rate by 50bp, to 5.0%, in
50 line with our base case. In the statement the Board maintained
the wording associated with the normalization of the mone-
0
tary stance, amid tradable inflationary pressures from food
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Source: DIAN, Finance Ministry update of the Financing Plan for 2022 and energy. Headline inflation climbed to 7.96%oya in April
while inflation excluding food and energy also rose, although
by less, to 3.8%oya. Yet, core inflation also ran above the
Cumulative YTD tax revenue has consistently surpassed the
upper limit of the inflation target range (see “Headline CPI
target set for each period through 2021, and this metric con-
scratched 8%oya in April”). That said, the BCRP maintained
tinued to increase for the first months of 2022. The trend sug-
the projection for headline inflation to return to the target
gests that total tax revenue for 2022 is on track to surpass the
range by 2Q-3Q23, with a downward trend beginning in July.
total target for 2022 of COP$196.7 (14.8% of GDP, though
we would note that our forecast for nominal GDP has risk for
Therefore, the BCRP insists on pursuing a stable tightening
an upward revision). Naturally though, a sufficiently strong
pace, of 50bp per meeting, aiming to prevent additional infla-
confidence shock or an economic downturn could derail this
tion expectations from deanchoring, taking comfort in the
trend.
observed gap between headline and core inflation. But that
strategy has, so far, failed. Indeed, the latest BCRP survey
Peru: Risk premia, withdrawals, and mone- showed a spike in the next-12-month inflation expectations, to
tary policy 4.62% from 4.39% a month ago. Moreover, inflation for end-
The first attempt to convene a Constituent Assembly dis- 2023 was also revised higher, by 20bp to 3.2% (economic
solved in the Congress. Last Friday, the Constitutional Com- analysts) and by 50bp to 4% (non-financial firms). Economic
mission of the Congress archived the constitutional reform agents are thus not only assuming higher inflation, but more
project presented by the Executive, which proposed calling a
49
Ben Ramsey (1-212) 834-4308 Lucila Barbeito (54-11) 4348-7229 Andeans
benjamin.h.ramsey@jpmorgan.com lucila.barbeito@jpmorgan.com May 13, 2022
Diego W. Pereira (1-212) 834-4321 Katherine Marney (1-212) 834-2285
diego.w.pereira@jpmorgan.com katherine.v.marney@jpmorgan.com
persistence, likely associated with the high likelihood that the Chile
new pension fund withdrawal will be enacted. Data releases and forecasts
In terms of monetary policy ahead, we now forecast the policy
Current account
rate to climb to 6.0% by July. If the sixth pension fund with-
Wed 2Q21 3Q21 4Q21 1Q21
drawal is finally enacted as passed in Congress, the central May 18 $bn -3.2 -6.9 -7.6 -2.8
bank is expected to offer repos to help alleviate the liquidity
pressures stemming from pension funds asset selling, and to GDP
take a proactive stance in the exchange rate market, if need Wed 2Q21 3Q21 4Q21 1Q21
be. May 18 %oya 18.9 17.2 12.0 7.9
The author wishes to thank Juan Goldin, of the Latin America Review of past week’s data
Economics Research team, J.P.Morgan Chase Bank Sucursal
Buenos Aires, for his contribution to this report. Trade balance
Feb Mar Apr
%oya 0.2 1.3 1.0 1.1
Colombia
Source: INE, CBC, and J.P. Morgan estimates
Week of May 16 - 20 Peru
GDP growth
May 2Q21 3Q21 4Q21 1Q22
Mon 16 %oya, sa 17.5 13.3 10.7 7.8 Economic activity
%q/q, sa -3.20 6.06 4.27 0.74 Mon Dec Jan Feb Mar
May 16 %oya 1.7 2.9 4.9 4.6
Economic activity ISE
Mon Dec Jan Feb Mar
May 16 %oya, sa 11.7 7.7 7.9 8.8 Unemployment
Mon Jan Feb Mar Apr
May 16 % 8.6 8.9 9.4 9.0
Trade balance
Mon Dec Jan Feb Mar
May 16 $bn -1.1 -1.7 -1.1 -1.1 Review of past week’s data
Imports Policy rate
Mon Dec Jan Feb Mar Mar Apr May
May 16 $bn 6.2 6.1 5.8 6.6 % 4.00 4.50 5.00 5.00
Source: INEI, BCRP, and J.P. Morgan estimate
Retail sales
Jan Feb Mar
%oya 21.0 4.9 8.0 12.0
Jan Feb Mar
%oya 14.7 10.7 4.5 12.3
Source: DANE and J.P. Morgan estimates
50
Allan Monks (44-20) 7134-8309 Global Data Watch
allan.j.monks@jpmorgan.com May 13, 2022
from the card spending data of late. Nevertheless, heading

United Kingdom into 2Q output is now 0.1% below the 1Q average (a 0.2%-
 GDP up 0.8%q/q in 1Q but disappointed toward the pt disappointment compared to our forecast). Combined
end of the quarter with an anticipated incremental drag from the April rise in
energy bills, this raises the likelihood of a contraction in
 We revise 2Q lower but still expect positive growth due GDP this quarter. However, it has been less well reported
to surging car sales that SMMT private car registrations surged 24%m/m in
 Labor market still tightening and card spending hints at April, which by itself could boost April GDP by 0.5% (Fig-
still-rising consumption ure 1). Consumer-facing services remain 6.8% below pre-
COVID levels, implying scope for further normalization,
 MPC treading carefully but likely to continue hiking and April card spending data do not point to a sudden de-
cline. Even assuming drags from retail sales and COVID
spending, we therefore still expect April GDP to show posi-
The Chancellor announced this week that Dr. Swati Dhingra
tive growth. May and June GDP is likely to be very vola-
will take over from Michael Saunders as an external member
tile, and weak overall, due to the additional (Platinum) Jubi-
on the MPC from the August meeting. Dhingra is an econom-
lee bank holiday in June. We have made some further revi-
ics professor at the LSE; now all four external members on
sions to the monthly profile based on the GDP pattern ob-
the MPC have an academic background focusing on interna-
served during the 2012 (Diamond) Jubilee bank holiday.
tional economics, trade, and Brexit. It is hard to say where she
But amid many moving parts, we expect 2Q GDP to just
will be on the MPC’s hawk/dove spectrum, but as she replac-
about avoid a contraction. The weaker trajectory heading
es one of the most hawkish members it could skew the com-
into the quarter, however, has prompted us to revise down
mittee in a slightly more neutral direction. But the data will
our 2Q GDP forecast from 0.3%q/q to 0.1%q/q (from 1.0%
ultimately determine what the MPC does in August.
to 0.5% annualized).
Data released this week showed softer-than-expected growth Figure 1: Private car registrations
in March and 1Q. We have revised down our 2Q GDP fore- %m/m, sa
cast (from 1.0% to 0.5% annualized). But we expect output
30
will avoid a contraction due to a surge in car registrations in 25
April, and resilient overall consumer spending as indicated by 20
15
the latest card spending data. Timely data also indicate the 10
labor market continued to tighten in April despite slower GDP 5
0
and employment growth, with pay pressures remaining in- -5
-10
tense. Provided timely indicators (e.g., card spending, PMI, -15
vacancies) continue to hold up despite the intensifying real -20
-25
income drag, we think the BoE will respond to growing infla- -30
tion concerns by continuing to tighten at a once per meeting 20 21 22
Source: SMMT, J.P. Morgan
25bp pace.
 GDP in March fell 0.1%m/m. We revise down 2Q GDP,  GDP rose 0.8%q/q in 1Q, led by stronger domestic demand.
but still look for positive growth overall. The March outturn As discussed above, a weaker March print combined with
was weaker than our forecast for a 0.1%m/m gain, and the downward revisions to prior months led to GDP for the
consensus expectation for a flat outturn. The underlying de- quarter undershooting expectations (JPM and consensus:
tails were worse still, as a 1.7%m/m surge in construction 1.0%; BoE: 0.9%. Consumption grew 0.6%, with public
output masked declines of 0.2%m/m in both manufacturing consumption down 1.7% (reflecting lower COVID-related
and services. The drop in services was the bigger disap- activity) and gross fixed investment rising 5.4% due to a
pointment. While falling COVID-related spending did large 23.6% boost from public spending. Meanwhile, busi-
shave 0.2%-pt off growth, there was a larger boost from ness investment continued to fall by 0.5%. Strength in do-
other health-related activity including GP appointments. mestic demand was offset by a 4% non-annualized drag
Under the surface, private sector services output was weak from net trade. The ONS has highlighted the difficulties it
with consumer-facing services falling 1.8%. This did reflect encounters in compiling the demand-side data in this report,
concentrated weakness from a 15.1% drop in motor trades, and has indicated caution is necessary when interpreting the
however, which shaved nearly 0.3%-pt off monthly GDP. move in 1Q trade flows due to changes in data collection
Other consumer services continued to grow even as retail procedures. As such, a large statistical alignment factor has
trade declined, consistent with the message we have taken been used to balance the demand side with output, and any
51
Allan Monks (44-20) 7134-8309 United Kingdom
expenditure moves should be treated with caution. Exports

look extremely weak overall with a 4.1%q/q drop. Overall,
employee compensation rose 1.5%q/q in 1Q compared to a
1.8% rise in CPI prices. With the CPI set to rise 3.4% this
quarter, real incomes will almost certainly contract more
sharply.
 REC Jobs Report shows weaker job growth, but a still-

tightening labor market and strong pay gains. The REC
survey is a useful timely barometer of labor market trends.
The latest April survey indicated a sharp slowing in em-
ployment growth with the permanent placements reading
falling just over 4pts to 59.8—its weakest since March
2021 (Figure 2). At this level the survey still points to un-
derlying job growth of around 2% annualized, however,
consistent with other business surveys that have continued
to indicate strong hiring intentions. It was encouraging that
the vacancies reading barely declined from a very high lev-
el (corroborating higher-frequency data that have also
shown resilience into May). Moreover, while the staff
availability reading edged higher it nevertheless continued
to suggest that unemployment is still falling around 0.1%
per month. The permanent salaries reading also edged down
only slightly, and remains close to the prior month’s all-
time high. As such, the message is that the market is still
tightening despite some loss of hiring momentum, while
wage pressures remain intense.
Figure 2: REC job placements versus LFS employment growth

% balance, sa, REC reading is permanent placements %3m/3m, saar
75 Job growth 4
65 3
2
55 1
0
45 -1
35 REC placements -2
-3
25 -4
07 09 11 13 15 17 19 21 23
Source: ONS, Markit, REC, KPMG
 Card spending data shows continued growth. According to

the BoE’s CHAPS payment data collected from 100 major
corporates, credit and debit card purchases increased by 8%
in the first week of May after having held steady through
April (despite a wobble during the month). Growth was re-
ported in all categories including social, staple, work-
related, and delayable spending. The data are nominal and
not seasonally adjusted, and may have been affected by the
May bank holiday. But we take encouragement from the da-
ta as we estimate card spending is running above levels that
would be consistent with flat spending in real seasonally
adjusted terms.
52
Data releases and forecasts Fri Retail sales

May 20 Volumes, sa
Week of May 16 - 20 9:30am Jan Feb Mar Apr
Mon Rightmove house price index Including auto fuel (%m/m) 2.3 -0.5 -1.4 -1.0
May 16 Nsa Ex auto fuel
12:01am Feb Mar Apr May (%m/m) 2.2 -1.0 -1.2
%m/m 2.3 1.7 1.6 (%oya) 7.9 4.8 -0.7
(%3m/3m saar) -4.4 -8.4 -5.7
Tue Labor market statistics
May 17 Average weekly earnings (3mma %oya sa) Weak retail surveys point to sales that are broadly flat, but
9:30am Dec Jan Feb Mar we project another drop in the ONS data given their recent
Headline 4.6 4.8 5.4 5.3 weakening trend.
Ex bonuses 3.7 3.8 4.0 4.1
Private sector ex bonuses 3.9 4.2 4.5 4.8 Review of past week’s data
Labor force survey (all percentage rates, sa) BRC retail sales monitor
Three months to: Dec Jan Feb Mar %oya
Activity rate 63.2 63.1 63.0 Feb Mar Apr
Employment rate 60.6 60.6 60.6 Like for like sales 2.7 -0.4 -1.7
Unemployment rate 4.1 3.9 3.8 3.7 Total 6.7 3.1 -0.3
- single month 3.9 3.8 3.8 3.6
RICS housing market survey
Change over three months to: Dec Jan Feb Mar % balance, sa
Employment (000s) -38 -13 10 Feb Mar Apr
Prices in last 3mnths 77.9 78.0 73.8 73.7 80.5
We expect the unemployment rate to keep falling a tenth Stocks on books 37.0 37.8 37.9 38.1
per month, consistent with the REC survey. Sales in last 3mnths 18.5 18.7 18.5 18.7 19.9
Sales: stocks ratio (%) 50.0 50.4 49.1 49.4 52.3
Wed Retail prices New buyer inquiries 16 15 9 9 10
May 18 %oya
7:00am Jan Feb Mar Apr Business investment (prelim)
CPI 5.5 6.2 7.0 9.1 2000 = 100, sa
Core CPI1 4.4 5.2 5.7 6.2 3Q21 4Q21 1Q22
RPI (1987=100) 317.7 320.2 323.5 333.9 %q/q 0.7 1.0 -0.47
RPI 7.8 8.2 9.0 11.0 %oya 5.1 1.0 8.5
1. CPI ex food, energy, alcohol, and tobacco.
GDP
Petrol prices did not show any decline despite the 6p drop %m/m, sa (unless stated otherwise)
in duty announced in late March. Together with a 54% rise Jan Feb Mar
in regulated domestic energy bills and our assumption that Monthly GDP
core will show another firm 0.6%m/m, sa gain we expect %m/m, sa 0.8 0.7 0.1 0.0 0.1 -0.1
both headline and core inflation to accelerate further in %3m/3m, sa 1.3 1.0 0.8 1.0 0.8
year-on-year terms. This assumption includes a rise in %3m/3m, saar 5.3 4.1 3.2 4.0 3.2
VAT within the hospitality sector. Breakdown (%m/m, sa):
Industrial production 0.7 0.9 -0.6 -0.3 -0.2
Wed House price index Manufacturing 0.9 -0.4 -0.6 -0.2
May 18 %oya, nsa Construction 1.6 2.1 -0.1 0.2 1.7
9:30am Dec Jan Feb Mar Services 0.8 0.5 0.2 0.0 -0.2
All dwellings 9.8 10.3 10.9
3Q21 4Q21 1Q22
Thu CBI industrial trends Quarterly GDP (1st estimate):
May 19 % balance %q/q, sa 0.9 1.3 1.0 0.8
11:00am Feb Mar Apr May %oya, sa 6.9 6.6 8.7
Total order books 20 26 14 %q/q, saar 3.8 5.2 4.1 3.0
Output expectations 31 30 17 Breakdown (%q/q, sa):
Output prices 77 80 71 Private consumption 2.6 0.5 1.0 0.6
Public consumption -0.6 1.5 0.7 -1.7
Fri GFK consumer confidence Fixed investment 0.4 1.1 1.1 5.4
May 20 Nsa Business investment 0.7 1.0 1.8 -0.5
12:01am Feb Mar Apr May Exports -4.1 6.9 -3.0 -4.9
% balance -26 -31 -38 Imports 4.6 0.3 9.0 9.3
53
Allan Monks (44-20) 7134-8309 United Kingdom
Trade balance
£bn, sa
Jan Feb Mar
Total -12.8 -11.8 -9.3 -9.2 -11.6
Goods -23.9 -24.0 -20.6 -21.6 -23.9
Services 11.1 12.3 11.3 12.4 12.3
Source: Rightmove, CBI, BBA, BCC, GFK, BRC Markit, SMMT, RICS, Land Registry, ONS, BoE,
and J.P. Morgan
54
Nicolaie Alexandru-Chidesciuc (44 José Cerveira (44-20) 7742-3556 Global Data Watch
20) 7742-2466 jose.a.cerveira@jpmorgan.com May 13, 2022
nicolaie.alexandru@jpmorgan.com Jessica Murray (44-20) 7742 6325
Yarkin Cebeci (44-20) 7134-7547 jessica.x.murray@jpmorgan.com
yarkin.cebeci@jpmorgan.com
downside afterwards. Base effects in food and energy should

Emerging Europe add to that from the end of 2022. Services are re-pricing at an
 Czech Republic: Core CPI surprised again and we raise explosive pace, but with a slowing economy and tighter poli-
CNB terminal rate to 7% cy we think that’s unsustainable. We assume a gradual slow-
down in services prices to around 4.5% in 2023. Together this
 Hungary: Following the rest of the region, April CPI would bring the CPI to close to 4%oya in late 2023.
came in stronger than expected
 Romania: NBR hiked as expected, but more needs to be Given the sheer strength of underlying inflation dynamics the
done board’s recent attempts to end to the hiking cycle (via public
speeches or the introduction of a new, more dovish “alterna-
tive scenario” forecast) seem unlikely to succeed. We are
Czech Republic: Relentless CPI continues therefore tweaking yet again our terminal rate forecast to 7%.
to surprise to the upside We expect a 75bp rate hike in June, followed by another 50bp
April brought yet another upside inflation surprise. Headline in August.
CPI jumped to 14.2%oya from 12.7%, beating expectations of
both markets and the CNB (consensus: 13.3%; JPM: 13.8%; Hungary: NBH far from out of the woods
CNB: 13.8%). On the non-core front, food prices were ex- Consumer prices were up 1.6%m/m, leading to an annual rate
tremely strong (as in the rest of the region), jumping of 9.5%oya, from 8.5% and beating market expectations for
3.6%m/m, but were partly offset by declines in prices of alco- an 8.9% reading. Despite caps on the prices of certain food
hol and tobacco (-1.1%), and fuel (-3.3%m/m). In addition items, food prices jumped 3.9%m/m, with unprocessed items
there were further adjustments to prices of electricity in particular rising by a staggering 6.8% in one month (pro-
(+4.3%m/m) and natural gas (+4.7%m/m), with administered cessed food was up 2.6%m/m). Fuel prices are capped, and
prices as a whole up 3.2%m/m. Core prices moved up electricity and gas prices have been frozen for many years
1.5%m/m (1.4%m/m, sa), raising the year-over-year rate to now, so unlike in the rest of the region, energy does not play a
12.9%oya. The sequential pace accelerated from around 15% visible role on inflation in April. Core CPI prices were up
toward the 20% area (Figure 1). 1.8%m/m, pushing core inflation to 10.3%oya (0.6%-pt above
our estimate). A second measure of core CPI compiled by the
Figure 1: Czech core CPI sequential pace
%mm, saar NBH, “Demand-driven inflation,” which is essentially core
20 ex. processed food, is running a bit lower at 8.8%oya, but the
monthly pace is not that different (1.6%m/m).
15
The Hungarian data show something similar to Czech Repub-
10
3mma lic, if slightly more modest, which could be explained by a
worse FX performance in Hungary. Core goods momentum
5 reached its zenith in January, when it moved up at 13.5% an-
nualized pace. Since there has been some marginal reduction
0 and stabilization just above 10% ar. Turning to services,
20 21 22
Source: J.P. Morgan estimates
again, like in the Czech Republic, prices keep accelerating,
and in April expanded at a near 12% ar.
In the details, inputted rents accelerated to 1.6%m/m, after
slowing 1%m/m in recent months. We think the rise was due In addition to high inflation, Hungary has deep twin deficits,
more to the pickup in construction materials prices than to lack of a clear plan to consolidate the budget especially with-
house prices. Services (ex. rents) are increasingly strong, hav- out removing energy subsidies, an extremely muted transmis-
ing accelerated some 2.1%m/m, sa in our estimate. The only sion mechanism for monetary policy, and volatile FX. Also,
bright spot was goods prices, which slowed from a record there is the aggravation of relations with the EU, and the trig-
high, despite an extremely strong print in vehicle prices (up gering of the so-called conditionality mechanism. These to-
3%m/m), a category that weighs roughly a quarter within gether mean that this year there is little chance of Hungary
market goods. unlocking NGEU money, and in addition there is now a real-
istic possibility (though still not our base case) that all funds
It now seems very likely that the headline CPI will cross 15% are frozen. Since the terms of trade shock, Hungary became as
in the next few months. The elusive peak and inflexion point a whole a net borrower, so the deterioration of relations with
is hard to catch, but we see scope for fuel and tradable goods the EU and increased risks around investment funds are likely
prices to peak in coming months, adding some pressure to the to weigh on the forint. In this weak context, and with inflation
55
Nicolaie Alexandru-Chidesciuc (44 José Cerveira (44-20) 7742-3556 Emerging Europe
not showing any signs of letting up, we raise our terminal rate Figure 2: CE4 policy rate paths
forecast. We now see the NBH lifting the 1-week depo rate to %
10
8.5% in 3Q22 (7.5% previously), with the base rate eventually 9 POL
catching up. 8
CZE
7
6 HUN
Romania: April CPI makes life hard for the 5 ROM
NBR 4 J.P. Morgan
3 forecast
The National Bank of Romania (NBR) hiked 75bp to 3.75% 2
as we expected; consensus was 50bp. The corridor remained 1
0
at 200bp and no other operational changes were made. The Jan- Jun- Dec- Jun- Dec- Jun- Dec- Jun- Dec- Jun- Dec-
step up in size of the increase (previously in this cycle, NBR 19 19 19 20 20 21 21 22 22 23 23
Source: CNB, NBH, NBP, NBR, J.P. Morgan
has hiked only in increments of 50bp or less) was accompa-
nied by a statement showing somewhat more concern around
the inflation outlook, mentioning that the new inflation fore- For the next rate meeting, on July 6, we now expect a 100bp
cast is in double-digit territory until 2H23. We share this view rate hike (previously 50bp). We also expect a 100bp hike at
and believe that inflation will remain elevated in 2023 with the August rate meeting, when a new inflation report is re-
headline around 8% and core likely around 7% at end-2023. leased. Even with this accelerated pace of hikes, we believe
that the NBR will not be able to attain the tight stance re-
The April CPI followed the rate decision and showed a spike quired by domestic fundamentals any time soon.
in the headline CPI driven by electricity and gas prices, but
also strength in core driven by processed food. Similar to Data releases and forecasts
CE3, there was a major upside surprise in Romania’s inflation Week of May 16 – 20
for April, which printed at 13.8%oya vs. 10.2% in March
(consensus: 11.1%). However, unlike the CE3, the move Hungary:
higher was driven by large hikes in energy prices despite the Tue Real GDP, preliminary
presence of the price cap; it is unclear how energy prices in- May 17 %oya, unless otherwise stated
creased by more than 26%m/m in April. This pushed energy 9:00am 2Q21 3Q21 4Q21 1Q22
inflation (for electricity, gas, and heating) to 40.8%oya from Real GDP 17.8 6.2 7.1 7.3
%q/q saar 9.2 3.8 8.3 8.0
11.7% in March. Adding to the upside surprise were both
food and fuel inflation, which were also stronger than ex-
Thu NBH 1-week deposit rate decision
pected. Core inflation, driven by processed food, jumped to
May 19 %
8.3%oya vs. 7.6% expected.
On hold: 6.45%
In our view, the main takeaway from the April CPI report is Source: NBH, National Statistics, Eurostat, J.P. Morgan forecasts
that it has become clear the NBR has made a policy mistake
by hiking less than other central banks in the region thus far. Israel:
Even though the NBR hiked 75bp this week, we are not sure
Sun Consumer prices
the bank is fully aware of the need to bring rates higher quick- May 15 %oya
ly. Reversing the policy mistake will not be easy and will 9:00am Jan Feb Mar Apr
likely be costly in terms of lost output over the medium term, %oya 3.1 3.5 3.5 3.8
due to the need to keep a tight monetary stance for an extend- %m/m, nsa 0.2 0.7 0.6 __
ed period of time. We now see end-2023 core inflation at
about 7% (5.4% previously) and headline CPI at 8% (7.6% Mon Real GDP, flash
previously). As a result, we revise our peak policy rate to 8%, May 16 %oya, unless otherwise stated
to be reached in 2023. We think risks are to the upside for 9:00am 2Q21 3Q21 4Q21 1Q22
Real GDP, nsa 17.5 5.0 11.1 10.3
both inflation and the key rate, and that the NBR will have to
%q/q, saar 15.7 7.0 17.8 1.6
keep a high key rate for an extended period of time, likely all
of 2024, too, if it wants to lower inflation back toward the Source: BOI, National Statistics, J.P. Morgan forecasts
target. This stands in stark contrast to the rest of CE4, where
we forecast rate cuts commencing in 2023 (Figure 2). Poland:
Mon Core inflation
May 16 %oya
56
Nicolaie Alexandru-Chidesciuc (44 José Cerveira (44-20) 7742-3556 Global Data Watch
2:00pm Jan Feb Mar Apr %q/q, saar 5.5 1.5 8.3 -2.0
CPI-ex food and energy 6.1 6.7 6.9 7.7
Source: Local authorities, CBR, J.P. Morgan forecasts
CPI-ex admin. prices 8.9 8.0 10.6 __
CPI-15% trimmed mean 7.0 7.0 7.8 __
Avg of 4 NBP measures 7.4 7.3 8.3 __ Turkey:
Mon Balance of payments
Tue Real GDP, preliminary May 16 US$ bn
May 17 %oya, 2005 prices 10:00am Dec Jan Feb Mar
10:00am 2Q21 3Q21 4Q21 1Q22 Current account -3.5 -7.0 -5.2 -5.0
Real GDP, nsa 11.3 5.5 7.6 8.2 Trade balance -5.0 -8.3 -6.0 -6.0
%q/q, saar 7.8 10.4 6.6 8.3 Exports 22.4 17.8 20.2 23.2
Imports 27.4 26.2 26.2 29.2
Fri Industrial output Net invisibles/transfers -10.7 -1.5 -0.5 1.0
May 20 %oya Capital account -0.4 -7.5 -3.4 __
10:00am Jan Feb Mar Apr Overall balance 13.8 0.9 2.2 __
Industry 18.0 17.3 17.2 __
%oya, swda by GUS 15.3 17.4 17.2 __ Source: CBRT, National Statistics, J.P. Morgan forecasts
%m/m, swda by GUS 3.1 1.9 2.1 __

Manufacturing 15.5 15.5 12.5 __ Review of past week’s data
Construction 20.9 21.0 27.6 __
Czech Republic:
Fri Producer prices Industrial output
May 20 %oya %oya
10:00am Jan Feb Mar Apr Jan Feb Mar
Producer prices 16.1 16.1 20.0 __ Production, nsa 4.0 -0.3 __ 0.3
%m/m nsa 2.4 1.1 4.9 __ Production, wda 1.3 -0.3 __ 0.3
%m/m sa 3.3 3.2 -2.4 __ 2.6
Fri Gross wages and employment
May 20 %oya External trade
10:00am Jan Feb Mar Apr CZK bn
Gross wages, nominal 9.5 11.7 12.4 __ Jan Feb Mar
Real (CPI adj.) 0.1 2.9 1.3 __ Trade balance 8.2 -4.4 __ -13.8
Employment, 000s, nsa 6460 6475 6485 __ Ytd 8.2 3.8 __ -11.5
Employment, %oya 2.3 2.2 2.4 __ Ytd a year ago 24.8 46.1 63.2
Exports %oya 13.5 7.0 __ 3.9
Source: NBP, National Statistics, Eurostat, Markit, J.P. Morgan forecasts
Imports %oya 20.8 16.5 __ 12.7
Romania: Consumer prices

Tue Real GDP, flash %oya
May 17 %oya, unless otherwise stated Feb Mar Apr
9:00am 2Q21 3Q21 4Q21 1Q22 %oya 11.1 12.7 13.8 14.2
Real GDP, nsa 15.4 6.9 2.4 4.1 %m/m nsa 1.3 1.7 __ 1.8
%q/q saar 6.5 1.6 -0.2 7.0 Food 6.9 7.7 __ 10.7
Romania’s growth in IP and construction have been very Housing 16.0 17.6 __ 20.0
strong in 1Q22, pointing to upside to our forecast. Retail Transport 15.3 21.6 __ 21.5
sales grew, but at a slower pace. The big unknown comes See main text.
from post-COVID shock recovery and could also imply a
Balance of payments
stronger GDP print because services that we cannot track
CZK bn
have performed well. Downside risks are rather limited af-
Jan Feb Mar
ter a very weak 2H21 driven by politics and COVID-19.
Current account 7.7 -5.8 __ -17.6
Source: NBR, National Statistics, Eurostat, Markit, J.P. Morgan forecasts YTD 7.7 1.9 __ 0.0
YTD-a year ago 25.8 38.6 __ 0.0
Trade balance 15.8 4.0 __ -1.6
Russia:
Service balance 2.5 3.3 __ 2.0
Wed Real GDP Primary income -3.6 -6.1 __ -11.9
May 18 %oya, 2008 prices Secondary income -6.9 -7.1 __ -6.1
2Q21 3Q21 4Q21 1Q22 Financial account -8.4 -22.2 __ 2.3
Real GDP, nsa 10.5 4.0 5.0 3.2 FDI, net -27.8 -4.0 __ 5.9
57
Nicolaie Alexandru-Chidesciuc (44 José Cerveira (44-20) 7742-3556 Emerging Europe
Portfolio investments 172.6 -26.0 __ -42.2 Source: NBP, National Statistics, Eurostat, Markit, J.P. Morgan forecasts
Other investments -230.8 -36.1 __ 34.4
Source: CNB, National Statistics, Eurostat, J.P. Morgan forecasts

Romania:
External trade
Hungary: EUR bn
Jan Feb Mar
External trade, preliminary Trade balance -2.1 -2.5 __ -2.6
EUR mn Ytd -2.1 -4.6 __ -7.2
Jan Feb Mar Ytd a year ago -1.2 -3.1 __ -5.3
Trade balance -244 -117 __ -503 Exports, %oya 25.0 21.9 __ 26.0
Ytd -244 -361 __ -864 Imports, %oya 34.8 35.0 23.8 23.9 __ 22.9
Ytd a year ago 946 1731 __ 2582
Exports, %oya 16.5 18.7 __ 8.7
NBR rate decision
Imports, %oya 33.4 30.5 __ 22.6
%
The NBR hiked the policy rate 75bp to 3.75%, as expected.
Consumer prices See main text for details.
%oya
Feb Mar Apr Consumer prices
All items (KSH) 8.3 8.5 8.9 9.5 %oya
%m/m nsa 1.1 1.0 __ 1.6 Feb Mar Apr
Food 11.3 13.0 __ 15.6 %oya 8.5 10.2 10.6 13.8
Consumer durables 8.3 9.5 __ 11.2 %m/m, nsa 0.6 1.9 0.9 3.7
Fuel 18.7 11.4 __ 12.6 See main text for details.
Services 5.5 6.0 __ 6.3
Core inflation 8.1 9.0 9.1 __ 10.3
Current account balance
EUR bn
%m/m, sa 1.0 1.1 1.0 1.1 __ 1.5
Regulated g&s (NBH) 2.7 2.8 __ 2.8 Jan Feb Mar
Market g&s (NBH) 9.1 9.4 __ 10.4 Current account -0.5 -0.7 -1.8 __ -2.2
Ytd -0.7 -2.5 __ -4.7
See main text.
Ytd a year ago 0.0 -1.4 __ -2.7
NBH 1-week deposit facility
% Industrial output
NBH held the 1-week deposit rate at 6.45%, as expected. %oya
Jan Feb Mar
Source: NBH, National Statistics, Eurostat, J.P. Morgan forecasts
Industrial output, nsa 0.4 0.6 __ -1.6
Industrial output, sa 0.0 -0.9 __ -3.9
Poland: %m/m sa 1.8 -1.0 __ -0.7
Consumer prices, final Source: NBR, National Statistics, Eurostat, Markit, J.P. Morgan forecasts
%oya, unless otherwise stated
Feb Mar Apr Russia:
%oya 8.5 11.0 12.3 12.4
%m/m, nsa -0.3 3.3 2.0 Consumer prices
Food 7.6 9.2 12.7 %oya, unless otherwise stated
Fuel 11.1 33.5 27.8 Feb Mar Apr
%oya 9.2 16.7 17.8
Balance of payments %m/m, nsa 1.2 7.6 1.6
EUR mn Source: Local authorities, CBR, J.P. Morgan forecasts
Jan Feb Mar
CA balance -638 -2871 -2663 __ -2972
YTD (bn) -0.6 -3.5 -3.3 __ -6.3 Turkey:
YTD-a year ago (bn) 2.8 3.1 __ 3.2 Industrial production
Trade balance -1669 -1741 -1559 __ -3253 %oya
Exports %oya 20.0 10.4 __ 16.2 Jan Feb Mar
Imports %oya 37.4 21.6 20.0 __ 34.3 Total 7.6 13.3 __ 9.6
Service balance 2354 2253 2310 __ 2102 Manufacturing 7.8 14.4 __ 10.7
Primary income -369 -2510 -2541 __ -1527 Mining 8.7 6.1 6.3 __ 2.9
Secondary income -954 -873 __ -294 Energy and utilities 5.6 4.9 __ 1.9
Fin + cap balance -848 -3398 -3230 __ -4184
FDI, net -4572 -1712 -2296 __ -2774 Source: CBRT, National Statistics, J.P. Morgan forecasts
58
JPMorgan Chase Bank, N.A., Johannesburg Branch Economic Research
Sthembiso E Nkalanga (27-11) 507-0422 Global Data Watch
sthembiso.nkalanga@jpmorgan.com May 13, 2022
Sonja Keller (27-11) 507-0376
sonja.c.keller@jpmorgan.com
likely substantially higher food inflation profile and the more

South Africa pronounced risks of strong FX passthrough, eventually also
 Inflation likely ticked higher to 6% in April, from 5.9%, entrenching higher inflation expectations. So far, the SARB
with greatest uncertainty around food inflation had expected inflation to peak this quarter at 6.2% (from 5.9%
in March) with a deceleration to 5.4% in 4Q22 and 4.7% in
 SARB probably will pick up pace of tightening with a 1Q23. Our inflation outlook differs in that we project an infla-
50bp repo rate hike next week amid inflation markup tion peak only in 4Q22 and at a higher 7.2% in October, leav-
 The skewed upside risk to next year’s inflation outlook ing the year-average at 6.4% (SARB: 5.8%) (Figure 1). This
and weaker ZAR should now also prompt 50bp in July is due to our substantially higher food inflation profile that
envisages a food inflation peak above 10%, contrasting with
the SARB’s expectation for a broad sideways move at around
SARB to hike 50bp next week with April in- 6%-7%. In our view, the agricultural prices component of the
flation marginally higher March PPI (excluded from the headline PPI inflation meas-
The MPC is likely to substantially mark up its inflation out- ure) as well as futures prices of wheat and maize increasingly
look and step up its pace of tightening with a 50bp hike next support our view of such a further pickup in food inflation
week, taking the policy rate to 4.75%. Concerns of a soft re- (Figures 2 and 3).
covery, weak labor market, and subdued domestically gener-
Figure 2: South Africa food inflation (cereals) and input costs
ated inflation (with inflation frequently surprising to the
%oya F'cast
downside) so far have allowed the SARB to engage in a
70 20
measured pace of policy rate normalization in increments of Wheat and
25bp since November. Indeed, the April inflation report prob- 50 maize* 15
ably will show only a small drift higher to 6%, from 5.9% in 30 10
March, helped by the temporary petrol levy cut. Yet, food 10 5
inflation, particularly the volatile items, could now begin to
-10 CPI - cereals 0
shoot higher which adds some upside risk. We therefore see
-30 & bread -5
April inflation in a 5.7% to 6.3% range.
-50 -10
With a split committee in March (a two-member hawkish 13 14 15 16 17 18 19 20 21 22
Source: StatsSA, Haver, J.P.Morgan forecast, *composite of wheat , white and yellow maize
minority favored a 50bp move), the bone of contention be-
tween MPC members seemed to be the assessment of how
materially the current multiplicity of shocks prompts second- Figure 3: South Africa food PPI and CPI inflation
round effects and whether the degree of “SA exceptionalism”
%oya, both axes
can persist in an environment of high global inflation. We 14 20
believe chances of limited second-round effects and only a 12
CPI - food
marginal inflation target breach have now substantially faded. *PPI - Food (rhs) 15
10
8 10
Figure 1: South Africa inflation outlook 6 5
%oya Forecast
7.0 Repo rate % 4
0
2
6.0 0 -5
Upper end of band
Headline 14 15 16 17 18 19 20 21 22
5.0 inflation
Source: StatsSA, J.P. Morgan. Average agriculture and manufucturing (food)
4.0
3.0
Core We believe firmer food prices also exacerbate cost pressures
in related categories (alcoholic and non-alcoholic beverages,
2.0 restaurants, and domestic workers’ wages). In addition, the
2017 2018 2019 2020 2021 2022 2023 SARB’s transportation inflation projection for 2H22 likely
Source: StatsSA, J.P. Morgan forecast
needs to be raised (even as April and May benefited from a
temporary levy cut), partly mitigated by a likely lower elec-
Firming signals of a near-term inflation rise and upside risk to tricity tariff hike of 7.5% in July. We therefore expect the
next year’s inflation outlook will now prompt a hawkish shift SARB to revise up its 2022 inflation forecast to around 6.1%-
with a unanimous vote for a 50bp increase, in our view. We 6.2% (from 5.8%).
believe two key developments since the last meeting are a
59
JPMorgan Chase Bank, N.A., Johannesburg Branch Economic Research
Sthembiso E Nkalanga (27-11) 507-0422 South Africa
sthembiso.nkalanga@jpmorgan.com May 13, 2022
Sonja Keller (27-11) 507-0376
sonja.c.keller@jpmorgan.com
Skewed risks around 2023 inflation should sa in March (-6%m/m in February after +6% in January), sig-
now prompt a further 50bp move in July nificantly beating consensus projections for a contraction.
Wet weather, continued rail & logistics bottlenecks, a delayed
The softening in the currency to USD/ZAR 16.20, from 14.80 return to deep-level mining in January, and the impact of de-
at the time of the March meeting, now probably also supports layed delivery of heavy mining equipment on maintenance
a further 50bp hike in July (previously 25bp) due to the added duration had weighed on output early in the year. The March
inflation risk for 4Q22 and beyond. Notwithstanding remain- outturn reduces the magnitude of the subtraction from 1Q
ing tailwinds from elevated commodity export prices, a string GDP to 0.4%-pt (to from 0.8%-pt previously). Manufacturing
of mining production setbacks, logistics bottlenecks, and re- output also edged up by 0.6%m/m, with a likely 2.2%-pt con-
cent softening in terms-of-trade weigh on the current account tribution to GDP last quarter. On the basis of this outcome,
outlook. In our view, the 1Q22 trade balance surplus probably we raise our sequential GDP estimate to 3.7%q/q, saar (from
softened to 4.2% (from 5.1% in 4Q21) and we now expect a 3.5%) pending trade data next week.
current account surplus of 2% in 2022 (SARB: 3%), down
from 3.7% in 2021. A lowering of the SARB’s current ac-
count outlook combined with a softer USD/ZAR input as-
sumption (from 15.11 in March) may be a key factor in lifting Week of May 16 – 20
the SARB’s 2023 inflation outlook to 5%-5.2% (from 4.6%; Wed Consumer prices
JPMe: 5.3%) with risks significantly skewed to the upside. In May 18 %oya, except as noted
addition, the 2023 Brent input assumption of US$80p/b prob- 10:00am Jan Feb Mar Apr
ably is lifted to US$88-$90p/b, curbing the disinflationary CPI 5.7 5.7 5.9 6.0
%m/m, sa 0.2 0.6 1.0 0.7
impulse from base effects next year.
Core 3.5 3.5 3.8 3.7
With the output gap probably only marginally changed, such Wed Retail sales
revisions should result in the QPM-modeled repo rate outlook May 18 %oya
1:00pm Dec Jan Feb Mar
marked higher to 5.45% by end-22 (from 5.06% in March;
Real 3.2 7.7 -0.9 __
JPMe: 5.75%) and 6.35% by end-23 (from 6.10%; JPMe: Nominal 6.3 11.9 2.8 __
6.75%) (Figure 4). Note that this remains considerably below
market pricing of South Africa’s rate hiking cycle. However, Thu SARB policy rate announcement
May 19 %
the design of the SARB’s quarterly forecasting framework
We expect the MPC to hike the policy rate by 50bp to
(with mostly conversion to target at the end of the forecast
4.75% (see main text).
horizon) curbs the QPM’s projection of a policy rate in more
than marginally restrictive territory in the outer years of the
forecast horizon.
SARB official reserves
US$ bn, except noted
Figure 4: QPM repo rate projections Feb Mar Apr
%oya Gross reserves 57.7 58.2 __ 60.3
Forecast
6.5 International liquidity 55.5 55.4 __ 54.6
6.0 May '22 Manufacturing production

JPMe
5.5 Volume output
Jan Feb Mar
5.0
Manufacturing (%oya) 3.0 0.7 __ -0.8
4.5 March '22 January '22 %m/m, sa 2.6 -1.5 __ 0.6
4.0
Mining production
3.5
Volume output
3.0 Jan Feb Mar
2020 2021 2022 2023 Mining (%oya) 1.7 -4.9 __ -9.5
Source: SARB, J.P. Morgan. Quarterly profile based on inferred SARB's model %m/m, sa 6.0 -6.0 __ 1.7
March activity data allow fine-tuning of 1Q Source: StatsSA, National Treasury, J.P. Morgan forecasts
GDP tracking
Hard data releases this week firmed our convictions of still-
solid GDP growth last quarter as we raise our estimate by
0.2%-pt to 3.7%q/q, saar. Mining production rose 1.7%m/m,
60
J.P. Morgan Securities Australia Limited Economic Research
Ben K Jarman (61-2) 9003-7982 Global Data Watch
ben.k.jarman@jpmorgan.com May 13, 2022
Tom Kennedy (61-2) 9003-7981
tom.kennedy@jpmorgan.com
Australia and New Zealand Figure 1: Australian unemployment and wage growth
WPI, %oya 2000-2014
 The coming week’s minutes will offer further insight 4.5
2015 to now
into the RBA’s decision to hike rates in May 4.0
 We expect 1Q wages growth to print at 0.8%q/q, lifting 3.5
the annual rate to 2.5% 3.0 4Q21
 We project the unemployment rate will hold at 4% in 2.5

April, alongside employment growth of 30K 2.0
 NZ 2022 Budget is expected to reveal smaller deficit 1.5

4.0 4.5 5.0 5.5 6.0 6.5 7.0
forecast for the coming fiscal year Source: ABS, J.P. Morgan Unemployment %
It’s a busy week ahead in Australia with the RBA minutes The industry/sector composition of wages is likely to be simi-
released on Tuesday, followed by the long-awaited 1Q wage lar to 2H21 when the modest acceleration in quarterly growth
print and labor force survey for April. The RBA minutes will was underpinned by sectors in which private wage negotia-
offer more insight on the Bank’s decision to commence the tions are the most prevalent wage-setting mechanism (for ex-
hiking cycle at its May Board meeting, particularly with re- ample, the professional, technology, and scientific industries).
spect to the magnitude of the move (+25bp) given economist By contrast, industries where wages are tethered to award
expectations were clustered around +15bp or +40bp moves. rates or enterprise bargaining agreements (EBAs) will be
Governor Lowe’s press conference following the announce- slower to respond, and an obvious headwind to near-term
ment repeatedly described the decision as reverting to busi- wages growth. The coming week also brings Australia’s
ness as usual, so we expect the minutes also to reflect this monthly labor force survey. The data have outperformed ex-
sentiment. We anticipate that, like the policy statement, the pectations so far in 2022 with the jobless rate now running at
forward guidance will note that a further rise in interest rates multi-decade lows (current: 4%, Figure 2).
will be required to return inflation to the target band. The
Bank delivered updated economic forecasts in the Statement Figure 2: Australian underemployment and unemployment rates
on Monetary Policy that leave little room for surprise, though % of labor force, both axes
we expect the minutes to reiterate the message that inflation Underemployment rate
8
pressures have intensified and will require a more immediate 13
7 Unemployment rate
monetary policy response. 11
6
9
Big week for the labor data
5 7
We expect the coming week’s 1Q22 wages result in Australia
4 5
to print at 0.8%q/q, one-tenth firmer than the prior quarter’s
outcome, and enough to see the annual rate increase to 3 3
2.5%oya (Figure 1). Market focus on the wage data has argu- 05 07 09 11 13 15 17 19 21 23
Source: ABS, J.P. Morgan
ably diminished in the past month following the RBA’s hawk-
ish pivot and decision to lean more heavily on feedback re-
ceived via its liaison program, rather than wait for confirma- While economic activity remains solid and the main leading
tion in the official data that rising price pressures are also lift- labor indicators are still elevated (for example, new job adver-
ing wages. With regard to the near-term cash rate outlook, we tisements), they are now consistent with the current unem-
view the 1Q data as somewhat asymmetric as a stronger-than- ployment rate. With unemployment now close to our estimate
forecast print (RBA implied quarterly wage growth is 0.7% in of NAIRU, further declines in the jobless rate will be harder-
1H22) would validate the signal from the liaison program, won. Accordingly, we expect the jobless rate to show signs of
while a softer outcome can be downplayed as a timing issue stabilization and oscillate in the high-3s/low-4s in coming
with wages pressure coming later in the year. Still, an annual quarters. In terms of next week’s print, we expect the headline
result of 2.5% could still influence perceptions of whether unemployment rate to hold at 4%, alongside a 30K gain in
policy needs to push well past neutral in the near term. employment and one-tenth increase in the consistently-strong
participation rate to 66.5%.
61
J.P. Morgan Securities Australia Limited Economic Research
Ben K Jarman (61-2) 9003-7982 Australia and New Zealand
ben.k.jarman@jpmorgan.com May 13, 2022
Tom Kennedy (61-2) 9003-7981
tom.kennedy@jpmorgan.com
Activity and prices still strong is a known dynamic so implications for markets should be
minimal, though it’s worth highlighting this is still a balanc-
Australian retail volumes increased 1.2%q/q in the March
ing act given the pace of near-term reserve drainage remains a
quarter, marginally firmer than the consensus estimate
function of LSAP sales, the Debt Management Office’s
(+1%q/q) but below our forecast of 1.5%q/q. The mix of
(DMO) funding plans, and improvement in the underlying
spending was consistent with expectations and the nominal
budget balance.
monthly data released through 1Q22. All major subgroups
posted strong outcomes, though sales growth at department
stores (+4%q/q) and household goods retailers (+3.4%q/q) Australia
was particularly strong. The retail survey is skewed toward Data releases and forecasts
goods consumption and therefore overlooks spending dynam- Week of May 16 – 20
ics across most service-based sectors. Given we expect ser-
vices to have outperformed early in 2022, we retain the view Wed Private wages ex. overtime
May 18 Jun Sep Dec Mar
that household consumption will outperform the retail-
11:30am %q/q 0.6 0.7 0.7 0.8
specific data.
The NAB business survey for April was also released this Thu Labor force survey
week. The headline measures sent mixed signals as business May 19 Jan Feb Mar Apr
confidence fell 6pts to +10, while firms’ perceptions of oper- 11:30am Unemployment rate (%) 4.3 4.2 4.0 4.0
ating conditions climbed 5pts to +15. The survey’s nominal Employment (ch. 000s) 12.9 77.4 17.9 30.0
indicators were mixed with the price of final products (the Participation rate (%) 66.2 66.4 66.4 66.5
most relevant component for CPI) falling to 1.7%q/q from
2.4%q/q, while firms’ reported labor/purchase costs increased
and remain very high by historical standards. The read- Review of prior week’s data
through from these survey-based measures to the official CPI NAB business confidence (10 May)
data is somewhat murky, though in general we view the April Feb Mar Apr
print as consistent with still-elevated inflationary pressures Index 14.0 ___ 16.0 ___ 10.0
and expect annual headline and core inflation to accelerate in
2Q.
Retail sales volumes (10 May)
Sep Dec Mar
NZ Budget to reveal smaller deficits %q/q 1.6 7.9 1.2
New Zealand’s Budget for 2022 is released in the coming
week and the tracking data suggest the deficit will print near
NZ$7 billion, roughly NZ$5 billion narrower than the forecast New Zealand
from the midyear update delivered just six months ago. The
improvement in the budget bottom line is directly related to Data releases and forecasts
revenues, which have outperformed expectations by 5% on Week of May 16 – 20
the back of a spike in corporate taxation. While the fiscal ac- Fri Trade balance
counts will show meaningful fiscal repair, the government has May 20 Jan Feb Mar Apr
already indicated that spending plans are unlikely to be al- 8:45am NZ$bn -1.1 -0.7 -0.4
tered, meaning the associated fiscal impulse will be relatively
minor.
Review of prior week’s data
At the half year update the NZ government materially lowered RBNZ 2Y inflation expectations
its bond issuance forecasts by NZ$10bn for FY2021 and Dec Mar Jun
NZ$7bn in the three subsequent years for a cumulative % 3.0 3.3 3.3
NZ$31bn reduction. At face value the improvement since late
last year suggest new issuance numbers can be trimmed fur-
Source: ABS, Stats NZ, J.P. Morgan forecast
ther, however we expect only modest changes (if any) given
the government will need to fund asset purchases from the
RBNZ as the central bank unwinds its balance sheet. The
RBNZ has sketched out its plans for asset sales, which will
occur gradually at a pace of NZ$5 billion per fiscal year. This
62
JPMorgan Chase Bank, N.A., Hong Kong Economic Research
Haibin Zhu (852) 2800-7039 Tingting Ge (852) 2800-0143 Global Data Watch
haibin.zhu@jpmorgan.com tingting.ge@jpmorgan.com May 13, 2022
Grace Ng (852) 2800-7002
grace.h.ng@jpmorgan.com
The lingering local Omicron wave and tightening zero-

Greater China COVID policy remains the most significant macro risk to the
 China: Exports slowed in April amid supply chain dis- Chinese economy. Our baseline scenario assumes production
ruptions, led by a decline in shipments to DM markets activity will start to normalize in May (indeed the authorities
have been encouraging the resumption of production in se-
 FX reserves fell US$68.3bn on hawkish Fed lected factory lines in Shanghai and neighboring export hubs),
 CPI inflation picked up to 2.1%oya on food and energy; though the recovery will likely be a gradual one as relaxation
PPI showed further sequential uptick of lockdown/mobility restrictions will likely be cautiously
implemented. Meanwhile, the relative outperformance of
 Credit growth slowed notably on weak credit demand China’s April exports to the ASEAN region (+6.1%m/m, sa)
and Omicron disruption may hint at some near-term diversion of production and ex-
 2Q GDP is tracking -1.5%q/q, saar; we revise down full- port activity toward other major production hubs in Asia.
year growth forecast to 4.3%y/y
FX reserves fell US$68.3bn on hawkish Fed
 Taiwan: Export activity beat expectations in April
China’s FX reserves fell by US$68.3bn to US$3.1197 trillion
 Next week: China FAI, IP and retail sales; Hong Kong in April, the largest monthly decline since late 2016 (Figure
unemployment rate and Taiwan export orders 2). The implied capital outflow may have stayed elevated at
US$48.1bn in April. A hawkish Fed has not only supported
China’s exports slowed in April amid Omicron-related supply USD strength, but also led to a rapid increase in US rates. The
chain and logistics disruptions, growing 3.9%oya on a US dollar index spiked from 98.3 to 103 in April, leading to
3.4%m/m, sa fall (Figure 1). Nominal imports held up better an estimated currency valuation loss of US$63.3bn. Mean-
than expected with a modest 1.7%m/m, sa, increase following while, US Treasury yields rose over 100bp across all major
the 4.0% easing in March. Exports to the major DM markets maturities in the past two months, pointing to a significant
decelerated significantly, including exports to the US (- valuation loss as China holds a large proportion of US Treas-
7.9%m/m, sa), the EU (-8.5%),and Japan (-10.9%), while uries and USD rate products in its FX reserves, an important
exports to EM Asia held up well (+2.6%). Export details by contributor to the elevated implied capital outflow.
product group suggest a broad-based slowing across lower-
Figure 2: China monthly change in FX reserves
end consumer goods (-6.3%) and tech products (-7.6%). On
the imports front, energy-related imports (crude oil and coal) USD bn
60
recovered further, while import volumes of major industrial
metals, including iron ore and copper, showed a moderate 30
sequential recovery, reflecting the frontloading of fiscal poli- 0
cy and support for infrastructure investment. In addition, pro-
-30
cessing imports remained sluggish in April (0.0%m/m, sa),
hinting at exports moderation for the next one to two months. -60
As for Russia-China bilateral trade, China’s exports to Russia -90
fell further by 9.9%m/m, sa in April, adding to March’s -120
33.7% plunge, while China’s imports from Russia grew Jan 14 Jan 15 Jan 16 Jan 17 Jan 18 Jan 19 Jan 20 Jan 21 Jan 22
15.5%. Source: SAFE, J.P. Morgan
Figure 1: China merchandise trade growth The 1%-pt RRR cut for FX deposits seems insufficient to alter
%oya CNY/USD weakness, and we think the primary target of the
50 Exports PBOC is to maintain currency flexibility and stability, which
Imports
40 is also in line with the US-China phase 1 trade deal, and avoid
30 one-sided depreciation expectations. Our FX strategist has
20 lifted the 2Q CNY/USD target to 6.7 (from 6.50) and the
year-end target to 6.80 (from 6.60) and we see the risk of
10
CNY weakness overshooting in the near term. If more macro
0
weakness fuels market expectation of further CNY deprecia-
-10 tion and CNY/USD is chased weaker, we think the PBOC
-20 will roll out more measures to help the market anchor curren-
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Source: China Customs, J.P. Morgan
cy expectations. Available macro-prudential policy instru-
ments include further FX deposit RRR cuts, increasing the
63
Haibin Zhu (852) 2800-7039 Tingting Ge (852) 2800-0143 Greater China
Grace Ng (852) 2800-7002
risk reserve ratio for FX forward transactions, reintroducing resists cutting the policy rate, there could still be a 10bp cut in
the counter-cyclical factor, and window guidance to encour- the LPR rate (the most relevant benchmark for banks’ lending
age more USD selling and restrict USD buying. rates) in May. If the PBOC were to resist lowering the MLF
in May, we believe the chances of MLF cuts for the rest of the
CPI and PPI inflation picked up sequentially year will be fairly low, especially considering that headline
CPI will likely trend up to average 2.9%oya in 2H22, as men-
Both CPI and PPI inflation came in above expectations in
tioned above.
April. Headline CPI grew 2.1%oya on a 0.9%m/m, sa rise
(Figure 3). Both food and energy prices picked up while core
CPI inflation stayed modest. Food prices jumped 3.1%m/m, Credit growth slowed notably on weak
sa on rising logistics costs amid the Omicron disruptions and credit demand and Omicron disruption
pork prices have started to recover on a modest 1.5%m/m, nsa April credit data disappointed the market as TSF growth
gain. Energy prices picked up further as vehicle fuel prices slowed by 0.4%-pt to 10.2%oya (Figure 4), and bank loan
rose 2.7%m/m, nsa. The core CPI edged up 0.1%m/m, sa as growth eased to 10.9%oya from 11.4% in March. The weak
prices for a range of major non-food, non-energy CPI items, credit report was driven by weak credit demand rather than
including clothing, medicine and medical care, and recreation, limited credit supply. This can be observed via the discrepan-
stayed flat in %m/m sa terms. While the annual PPI inflation cy between the pickup in M2 growth (from 9.7%oya to
rate eased to 8.0%oya from 8.3% in March, in sequential 10.5%oya) and the slowdown in loan growth (from 11.4%oya
terms, PPI rose 0.9%m/m, sa, attributable to elevated global to 10.9%oya).
commodity prices, such as oil, coal, and industrial metals.
Various credit components eased in April. Amid significant
Figure 3: China headline CPI and PPI weakness in property market transactions, using policy, total
%3m/3m saar, both scales loans to the households (heavily driven by mortgage loans)
12 PPI (NBS) 18 contracted 217 billion yuan in April. Medium- to long-term
Headline CPI loans to the corporate sector slowed significantly, suggesting
9 12
soft credit demand for corporate sector financing and invest-
6 6 ment. The PBOC also mentioned that rising costs of raw ma-
terials and input shortages have worsened the operating condi-
3 0
tions for the corporate sector, especially SMEs, leading to
0 -6 notable slowing in effective financing needs. Meanwhile,
government bond issuance moderated and corporate bond
-3 -12
issuance remained steady. Short-term bill financing for corpo-
10 12 14 16 18 20 22
Source: NBS, J.P. Morgan rates picked up, a typical phenomenon when the credit policy
guideline is relaxed but credit demand remains relatively soft.
While the Omicron-related travel restrictions may lead to lo-
gistics bottlenecks and longer delivery times, posing upward Figure 4: China TSF growth and credit impulse
cost pressure, the experience of the past two years suggests % JPM
forecast
core CPI generally tends to soften during periods when 40
COVID-19 cases spike and related lockdowns/mobility re- TSF growth
30
striction measures tighten, as consumer spending, transporta-
tion, and general service activity slow in the near term. In 20
addition, concerns about job security and the income outlook
10
amid recurring virus spikes could weigh on household senti-
ment and consumer spending, restraining pricing power for 0
TSF growth minus nominal GDP growth
consumer goods and services. Overall, we expect China’s CPI -10
inflation to stay at around 2.3%oya in 2Q22, before trending 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22
to average around 2.9% in 2H22. For full-year 2022, we ex- Source: PBOC; J.P. Morgan
pect CPI inflation to average at about 2.3%y/y.
In our view, the disappointing April credit report further high-
On the policy side, our baseline scenario looks for a 10bp cut lights the near-term weakness in the economy amid Omicron
in the MLF policy rate in May, though this is not a high- disruption, leading to further weakness in domestic demand
conviction call. In the 1Q monetary policy report, the PBOC and hence soft credit demand. For the macro picture, the
noted the importance of a market-oriented deposit rate mech- Omicron wave and zero-COVID policy remain the most
anism, and noted that banks’ weighted-average deposit rates prominent near-term concerns for the economy. On monetary
fell 10bp in the last week of April. Hence, even if the PBOC policy, we expect a 10bp rate cut in both MLF and LPR next
64
Haibin Zhu (852) 2800-7039 Tingting Ge (852) 2800-0143 Global Data Watch
Grace Ng (852) 2800-7002
week, but it has become a low-conviction call. Amid concerns March, with a strong sequential growth trend at 65.0%3m/3m,
of US-China monetary policy divergence and the latest uptick saar (Figure 5). Non-tech exports seem to have picked up
in China’s headline CPI, the PBOC may choose to lower some momentum, growing a notable 6.8%m/m, sa in April
market rates (LPR) without cutting the policy rates (MLF and and boosting sequential trend growth to 22.7%3m/3m, saar. In
7-day reverse repo rate) next week. In the bigger picture, the particular, the machinery exports grew 26.1%3m/3m, saar,
room for further rate cuts is very limited. hinting at solid momentum in the global capex growth trend.
Figure 5: Taiwan export breakdown by products

2Q GDP tracking -1.5%q/q, saar
%3m/3m saar Nontech Tech
The escalation of the zero-COVID policy, including partial or 75 exports exports
full lockdowns in a number of cities, has disrupted economic
50
activity since March. Our high-frequency tracking indicators
suggest that the negative impact on economic activity further 25
intensified in April. The Politburo meetings in late April and
0
early May reiterated that the zero-COVID policy will contin-
ue to be strictly enforced, though efforts should be made to -25
mitigate the economic disruption (especially to prioritize fac-
tory reopening and resumption of logistics and transporta- -50
13 14 15 16 17 18 19 20 21 22 23
tion). The NBS will release April activity data next Monday. Source: MoF, J.P. Morgan
We now expect a 4%m/m, sa contraction in industrial produc-
tion, a 9% contraction in retail sales, and a slowdown of FAI While we have been concerned about the fallout of Mainland
growth to 3.6%oya in April (vs. 7.1%oya in March). This is China’s Omicron wave and impact of regional supply chain
more severe than our initial forecasts but in line with disap- disruption on Taiwan’s export sector activity, the upside sur-
pointing PMI readings in April. prise in Taiwan’s April export data is encouraging. Regarding
shipments by destination, though Taiwan’s exports to Chi-
Entering May, developments have been mixed. The number
na/Hong Kong SAR edged down 0.2%m/m, sa in April, ex-
of new infection cases has declined steadily but lower thresh-
ports to Europe (+12%) and ASEAN (+6.2%) showed notable
olds for tightening zero-COVID policies (as most local gov-
strength. As 2Q global growth will likely stay below-trend,
ernment officials believe early escalation in policy can short-
the near-term outlook on aggregate global demand conditions
en the economic disruption) suggest that the disruption to
remains somewhat uncertain. Meanwhile, underlying tech
economic activity has not lessened as new cases decline. We
demand for Taiwan exporters appears to remain well support-
expect some delay between the decline in new cases and ac-
ed, especially for new growth areas including 5G, HPC, and
tivity normalization, and that the government will prioritize
auto-related tech products, though WFH-related demand will
production and supply chain normalization before removing
likely ease with post-pandemic economic normalization.
individual mobility restrictions. Hence, we expect sequential
Meanwhile, the notable uptick in Taiwan’s capital goods im-
improvement in May activity to be modest (1.5%m/m, sa for
ports in April (+13.3%m/m, sa) seems to hint at solid corpo-
IP and 4%m/m, sa for retail sales), and activity in June to be
rate capex, sending a constructive signal on Taiwan manufac-
roughly back to the Jan-Feb level.
turers’ confidence about external demand conditions down the
As a result, we lower our current-quarter growth forecast to - road.
1.5%q/q, saar (from 1.6%), or 2.8%oya (from 3.3%). We
maintain our 3Q and 4Q growth forecasts at 4.9%q/q, saar and
7.3%q/q, saar, respectively, recognizing significant uncertain-
ty related to the Omicron outlook and evolution of COVID
policy. Our full-year growth forecast is now 4.3%y/y (down
from 4.6%).
Taiwan: Export activity beat expectations

despite regional supply chain concerns
Taiwan’s merchandise exports beat expectations to grow
3.4%m/m, sa in April, following average monthly growth of
2.9% in January-March. After adjusting for export prices, real
exports rose 2.9%m/m, sa. Tech exports rose 0.7%m/m, sa,
adding to a solid average monthly gain of 3.8% in January-
65
Haibin Zhu (852) 2800-7039 Tingting Ge (852) 2800-0143 Greater China
Grace Ng (852) 2800-7002
China:
Data releases and forecasts Hong Kong SAR:
Week of May 16 – 20 Data releases and forecasts
Mon Fixed investment Week of May 16 – 20
May 16 % change
10:00am Jan Feb Mar Apr Thu Labor market survey
%oya 12.2 12.2 7.1 3.6 May 19 Sa, 3mma
%oya, ytd 12.2 12.2 9.3 7.3 4:30pm Jan Feb Mar Apr
Unemployment rate 3.9 4.5 5.0 5.1
Mon Industrial production
May 16 %
10:00am Jan Feb Mar Apr Review of past week’s data
%oya 7.5 7.5 5.0 0.4 Real GDP (13 May)
%m/m, sa 0.9 0.6 -1.1 -4.0 % change
21Q3 21Q4 22Q1
Mon Retail sales %oya 5.4 5.4 4.7 4.7 -4.0
May 16 % change %q/q, saar 2.7 2.8 0.0 0.0 -11.1 -11.4
%oya 6.7 6.7 -3.5 -5.4
%m/m, sa 0.6 0.5 -1.2 -9.0 Taiwan:
Review of past week’s data Week of May 16 – 20
FX reserves (7 May) Fri Export orders
US$tn
May 20 % change
Feb Mar Apr
4:00pm Jan Feb Mar Apr
Foreign reserves 3.21 0.9 3.19 1.5 3.12
%oya 11.7 21.1 16.8 8.3
%m/m, sa 0.3 14.4 -7.7 -1.8
Merchandise trade (9 May)
US$bn
Feb Mar Apr Review of past week’s data
Balance 30.5 30.5 47.4 47.4 59.9 51.1
Merchandise trade (9 May)
Exports 217.5 217.5 276.1 276.1 270.1 273.6
US$bn
%oya 6.3 6.3 14.7 14.7 2.5 3.9
Feb Mar Apr
Imports 187.0 187.0 228.7 228.7 210.2 222.5
Balance 5.8 5.8 4.7 4.7 4.9
%oya 10.5 10.5 -0.1 -0.1 -5.6 0.0
Exports 37.5 37.5 43.5 43.5 38.9 41.5
%oya 34.8 34.8 21.3 21.3 11.6 18.8
Consumer prices (11 May)
Imports 31.6 31.6 38.8 38.8 34.0 36.6
% change
%oya 35.3 35.3 20.3 20.3 18.0 26.7
Feb Mar Apr
%oya 0.9 0.9 1.5 1.5 1.7 2.1
%m/m sa 0.2 0.2 0.7 0.7 0.4 0.9
Source: NBS, China Customs, Hong Kong Census and Statistics Department, Taiwan Ministry of
Producer prices (NBS) (11 May)
Economic Affairs, DGBAS, MoF, J.P. Morgan forecasts
% change
Feb Mar Apr
%oya 8.8 8.8 8.3 8.3 7.0 8.0
The long-form nomenclature for references to China; Hong Kong; and Taiwan within this research
%m/m, sa 1.0 1.0 0.8 0.8 0.3 0.9
material is Mainland China; Hong Kong SAR (China); and Taiwan (China).
Monetary aggregates (13 May)

%oya, bn yuan
Feb Mar Apr
M2 9.2 9.2 9.7 9.7 9.8 10.5
TSF flow 1229 4653 2381 910
New loan creation 1230 1230 3130 3130 1554 645
66
JPMorgan Chase Bank, N.A., Seoul Branch Economic Research
Seok Gil Park (82-2) 758-5509 Global Data Watch
seok.g.park@jpmchase.com May 13, 2022
Jisun Yang (822) 758-5512
jisun.yang@jpmorgan.com
China remain a drag, as we estimate that exports to China

Korea should fall another 4.5%m/m, sa after April’s 12.2% fall (Fig-
 Strong domestic demand recovery should buffer drags ure 2). Meanwhile, exports to the US and the EU continue
from exports in 2Q their robust monthly growth. Also, Korea’s imports from Chi-
na are estimated to rebound strongly in May, pointing to the
 Flash exports data suggest continued divergence by des- resilience of Korean trade data despite the lingering supply
tination; weak China vs. robust DM demand disruptions. We will look for more clarity from the flash 20-
 Current account surplus widened in 1Q despite the day data after the 10-day data’s usual high-frequency noise.
terms of trade drag
Figure 2: Customs exports to China
%m/m, sa Estimate based on
This week’s data confirm our longstanding view that 2Q 15 10-day reports
would see the cross-currents between sluggish external de-
10
mand and a sharp rebound in domestic demand. According to
the first 10-day flash data, customs exports to China are ex- 5
pected to fall further in May, pointing to a drag on exports 0
and manufacturing growth this quarter, while high-frequency -5
indicators and labor market data suggest retail sales and ser-
-10
vice-sector growth will rebound sharply in 2Q. Actual
-15
2018 2019 2020 2021 2022
Employment rises further amid reopening Source: Customs Office and J.P. Morgan estimates
Korea’s seasonally adjusted unemployment rate remained at a

record-low 2.7% in April, with continued employment growth Current account surplus widened in 1Q de-
at 0.4%m/m, sa. Employment’s sequential growth accelerated spite the terms of trade drag
to 1.7%3m/3m, sa (non-annualized), the second-fastest rate
According to the Bank of Korea’s external account data, Ko-
since 2001. The job gains were broad-based across the manu-
rea posted a current account surplus of US$7.6bn in March
facturing and services sectors and the labor participation rate
(seasonally adjusted), and the monthly average of the CA sur-
rose, highlighting the ongoing recovery in consumer-facing
plus in 1Q was US$7.3bn, higher than 4Q21’s US$5.9bn.
services activity and in overall labor market conditions.
While the customs trade balance has turned to a deficit in re-
Moreover, high-frequency data suggest that mobility and eco-
cent months, the gap between the merchandise trade balance
nomic activity have picked up smartly since mid-April as
(in BoP data) and customs trade balance widened, and the
quarantine restrictions are removed, highlighting that a pickup
merchandise trade surplus was maintained at a higher level
in private consumption and services production should lead
than in 4Q21 (Figure 3). Also, services and income balances
real GDP growth in 2Q (Figure 1).
continue to provide a buffer against the terms of trade drag,
Figure 1: Sales of services and mobility trends in Korea resulting in robust CA balance in 1Q22. Therefore, we con-
% change from baseline, both axes tinue to expect the CA to remain in surplus, at US$66.9bn in
30 Google 15
2022 (vs. US$88.3bn in 2021), even though it may dip into a
mobility deficit temporarily in April due to seasonal dividend pay-
20 10
Shading is lunar- ments. The financial account recorded outflows in March,
10 calendar holidays 5
including local residents’ continued investment overseas in
0 0
equity securities and foreigners’ outflows from the local stock
-10 -5
market. Reserve assets decreased by US$5.0bn in 1Q22 after
-20 -10
Card spending a total US$14.4bn increase in full-year 2021.
-30 -15
on services
-40 -20
Aug-20 Nov-20 Feb-21 May-21 Aug-21 Nov-21 Feb-22 May-22
Source: A local credit card company, Google, and J.P. Morgan
Exports performance continues to diverge

by destination in 2Q
Based on the flash 10-day data, we estimate that customs ex-
ports will sustain their robust trend rise, reaching 19.3%oya in
May. That said, details by destination show that exports to
67
JPMorgan Chase Bank, N.A., Seoul Branch Economic Research
Seok Gil Park (82-2) 758-5509 Korea
seok.g.park@jpmchase.com May 13, 2022
Jisun Yang (822) 758-5512
jisun.yang@jpmorgan.com
Figure 3: Korea trade balance - BoP vs. customs basis

US$ billion, sa BoP merchandise balance
14
12
10
8
6
4
2
0
-2 Customs trade balance
-4 (through April)
2015 2016 2017 2018 2019 2020 2021 2022
Source: BoK, and J.P. Morgan

Fri Producer prices

May 20 % change
%oya 8.9 8.5 8.8 8.2
Fri Stage of processing price index

May 20 % change
%oya 13.8 13.3 13.7 12.1
Current account (May 10)

US$ bn, nsa
Jan Feb Mar
Balance 1.9 1.9 6.4 6.4 6.5 6.7
Unemployment rate (May 11)

% of labor force
Feb Mar Apr
Seasonally adjusted 2.7 2.7 2.7 2.7 2.8 2.7
Not seasonally adjusted 3.4 3.4 3.0 3.0 2.9 3.0
Monetary aggregates (May 12)

%oya, monthly average
Jan Feb Mar
M2 12.7 12.7 11.8 11.8 11.5 10.8
Lf 10.6 10.6 9.9 9.9 9.5 9.1
Import and export prices (May 13)

%oya, in local currency terms
Feb Mar Apr
Export prices 20.5 20.5 22.8 23.4 20.2 21.4
Import prices 30.7 30.7 35.5 35.9 38.2 35.0
Source: BoK, NSO, and J.P. Morgan forecasts
68
Jin Tik Ngai, CFA (65) 6807 5556 Global Data Watch
jintik.ngai@jpmorgan.com May 13, 2022
auto-related component shortages in Japan that preceded the

ASEAN Ukraine crisis and China lockdowns remain acute. Given
 Thailand’s external backdrop to worsen on weaker US Thailand’s close industrial linkages with Japan (30% of auto
capex, China lockdowns, auto supply chain disruptions imports are from Japan), we expect a below-trend expansion
in manufacturing production in 2Q22. This adds downside
 Consumer spending will continue to be lifted by reopen- risk to our 2022 GDP forecast of 3.0%, especially in 1H22.
ing, but constrained by real income shock
Figure 1: US capex intentions vs. Thailand exports
 Inflation to resume upward trajectory through 3Q22;
12-mo z-score %oya
BoT continues to signal pro-growth stance in 2022 US capex intentions Thailand exports
2 60
In Thailand, recent global developments and data releases 40

1
continue to suggest further downside risk to growth and up- 20
side risk to inflation. The relapse in US capex momentum, 0
extended lockdowns in China, and auto-related supply chain 0
disruptions in the region paint a challenging external back- -1
-20
drop, manifesting in weak manufacturing data in March. The
onus is on domestic demand to offset external weaknesses. In -2 -40
10 12 14 16 18 20 22
this regard, reopening should continue to boost mobility and Source: CEIC, J.P. Morgan
consumer spending, but the improvement since the start of the
year remains tepid. We think that there are other drags in play, Figure 2: EM Asia (ex-CN, IN) manufacturing PMI
notably the real income shock from higher food and fuel infla- Diffusion index
tion, especially for farmers. April inflation came in below our New export orders
60 Backlog of work
expectations on flat global oil prices, but we expect price
pressures to rebuild through 3Q22 as the government gradual- 50
ly withdraws fiscal support and higher food-related input
costs are transmitted to retail prices. As such, we have up- 40
graded our 2022 headline CPI forecast from 4.8% to 6.0%. Suppliers' delivery times
This level would exacerbate the growth-inflation dilemma for 30
the Bank of Thailand (BoT). Absent the signposts of an earli-
er rate liftoff (e.g., broader demand-pull inflation and deplet- 20
2016 2017 2018 2019 2020 2021 2022 2023
ing onshore liquidity), we still expect the BoT to prioritize Source: Markit, J.P. Morgan
growth and only initiate rate normalization in 1Q23.
A tepid MPI recovery profile has direct negative implications
Speed bumps for industrial/export sector for exports. Recent trade data have been boosted by a spike in
gold shipments driven by residents monetizing their gold
Since the start of the year, Thailand’s manufacturing sector
holdings. Adjusted for this near-term trend, exports would
has been unable to sustain the strong momentum from 4Q21.
have been markedly weaker (Figure 3). We also noted that
The latest March print for the manufacturing production index
despite the supply-chain issues, exports have outperformed
(MPI) contracted 0.1%oya, significantly below consensus
manufacturing output since the onset of the pandemic, but
expectations (2.0%oya). The MPI weakness was broad-based
largely due to the massive buildup in finished goods invento-
across key categories (e.g. auto, electronics) and can be at-
ries. As the drawdown of inventories (especially in autos and
tributed to three evolving external dynamics. First, US capex
electronics) runs its course, we expect exports to “catch
momentum has rolled over since mid-2021 (Figure 1) albeit
down” with manufacturing output.
from historically elevated levels. With the Fed poised to hike
aggressively and household savings (6.2% of disposable in-
come) dipping to below pre-pandemic levels, a further moder-
ation in US goods imports is the path of least resistance. Sec-
ond, China’s stringent lockdowns across major demand cen-
ters and manufacturing hubs raise the specter of another round
of supply-side bottlenecks. Indeed, the EM Asia ex.-China
and India PMI is already seeing longer supplier delivery
times, even as external demand softens, as seen in weaker
new export orders and backlog of work (Figure 2). And third,
69
Jin Tik Ngai, CFA (65) 6807 5556 ASEAN
Figure 3: Thailand export growth¹ Figure 5: World food price index vs. Thailand farm income
%oya %oya
Total exports Exports ex. gold 19.6
20
45
18 World food price index¹
15.9
16
20
14 12.3
12
-5
10 8.9
7.9
8 6.8 Thailand farm income
-30
6 2015 2016 2017 2018 2019 2020 2021 2022
Jan 22 Feb 22 Mar 22 Source: FAO, CEIC, J.P. Morgan 1. World food price, containing grains and seedoil, is a proxy
Source: CEIC, J.P. Morgan estimates 1. Customs trade data of farmers' input costs
Consumer to do the heavy lifting Inflation stalls in April but has not peaked
External sector weakness, at least through 2Q22, means that April inflation moderated to 4.7%oya, coming in below ex-
the onus is on private consumption to support growth. In this pectations, driven mostly by flat transport and energy prices.
regard, mobility and consumer spending should continue to However, we expect the inflation profile to increase, peaking
get a lift from the transition toward an endemic equilibrium, around 6%-8% in 3Q22 (Figure 6). Fuel prices should be re-
but declining consumer confidence and a choppy YTD recov- set higher as the diesel subsidy rationalization kicks in effec-
ery profile (Figure 4) suggest that there are other major drags tive May 1. Electricity tariffs are also scheduled to increase by
in play. In our view, food and fuel price inflation since 4Q21 7% in May and 11% in September. Persistent supply shortag-
have delivered a significant shock to real incomes. This situa- es from the Ukraine crisis and Indonesia’s palm oil export ban
tion is particularly acute for farmers, whose margins are being also mean more upside to global food prices. This could bring
eroded by intense input cost pressures (e.g., animal feed, ferti- another round of re-pricing in the prepared food/F&B seg-
lizer) that have far exceeded output prices (Figure 5). The key ment later in the next one to two quarters. Given rising odds
catalyst for private consumption is still tourist receipts, given of second-round effects, we have recently revised up our
that tourism-related services employ roughly 20% of the headline CPI forecast from 4.8% to 6.0% and core CPI fore-
workforce. Border reopening, alongside the removal of key cast from 2.1% to 2.5% in 2022.
entry requirements, should lead to further improvement but on
an absolute basis, we are projecting only 5.6 million arrivals Figure 6: Thailand headline vs. core CPI
or US$6.7 billion in net travel receipts in 2022, 15% of pre- %oya oya%
Headline CPI Core CPI
pandemic levels. 10 4.0
8
Figure 4: Consumer confidence vs. private consumption 3.0
6
Index Private consumption %oya 2.0
Consumer confidence index 4
100 indicator 20 2 1.0
0
10 0.0
80 -2
0 -4 -1.0
2018 2019 2020 2021 2022
60 Source: CEIC, J.P. Morgan forecast in shaded area
-10
40 -20 Growth vs. inflation dilemma

11 13 15 17 19 21 23
Source: CEIC, J.P. Morgan Similar to regional central banks, the BoT is not insulated
from an increasingly stark policy dilemma surrounding weak-
er growth and higher inflation. At -4%, the real policy rate is
hovering near a record low, putting the BoT significantly be-
hind the rate normalization curve. Our updated augmented
Taylor Rule model (Figure 7), which is most sensitive to core
inflation, suggests a policy rate (1.7%) that is at least 100bp
higher than the current 0.5%. However, the fact that this im-
plied-actual policy rate gap has remained wide since the onset
70
Jin Tik Ngai, CFA (65) 6807 5556 Global Data Watch
of the pandemic could mean that the BoT is willing to look %oya 3.5 5.0 4.1 5.0
through higher inflation, even in the core component. In an %q/q, saar -3.3 14.0 4.1 3.5
open letter to the Minister of Finance issued in early April, the The central theme of the 1Q22 GDP print is the continued re-
central bank stated that inflationary pressures are cost-push covery in private consumption as public spending is gradually
withdrawn. This lays the groundwork for the liberalization in
and that headline CPI is expected to return to the 1%-3% tar- energy prices, which should lead to a rise in core inflation in
get range in early 2023. As such, the BoT can still afford to May and prompt BI to initiate rate liftoff in June.
maintain a pro-growth stance to ensure a more robust post-
pandemic recovery. We continue to expect rate normalization Consumer prices (May 9)
to commence in 1Q23, followed by 25bp hikes in 2Q23 and % change
3Q23 with the terminal policy rate ending at 1.25%. As men- Feb Mar Apr
tioned previously, we remain vigilant of signposts that could All items, %oya 2.1 2.6 3.0 3.5
warrant an earlier rate liftoff, namely broadening, demand- %m/m, sa 0.7 0.0 0.5 0.7
pull price pressures beyond food and fuel, as well as a materi- Headline CPI came in above expectations in April. Core CPI al-
al deterioration in excess liquidity resulting from accelerated so rose 0.3%m/m, sa and 2.6%oya. Price gains were driven by
the adjustment in Pertamax motor gasoline prices and volatile
deposit outflows as negative interest rate differentials widen. food items, especially cooking oil prices. We expect CPI to rise
materially in coming months on Lebaran seasonality and the
Figure 7: Thailand augmented Taylor Rule (TR) expected hike in Pertalite motor gasoline prices, which will
Policy rate, % likely prompt BI to initiate rate liftoff in June.
4.0
3.0 Malaysia
TR-implied
2.0 Data releases and forecasts
1.0
Actual
Thu Merchandise trade
0.0 May 19 US$ bn, nsa
-1.0 12:00pm Jan Feb Mar Apr
12 14 16 18 20 22 Trade balance 4.4 4.7 6.4 4.0
Source: J.P. Morgan estimates Exports 26.5 24.4 31.3 26.4
%oya 19.4 12.8 22.7 2.9
Imports 22.1 19.7 25.0 22.4
ASEAN %oya 22.1 14.3 27.1 8,1
Indonesia
BNM monetary policy meeting (May 11)
Week of May 16 – 20 % pa
Tue Merchandise trade Jan Mar May
May 17 US$ bn, nsa O/N policy rate 1.75 1.75 1.75 2.00
11:00 am Jan Feb Mar Apr BNM hiked the OPR by 25bp against JPM and consensus ex-
Trade balance 1.0 3.8 4.5 3.8 pectations of a hold, attributing the decision to stronger domes-
Exports, %oya 25.4 34.2 44.4 31.1 tic growth prospects as economic reopening gathers pace. Given
Imports, %oya 36.6 25.4 30.9 26.3 that BNM’s reaction function is more sensitive to growth than
inflation, there is risk of faster policy normalization. For now,
the central bank’s guidance for “measured and gradual” adjust-
Fri Balance of payments ments implies further 25bp rate hikes in 3Q22 and 4Q22.
May 20 US$ bn
2Q21 3Q21 4Q21 1Q22 Real GDP (May 13)
Current account -2.0 4.5 1.3 4.3 % change
Capital account 1.6 6.7 -2.4 -5.0 3Q21 4Q21 1Q22
Overall balance -0.4 10.7 -0.8 -0.8 %oya -4.5 3.6 3.1 5.0
%q/q, saar -13.5 28.9 9.8 16.4
Review of past week’s data 1Q22 GDP beat expectations, driven by a strong rebound in
private consumption as the economy reopens and households
Real GDP (May 9) tap into EPF withdrawal facilities and stimulus paychecks.
% change Strong domestic growth momentum set up for 50bp of rate
3Q21 4Q21 1Q22 hikes in 2H22 and another 50bp in 1H23.
71
Jin Tik Ngai, CFA (65) 6807 5556 ASEAN
Balance of payments (May 13) Thailand

US$ bn
3Q21 4Q21 1Q22
Current account 2.8 3.6 9.4 0.7 Week of May 16 – 20
Capital account 5.3 -0.4 2.0 7.2
Overall balance 4.9 0.8 10.2 3.0
Tue Real GDP
May 17 % change
The 1Q22 current account narrowed on stronger imports as the 2Q21 3Q21 4Q22 1Q22
9.30am
post-pandemic recovery picks up momentum. The financial ac-
%oya 7.7 -0.2 1.9 1.7
count recorded strong inflows on robust FDI inflows (US$5 bil-
lion), especially into the manufacturing sector, more than offset- %q/q, saar 0.0 -3.6 7.5 3.4
ting portfolio outflows (US$2.4 billion), which was driven by
institutional investor outbound equity investments. Despite the
upcoming policy rate hikes, we expect the NEER to remain
broadly stable considering risks around the goods exports sec- No data released.
tor.
Philippines Vietnam
Data releases and forecasts Data releases and forecasts
Week of May 16 – 20 Week of May 16 – 20
Thu BSP monetary policy meeting No data releases.
May 19 % pa
Dec Feb Mar May Review of past week’s data
Reverse repo rate 2.00 2.00 2.00 2.25
No data released.
Review of past week’s data Source: Central Bureau of Statistics, Indonesia; Department of Statistics, Malaysia Coordination
Board and National Statistics Office, Philippines, Singapore Statistics Department, Office for
Real GDP (May 12) Industrial Economics, Thailand; Bank of Thailand; General Statistics Office of Vietnam; J.P.
% change Morgan forecasts
3Q21 4Q21 1Q22
%oya 6.9 7.7 6.8 8.3
%q/q, saar 12.9 13.0 6.5 7.6
1Q22 real GDP beat consensus expectations, driven by a robust
recovery in domestic demand as mobility restrictions are lifted.
The strong growth momentum, together with the slew of above-
target CPI prints in recent months, has led us to expect rate lift-
off to begin in May, with an additional 25bp hike in June and
50bp hikes in 2H22, bringing the policy rate to 3.0% by the end
of the year.
Singapore
Tue Merchandise trade
May 17 US$ bn, nsa
Trade balance 3.6 5.2 3.7 1.8
Exports 40.6 38.6 46.5 45.8
NODX 13.1 11.5 14.1 13.2
%m/m, sa, US$ terms 5.9 -2.6 -3.2 0.3
%oya, US$ terms 15.4 7.9 6.4 10.0

No data released.
72
JPMorgan Chase Bank, N.A., Mumbai Branch Economic Research
Sajjid Z Chinoy (91-22) 6157-3386 Global Data Watch
sajjid.z.chinoy@jpmorgan.com May 13, 2022
Toshi Jain (91-22) 6157-3387
toshi.jain@jpmorgan.com
India Figure 2: Core-core inflation

 CPI surprised to the upside in April printing at % , both axes
7.8%oya 6.5 % 3m/3m, saar 8
 The print reinforces our call of a 50bp hike in June % oya 7

5.5
 Core prices remains elevated at 0.6%m/m, sa 6
 IP remained strong in March 4.5

5
4
Inflation remains on an uptrend with April CPI increasing 3.5 3
sequentially by 1.0% for second successive month. Core infla- Jan 20 Jul 20 Jan 21 Jul 21 Jan 22
tion was also strong growing sequentially by 0.6% in April. Source: MOSPI
All this contributed to a large upward surprise with headline
inflation printing at 7.8%oya in April accelerating from 7.0% IP strong in March
in March. This week’s print reinforces our call of the RBI
delivering a 50bp hike in the June policy. On the activity The firming of core can likely be attributed to unrelenting cost
front, industrial production has been recovering at a fast clip pressures intersecting with an economy that was recovering
in the last few months and continued that streak in March, before the negative terms of trade shock from higher global
growing sequentially by 2.7%m/m, sa. That said, we expect commodity prices. The services economy has continued to
the adverse terms of trade (ToT) shock from rising oil and recover in recent months post-Omicron—reflected in the
commodity prices to pressure growth in coming quarters. strength of the services PMIs. But what has been a pleasant
surprise is the second wind that industrial production seems to
April CPI surprises to the upside have acquired in recent months. The March IP released this
India’s headline CPI prices surged 1% sequentially for a sec- week surged another 2.7%m/m, sa on the back of the strong
ond successive month, underpinning April CPI to print at an increases of 1.4% in February and 2.1% in January (Figure 3).
eight-year high of 7.8%oya, discernably above market expec- On a year-on-year basis IP therefore printed at 1.9% in
tations (J.P. Morgan and consensus: 7.4%). This reinforces March, much above expectations (J.P. Morgan: 1.0% oya;
our call of the RBI delivering a 50bp hike in June policy, on consensus: 1.3%oya) and the increases were broad-based.
the back of last week’s 40bp inter-meeting hike, which re- That said, the adverse terms of trade (ToT) shock from rising
vealed an appropriately-hard pivot by the RBI toward infla- oil and commodity prices is expected to pressure growth in
tion management, against growing risks of entrenched infla- coming quarters, and to show up most visibly in margin and
tionary pressures and expectations. Proof of this was visible in earnings squeezes for firms.
the continued firming of underlying inflation. Core-core pric- Figure 3: Industrial production
es (standard core adjusted for diesel and petrol) rose another
% m/m,sa
0.6%m/m, sa in April on the back of the 0.7% increase in
3
March. Therefore, even as core-core inflation rose to a series-
2
high of 6.5% on a year-on-year basis, the underlying momen-
tum is even higher with the 3m/3m, saar rising to almost 7.0% 1
in April. 0
-1
Figure 1: Headline CPI inflation -2
% oya -3
8 Aug 21 Sep 21 Oct 21 Nov 21 Dec 21 Jan 22 Feb 22 Mar 22
RBI inflation target
Source: MoSPI
upper band
6
4
Meanwhile, within the CPI details, both food and fuel prices
contributed to the upward surprise rising by 1.1% and
RBI inflation target
2 4.0%m/m, sa, respectively. Within the food basket, both glob-
al (oil seeds and wheat) and domestic (fruits) factors drove the
0 increases. All told, food inflation firmed further from
16 17 18 19 20 21 22 7.5%oya in March to 8.1% in April (Figure 4). Meanwhile,
Source: MoSPI price hikes in LPG, kerosene, and electricity underpinned the
73
JPMorgan Chase Bank, N.A., Mumbai Branch Economic Research
Sajjid Z Chinoy (91-22) 6157-3386 India
sajjid.z.chinoy@jpmorgan.com May 13, 2022
Toshi Jain (91-22) 6157-3387
toshi.jain@jpmorgan.com
sharp increase in fuel prices. Separately, petrol and diesel— August policy onwards, as we had laid out after last week’s
though not technically part of the fuel basket—firmed another inter-meeting hike.
9%-10% sequentially in April.
Figure 4: Food inflation
% , both axes
12 % 3m/3m, saar No data releases.
19
9 % oya 14
6 9 Consumer prices (May 12)
3 4 % oya
Jan Feb Mar Apr
0 -1
Overall 6.0 6.1 7.0 7.8
-3 -6 Core-core 5.6 5.6 6.2 6.5
17 18 19 20 21 22
Source: MOSPI Industrial production (May 12)
Dec Jan Feb Mar

Expecting 50bp hike in June 1.0 1.5 1.5 1.9
Overall (% oya)
With April likely to be the peak of inflation—because very % m/m, sa 1.5 2.1 1.4 2.7
favorable base effects will help pull down year-on-year CPI
from May onwards—we believe the RBI will use the April
surge to frontload normalization through a 50bp hike at the
June review. The inflation gap down from May onwards will
Source: Central Statistical Organization, RBI, Ministry of Commerce, IHS-Markit, and J.P. Morgan
allow the RBI to move in smaller increments of 25bp from the
forecasts
74
Daniel Silver (1-212) 622-6039 Global Data Watch
US economic calendar
Monday Tuesday Wednesday Thursday Friday
16 May 17 May 18 May 19 May 20 May
Empire State survey (8:30am) Retail sales (8:30am) Housing starts (8:30am) Initial claims (8:30am) QSS (10:00am)
May 12.0 Apr 1.5% Apr 1,705,000 w/e May 14 195,000 1Q advance
TIC data (4:00pm) Ex. autos 0.8% Permits 1,825,000 Philadelphia Fed manufacturing
Mar Business leaders survey (8:30am)
(8:30am) Auction 20-year bond $17bn May 9.0
New York Fed President Williams May Existing home sales (10:00am)
speaks (8:55am) Industrial production (9:15am) Philadelphia Fed President Harker Apr 5.65mn
Apr 0.5% speaks (4:00pm) Leading indicators (10:00am)
Manufacturing 0.4% Apr
Capacity utilization 78.6%
Business inventories (10:00am) Announce 2-year FRN (r) $22bn
Mar 1.9% Announce 2-year note $47bn
NAHB survey (10:00am) Announce 5-year note $48bn
Announce 7-year note $42bn
May 76 Auction 10-year TIPS (r) $14bn
St. Louis Fed President Bullard speaks

(8:00am)
Philadelphia Fed President Harker
speaks (9:15am)
Fed Chair Powell speaks (2:00pm)
Cleveland Fed President Mester speaks
(2:30pm)
Chicago Fed President Evans speaks
(6:45pm)

Atlanta Fed President Bostic speaks Philadelphia Fed nonmanufac- Durable goods (8:30am) Initial claims (8:30am) Personal income (8:30am)
(12:00pm) turing (8:30am) Apr w/e May 21 Apr
May Real GDP (8:30am) Advance economic indicators
Manufacturing PMI (9:45am) Auction 2-year FRN (r) $22bn 1Q second (8:30am)
May flash Auction 5-year note $48bn Pending home sales (10:00am) Apr
Services PMI (9:45am) Apr Consumer sentiment (10:00am)
May flash FOMC minutes KC Fed survey (11:00am) May final
New home sales (10:00am) Apr May
Richmond Fed survey (10:00am)
May Auction 7-year note $42bn
Auction 2-year note $47bn
30 May 31 May 1 Jun 2 Jun 3 Jun

Memorial Day, markets closed FHFA HPI (9:00am) Manufacturing PMI (9:45am) ADP employment (8:15am) Employment (8:30am)
Mar, 1Q May final May May
S&P/Case-Shiller HPI (9:00am) ISM manufacturing (10:00am) Initial claims (8:30am) Services PMI (9:45am)
Mar May w/e May 28 May final
Chicago PMI (9:45am) Construction spending Productivity and costs (8:30am) ISM services (10:00am)
May (10:00am) Apr 1Q rev May
Consumer confidence (10:00am) JOLTS (10:00am) Apr Factory orders (10:00am) Apr
May Dallas Fed services (10:30am)
Dallas Fed manufacturing May Announce 10-year note (r) $33bn
(10:30am) May Beige book (2:00pm) Announce 30-year bond (r) $19bn
Light vehicle sales May Announce 3-year note $44bn
6 Jun 7 Jun 8 Jun 9 Jun 10 Jun

International trade (8:30am) Wholesale trade (10:00am) Initial claims (8:30am) CPI (8:30am)
Apr Apr w/e Jun 4 May
QFR (10:00am) 1Q Consumer sentiment (10:00am)
Consumer credit (3:00pm) Auction 10-year note (r) $33bn Announce 20-year bond (r) $14bn Jun preliminary
Apr Announce 5-year TIPS (r) $18bn QSS (10:00am)
Auction 30-year bond (r) $19bn 1Q
Auction 3-year note $44bn Federal budget (2:00pm) May
Source: Private and public agencies and J.P. Morgan. Further details available upon request.
75
Greg Fuzesi (44-20) 7134-8310 Global Data Watch
greg.x.fuzesi@jpmorgan.com May 13, 2022
Euro area economic calendar

Euro area: Euro area: Euro area: Euro area: Euro area:
Foreign trade (11:00am) Mar Employment prelim (11:00am) 1Q HICP final (11:00am) Apr Balance of Payments (10:00am) EC cons. Conf. flash (4:00pm) May
GDP (11:00am) 1Q 0.6%m/m, nsa Mar -20.0% balance of responses
Speech by ECB’s Panetta (9:20am) 0.8%q/q, saar ECB: 0.2%m/m, sa ECB monetary policy account Germany:
Money supply (10:00am) Apr 7.5%oya, nsa (1:30pm) Mar PPI (8:00am) Apr
France: Core ECB: 0.5%m/m, sa Construction output (11:00am) Mar Belgium:
ILO unemployment (7:30am) 1Q Core: 3.5%oya, nsa BNB cons. conf. (11:00am) May
Italy: Ex tobacco: 0.6%m/m Speech by ECB’s de Guindos (8:30am)
Foreign trade (10:00am) Mar
CPI final (11:00am) Apr
0.2%m/m, nsa
6.2%oya, nsa
6.6%oya, nsa
Speech by ECB’s Enria (8:30am)

Speech by ECB’s Lagarde (7:00pm)

Germany: Euro area: Germany: Italy:
IFO bus. survey (10:00am) May PMI mfg prelim (10:00am) May GDP final (8:00am) 1Q ISAE bus. conf. (10:00am) May
Belgium: PMI serv. & comp prelim GfK cons. conf. (8:00am) Jun ISAE cons. conf. (10:00am) May
BNB bus. conf. (3:00pm) May (10:00am) May France:
Germany: INSEE cons. conf. (8:45am) May
PMI mfg prelim (9:30am) May
PMI serv. & comp prelim (9:30am)
May
France:
INSEE bus. conf. (8:45am) May
PMI mfg prelim (9:15am) May
PMI serv. & comp prelim (9:15am)
May

Euro area: Euro area: Euro area: Euro area: Euro area:
EC Survey (11:00am) May HICP flash (11:00am) May PMI mfg final (10:00am) May PPI (11:00am) Apr PMI serv. & comp final (10:00am)
Germany: Germany: Unemployment rate (11:00am) Apr MFI interest rates (10:00am) Apr May
CPI 6 states and prelim (2:00pm) Employment (9:55am) Apr Germany: Retail sales (11:00am) Apr
May Unemployment (9:55am) May PMI mfg final (9:55am) May Germany:
Italy: France: Retail sales (11:00am) Apr PMI serv. & comp final (9:55am)
PPI (10:00am) Apr Cons. of mfg goods (8:45am) Apr France: May
Spain: CPI flash (8:45am) May Monthly budget situation (8:45am) France:
CPI flash (9:00am) May GDP final (8:45am) 1Q Apr Industrial production (8:45am) Apr
HICP flash (9:00am) May PPI (8:45am) Apr PMI mfg final (9:50am) May PMI serv. & comp (9:50am) May
Belgium: Italy: Italy: Italy:
CPI (7:00am) May GDP final (10:00am) 1Q PMI mfg final (9:45am) May PMI serv. & comp (9:45am) May
Netherlands: CPI flash (11:00am) May Spain: Spain:
CBS bus. conf. (6:30am) May Belgium: PMI mfg final (9:15am) May PMI serv. & comp (9:15am) May
GDP final (11:00am) 1Q

Germany: Euro area: Euro area: Italy:
Mfg orders (8:00am) Apr Employment final (11:00am) 1Q ECB rate announcement (1:45pm) Industrial production (10:00am)
GDP final (11:00am) 1Q Jun Apr
Germany: Netherlands: Spain:
Industrial production (8:00am) Apr CPI (6:30am) May CPI final (9:00am) May
France: HICP final (9:00am) May
Foreign trade (8:45am) Apr
Highlighted data are scheduled for release on or after the date shown. Times shown are local. Source: Public and private agencies and J.P. Morgan. Further
details available upon request.
76
May 13, 2022
Ayako Fujita (81-3) 6736-1172
Yuka Mera (81-3) 6736-1167
Japan economic calendar

Corporate goods prices Tertiary sector activity index Reuters Tankan Private machinery orders Nationwide core CPI
(8:50am) Apr 9.7 %oya (1:30pm) Mar (8:00am) May (8:50am) Mar 5.0 %m/m, sa (8:30am)
Mfg DI 11, Non-mfg DI 10 Trade balance Ex. fresh food and energy
GDP prelim (8:50am) Apr 0.2 %oya
(8:50am) 1Q 0.1 %q/q, saar -1221.6 billion yen, sa Ex. fresh food 0.6 %oya
IP final Construction spending
(1:30pm) Mar (2:00pm) Mar
Auction 10-year note Auction 5-year note Auction 1-year note Auction 3--month bill
Auction 20-year note
During the week: Nationwide department store sales Apr (16-23 May)

PMI manufacturing prelim Coincident CI Corporate service prices Tokyo core CPI
(9:30am) May (2:00pm) (8:50am) Apr (8:30am) May
PMI services prelim
(9:30am) May
Nationwide department store
sales
(2:30pm) Apr
Auction 6--month bill Auction 40-year note Auction 3--month bill

Job offers to applicants ratio MoF corporate survey PMI service final
(8:30am) Apr (5:50am) 1Q (9:30am) May
Unemployment rate PMI manufacturing final
(8:30am) Apr (9:30am) May
IP prelim Auto registrations
(8:50am) Apr (2:00pm) May
Total retail sales
(8:50am) Apr
Consumer sentiment
(2:00pm) May
Housing starts
(2:00pm) Apr
Auction 2-year note Auction 10-year note Auction 3--month bill

All household spending GDP 2nd M2 Corporate goods prices
(8:30am) Apr (8:50am) 1Q (8:50am) (8:50am) May
Employers’ survey Bank lending
(8:30am) Feb (8:50am) May
Coincident CI Current account
(2:00pm) (8:50am) Apr
Economy watchers survey
(2:00pm) May
Auction 30-year note Auction 6--month bill Auction 3--month bill
Times shown are local. Source: Private and public agencies and J.P. Morgan. Further details available upon request.
77
Silvana Dimino (1-212) 834-5684 Global Data Watch
Gopal Kumar (91-22) 6157-3080 May 13, 2022
Canada economic calendar

Housing starts (8:15am) International transactions in CPI (8:30am) IPPI (8:30am)
Apr 265,000 (7.6%) securities (8:30am) Apr 0.7%(6.8%oya) Apr 1.0%
Manufacturing sales (8:30am) Mar Teranet/National Bank HP Index Ex energy 0.5%
Mar 1.7% (8:30am) New housing price index
Wholesale sales (8:30am) Apr (8:30am)
Mar -0.3% Apr 0.6%
Existing home sales (9:00am)
Apr

CFIB Business Barometer Index
Victoria Day (6:00am)
Markets closed May
Retail sales (8:30am)
Mar
Payroll employment (8:30am)
Mar

Current account (8:30am) Quarterly GDP (8:30am) Markit/S&PGlobal manufacturing Building permits (8:30am) Productivity & costs (8:30am)
1Q 1Q PMI (9:30am) Apr 1Q
Monthly GDP (8:30am) May
Mar Bank of Canada Rate an- Deputy Governor Paul Beaudry
Food services and drinking nouncement (10:00am) presents the "Economic Progress
places (8:30am) Report" to the Gatineau Chamber
Mar of Commerce By videoconference
(11:00am)

International trade (8:30am) Bank of Canada Financial Sys- Labor Force Survey (8:30am)
Apr tem Review (10:00am) May
Ivey PMI (10:00am) Capacity utilization (8:30am)
May 1Q
78
Banco J.P.Morgan, S.A., Institución de Banca Múltiple, J.P.Morgan Economic Research
Grupo Financiero Global Data Watch
Steven Palacio (52 55) 5382-9651 May 13, 2022
Latin America economic calendar

Brazil: Brazil: Chile: Argentina: Argentina:
Central Bank Economists Survey IGP-10 May 0.15%m/m; Current Balance 1Q –US$2.8bn Economic Activity Mar 7.0%m/m Budget Balance Apr
Economic Activity Mar 12.20%oya GDP 1Q 7.9%oya Trade Balance Apr US$1.0bn Primary Deficit Apr -ARS$130bn
Colombia: Uruguay: Exports Apr Brazil:
Trade Balance Mar –US$1.1bn Monetary Policy Rate 9.25% Tax Collections Apr
Imports Mar US$6.6bn (+75bp) Chile:
GDP 1Q 0.74%q/q; 7.8%oya Central Bank Minutes
Economic Activity Mar 8.8%oya Mexico:
Peru: Banamex Survey of Economists
Economic Activity Mar 4.6%oya
Unemployment Rate Apr 9.0%
During the week: Peru: GDP 1Q

Brazil: Brazil: Argentina: Colombia:
IPCA May Current Balance Apr Consumer Confidence Index May Monetary Policy Rate
Mexico: FDI May Mexico:
Biweekly CPI May Mexico: Retail Sales Mar
Biweekly Core CPI May GDP 1Q F
Trade Balance Apr
Economic Activity Mar
During the week: Brazil: Tax Collections Apr

Chile: Brazil: Brazil: Brazil: Argentina:
Unemployment Rate Apr Unemployment Rate Apr Trade Balance May FIPE CPI May Vehicle Exports Adefa May
Primary Balance Apr Chile: GDP 1Q22 Central Bank Survey
Chile: Economic Activity Apr Mexico: Brazil:
IP Apr Mexico: Consumer Confidence May IP Apr
Retail Sales Apr Remittances Apr Vehicle Sales May Uruguay:
Colombia: Central Bank Economist Survey Paraguay: CPI May
Unemployment Rate Apr IMEF Manufacturing Index May CPI May
Mexico: IMEF Non-Manufacturing Index
Unemployment Rate Apr May
Peru:
CPI May
During the week: Argentina: Government Tax Revenue May Colombia: CPI Apr Core CPI Apr

Mexico: Colombia: Brazil: Argentina: Brazil:
GFI Mar Consumer Confidence May IGP-DI May IP Apr Retail Sales Apr
Chile: Chile: Construction Apr Chile:
Trade Balance May CPI May Mexico: Central Bank Economists Survey
Monetary Policy Rate CPI May Mexico:
Mexico: Core CPI May IP Apr
Banamex Survey of Economists Biweekly CPI May
Biweekly Core CPI May
Peru:
Monetary Policy Rate
During the week: Brazil: Vehicle Sales Anfavea May (6-7 Jun)
79
Morten Lund May 13, 2022
UK and Scandinavia economic calendar

United Kingdom: United Kingdom: United Kingdom: United Kingdom: United Kingdom:
Rightmove HPI (12:01am) May Labor market report (7:00am) Apr CPI (7:00am) Apr CBI industrial trends (11:00am) Gfk cons. conf. (12:01am) May
Norway: Average weekly earnings: 9.1%oya May Retail sales (7:00am) Apr
Trade balance (8:00am) Apr Headline: 5.3% 3mma ,%oya, sa Core: 6.2%oya Sweden: -1.0%m/m, sa
Ex bonuses: 4.1% 3mma, %oya, RPI: 11.0%oya Valueguard house price data
BoE’s Bailey, Ramsden, Haskel and sa ONS HPI (9:30am) Mar (6:00am) Apr Speech by BoE’s Pill (8:30am)
Saunders give oral evidence at Treasury Private sector ex bonuses: 4.8% Production value index (9:30am)
Committee meeting (3:15pm) 3mma, %oya, sa Apr
Unemployment rate: 3.7%
BoE’s Cunliffe in fireside chat (11:05am)

United Kingdom: United Kingdom: United Kingdom: Sweden:
Public sector finances (7:00am) IDR inflation forecast Car manufacturing (12:01am) Apr Household lending (8:00am) Apr
Apr Sweden: CBI services sector survey Retail sales (8:00am) Apr
PMI Mfg prelim (9:30am) May PPI (8:00am) Apr (12:01am) 2Q Financial markets statistics
PMI Services prelim (9:30am) May LFS unemployment (9:30am) May (9:00am) Apr
CBI distributive trades (11:00am)
May
Norway:
Consumer confidence (6:30am) 2Q
During the week: Nationwide HPI May (28-3 Jun)

United Kingdom: United Kingdom: United Kingdom: Sweden:
EC economic sentiment (10:00am) M4 & M4 lending final (9:30am) PMI Mfg final (9:30am) May Services PMI (8:30am) May
Sweden: Apr Growth indicator (12:01am) Apr Norway:
GDP final (8:00am) 1Q Net lending to individuals (9:30am) Sweden: Labor directorate unemployment
Trade balance (8:00am) Apr Apr PMI (8:30am) May (10:00am) May
Wage stats (8:00am) Mar Norway: Norway:
Consumer confidence (9:00am) Credit indicator growth (8:00am) PMI Mfg (10:00am) May
May Apr
Economic Tendency survey
(9:00am) May
Norway:
Retail sales (8:00am) Apr
During the week: BoE/NOP Inflation attitudes survey Jun (5-15 Jun)

United Kingdom: United Kingdom: United Kingdom: United Kingdom: United Kingdom:
New car regs (9:00am) May BRC retail sales monitor (12:01am) PMI Construction (9:30am) May RICS HPI (12:01am) BoE/TNS inflation attitudes survey
May Sweden: Sweden: (9:30am) May
PMI Services final (9:30am) May Budget Balance (8:00am) May Industrial production & orders Markit jobs report (12:01am) May
Halifax HPI (7:00am) May Norway: (8:00am) Apr Norway:
IP Mfg (8:00am) Apr GDP indicator (9:00am) Apr CPI (8:00am) May
Household consumption (9:30am) PPI (8:00am) May
Apr
Times shown are local. Source: Private and public agencies and J.P. Morgan. Further details upon request.
80
Jessica Murray (44-20) 7742 6325 Global Data Watch
jessica.x.murray@jpmorgan.com May 13, 2022
Emerging Europe/Middle East/Africa economic calendar

Czech Republic: Hungary: Russia: South Africa: Poland:
PPI (9:00am) Apr GDP prelim (9:00am) 1Q GDP flash (7:00pm) 1Q SARB rate decision May Average gross wages and Em-
Poland: 8.0%q/q, saar 3.2%oya 50bp hike: 4.75% ployment (10:00am) Apr
Core inflation (2:00pm) Apr Poland: South Africa: Egypt: Industrial output (10:00am) Apr
7.7%oya GDP prelim (10:00am) 1Q CPI (10:00am) Apr CBE rate decision May PPI (10:00am) Apr
Turkey: 8.3%q/q, saar 6.0%oya 125bp hike: 10.5%
Current account (10:00am) Mar Romania: Retail sales (1:00pm) Mar
US$-5.0bn GDP flash (9:00am) 1Q
Israel: 7.0%q/q, saar
GDP flash (1:00pm) 1Q
1.6%q/q, saar
Nigeria:
CPI Apr
16.6%oya
During the week: Poland: Budget balance Apr (16-31 May)

Poland: Hungary: Poland: Hungary:
Retail sales (10:00am) Apr Average gross wages (9:00am) Unemployment (10:00am) Apr Unemployment (9:00am) Mar
Turkey: Mar Russia: Turkey:
Capacity utilization (10:00am) May Nigeria: PPI (7:00pm) Apr CBRT rate decision (2:00pm) May
Israel: CBN rate decision May Zambia:
BoI rate decision (4:00pm) May CPI Apr
Ghana:
BOG rate decision May
During the week:

South Africa: Czech Republic: Czech Republic: Hungary: Hungary:
Budget (2:00pm) Apr GDP prelim (9:00am) 1Q PMI (9:30am) May Trade balance final (9:00am) Apr Retail sales (9:00am) Apr
Kenya: Hungary: Hungary: Romania:
CBK rate decision May PPI (9:00am) Mar GDP (9:00am) 1Q Retail sales (9:00am) Apr
NBH rate decision (2:00pm) May PMI (9:00am) May Turkey:
Poland: Poland: CPI (10:00am) May
CPI (10:00am) Apr PMI (9:00am) May
GDP (10:00am) 1Q Russia:
Turkey: Manufacturing PMI (9:00am) May
Foreign trade (10:00am) Apr Industrial output (7:00pm) May
GDP (10:00am) 1Q Retail sales, Unemployment &
South Africa: Investment (7:00pm) May
Private sector credit (8:00am) Apr South Africa:
Trade balance (2:00pm) Apr Barclays PMI (11:00am) May
During the week:

Czech Republic: Czech Republic: Hungary: Romania: Czech Republic:
Industrial output (9:00am) Apr Average real wage (9:00am) 1Q CPI (9:00am) May Trade balance (9:00am) Apr CPI (9:00am) May
Trade balance (9:00am) Apr South Africa: Poland: Ukraine: Romania:
Kazakhstan: Gross reserves (8:00am) May NBP rate decision Jun CPI (3:30pm) May CPI (9:00am) May
NBK rate decision (3:00pm) Jun Egypt: Romania: Serbia: Russia:
FX reserves May GDP (9:00am) 1Q NBS rate decision (12:00pm) Jun CBR rate decision (1:30pm) Jun
Russia: Foreign trade (4:00pm) Apr
CPI (7:00pm) May
During the week: South Africa: Quarterly Labour Force Survey 1Q (6-30 Jun) Angola: CPI May (11-25 Jun) Angola: FX reserves May (11-25 Jun)
81
Tingting Ge (852) 2800-0143 Global Data Watch
tingting.ge@jpmorgan.com May 13, 2022
Non-Japan Asia economic calendar

China: India: Australia: New Zealand:
FAI (10:00am) Apr 7.3%oya ytd WPI (12:00pm) Apr Unemployment rate (11:30am) Trade balance (10:45am) Apr
IP (10:00am) Apr 0.4%oya Indonesia: Apr 4.0% Indonesia:
Retail sales (10:00am) Trade balance (11:00am) Hong Kong: Current acct. Balance (10:00am)
Apr -5.4%oya Apr US$3.8bn Unemployment rate (4:30pm) 1Q US$4.3bn
Singapore: Apr 5.1% SA Korea:
NODX (8:30am) Apr US$13.2bn Malaysia: PPI (6:00am) Apr 8.2%oya
Thailand: Trade balance (12:00pm) Taiwan:
GDP (8:30am) 1Q 1.7%oya Apr US$4.0bn Export orders (4:00pm)
Philippines: Apr 8.3%oya
Holiday: India, Indonesia, Malay- BSP monetary policy meeting
sia, Singapore, Thailand 25bp hike

Hong Kong: New Zealand: New Zealand: Hong Kong: Australia:
CPI (4:30pm) Apr Retail sales (10:45am) 1Q RBNZ official rate announcement Trade balance (4:30pm) Apr Retail sales (11:30am) Mar
Singapore: Indonesia: Korea: Korea:
CPI (1:00pm) Apr BI monetary policy meeting FKI Business Survey (6:00am) Apr BOK monetary policy meeting
Taiwan: Korea: Malaysia: Singapore:
IP (4:00pm) Apr Consumer survey (6:00am) May CPI (12:00pm) Apr IP (1:00pm) Apr
Unemployment rate (4:00pm) Apr Taiwan:
GDP prelim (4:00pm) 1Q Holiday: Indonesia
During the week: Vietnam: CPI May (25-31 May) Vietnam: Exports May (25-31 May) Vietnam: Industrial output May (25-31 May) Thailand: Mfg. Production Apr (26-
30 May)

Australia: Australia: Australia: Korea:
Building approvals (11:30am) Mar GDP (11:30am) 1Q Trade balance (11:30am) Apr CPI (8:00am) May
Company operating profit 1Q China: New Zealand:
Current account balance PMI Mfg. (9:45am) Jun Terms of trade (10:45am) 1Q
(11:30am) 1Q Hong Kong: Indonesia:
Inventories (11:30am) 4Q Retail sales (4:30pm) Apr CPI (11:00am) May
Pvt. sector credit (11:30am) Apr India: Singapore:
New Zealand: PMI mfg. (10:30am) Jun PMI (9:00pm) May
Building permits (10:45am) Apr Korea:
NBNZ business confidence Trade balance (9:00am) May
(1:00pm) May PMI mfg. (9:30am) May
China: Taiwan:
PMI mfg. (NBS) (9:00am) Apr PMI mfg. (8:30am) May
Korea:
IP (8:00am) Apr
Thailand:
PCI (2:30pm) Apr
PII (2:30pm) Apr
Trade balance (2:30pm) Apr Holiday: China, Hong Kong, Tai-
Holiday: Indonesia, Korea wan, Thailand

Australia: Australia: Korea: China: China:
ANZ job advertisements (11:30am) RBA official rate announcement GDP prelim (8:00am) 1Q Trade balance May CPI (9:30am) May
May China: Taiwan: Philippines: PPI (9:30am) May
Thailand: Foreign Exchange Reserves May Trade balance (4:00pm) May Trade balance (9:00am) Apr India:
CPI (10:30am) May Philippines: Thailand: IP (5:30pm) Apr
CPI (9:00am) May BOT monetary policy meeting Korea:
Taiwan: Current account balance (8:00am)
Holiday: Korea, Malaysia CPI (4:00pm) May May
During the week: China: Money supply/TSF May (9-15 Jun)
82
Olya Borichevska (1-212) 834-5398 Global Data Watch
olya.e.borichevska@jpmorgan.com May 13, 2022
Bennett Parrish
Global Data Diary

Week / Weekend Monday Tuesday Wednesday Thursday Friday
14 - 20 May 16 May 17 May 18 May 19 May 20 May
China Euro area Canada Euro area Euro area
 FAI (Apr)  Employment (1Q)  CPI (Apr)  ECB minutes  EC cons conf flash (May)
 IP (Apr)  GDP (1Q, 2nd est) Chile Japan Japan
 Retail sales (Apr) Hungary  GDP (1Q)  Machinery orders (Mar)  Core CPI (Apr)
Colombia  GDP (1Q) Euro area  Trade balance (Apr) Poland
 GDP (1Q) Poland  Car regs (Apr) Philippines  IP (Apr)
Euro area  GDP (1Q)  CPI (Apr, fnl)  BSP mtg: +25bp Taiwan
 Trade balance (Mar) Romania Japan South Africa  Export orders (Apr)
Israel  GDP (1Q)  GDP (1Q, prl)  SARB mtg: +50bp United Kingdom
 GDP (1Q) Singapore  Reuters Tankan (May) United States  Retail sales (Apr)
United States  NODX (Apr) Russia  Existing home sls (Apr) United States
 Empire st srvy (May) Thailand  GDP (1Q)  Leading indicators (Apr)  QSS (1Q, adv)
 TIC data (Mar)  GDP (1Q) South Africa  Philly Fed mfg (May)
United Kingdom  CPI (Apr)
 Labor mkt report (Apr) United Kingdom
United States  CPI (Apr)
 Bus. inventories (Mar) United States
 NAHB srvy (May)  Housing starts (Apr)
 Retail sales (Apr)
 IP (April)
21 - 27 May 23 May 24 May 25 May 26 May 27 May

Germany Euro area Malaysia Korea Japan
 IFO srvy (May)  Flash PMI (May)  CPI (Apr)  BOK mtg: +25bp  Tokyo CPI (May)
Israel Indonesia New Zealand Singapore United States
 BoI mtg: +25bp  BI mtg: no chg  RBNZ mtg: +25bp  IP (Apr)  Adv econ indicators (Apr)
Singapore Japan Taiwan Turkey  UMich cons snt (May, fnl)
 CPI (Apr)  Flash PMI (May)  GDP (1Q)  CBRT mtg: no chg
Taiwan United Kingdom United States United Kingdom
 IP (Apr)  Flash PMI (May)  Durables goods (Apr)  Car production (Apr)
United States  FOMC minutes United States
 Flash PMI (May)  GDP (1Q, 2nd est)
 New home sls (Apr)  Pending home sls (Apr)
 Philly Fed non-mfg (May)
83
Olya Borichevska (1-212) 834-5398 Global Data Diary
Bennett Parrish
Analysts' Compensation: The research analysts responsible for the preparation of this report receive compensation based upon various factors,
including the quality and accuracy of research, client feedback, competitive factors, and overall firm revenues.
Other Disclosures
J.P. Morgan is a marketing name for investment banking businesses of JPMorgan Chase & Co. and its subsidiaries and affiliates worldwide.
UK MIFID FICC research unbundling exemption: UK clients should refer to UK MIFID Research Unbundling exemption for details of
JPMorgan’s implementation of the FICC research exemption and guidance on relevant FICC research categorisation.
Any long form nomenclature for references to China; Hong Kong; Taiwan; and Macau within this research material are Mainland China; Hong
Kong SAR (China); Taiwan (China); and Macau SAR (China).
J.P. Morgan Research may, from time to time, write on issuers or securities targeted by economic or financial sanctions imposed or adminis-
tered by the governmental authorities of the U.S., EU, UK or other relevant jurisdictions (Sanctioned Securities). Nothing in this report is in-
tended to be read or construed as encouraging, facilitating, promoting or otherwise approving investment or dealing in such Sanctioned Securi-
ties. Clients should be aware of their own legal and compliance obligations when making investment decisions.
Changes to Interbank Offered Rates (IBORs) and other benchmark rates: Certain interest rate benchmarks are, or may in the future be-
come, subject to ongoing international, national and other regulatory guidance, reform and proposals for reform. For more information, please
consult: https://www.jpmorgan.com/global/disclosures/interbank_offered_rates
Private Bank Clients: Where you are receiving research as a client of the private banking businesses offered by JPMorgan Chase & Co. and
its subsidiaries (“J.P. Morgan Private Bank”), research is provided to you by J.P. Morgan Private Bank and not by any other division of J.P.
Morgan, including, but not limited to, the J.P. Morgan Corporate and Investment Bank and its Global Research division.
Legal entity responsible for the production and distribution of research: The legal entity identified below the name of the Reg AC Re-
search Analyst who authored this material is the legal entity responsible for the production of this research. Where multiple Reg AC Research
Analysts authored this material with different legal entities identified below their names, these legal entities are jointly responsible for the pro-
duction of this research. Research Analysts from various J.P. Morgan affiliates may have contributed to the production of this material but may
not be licensed to carry out regulated activities in your jurisdiction (and do not hold themselves out as being able to do so). Unless otherwise
stated below, this material has been distributed by the legal entity responsible for production. If you have any queries, please contact the rele-
vant Research Analyst in your jurisdiction or the entity in your jurisdiction that has distributed this research material.
Legal Entities Disclosures and Country-/Region-Specific Disclosures:
Argentina: JPMorgan Chase Bank N.A Sucursal Buenos Aires is regulated by Banco Central de la República Argentina (“BCRA”- Central
Bank of Argentina) and Comisión Nacional de Valores (“CNV”- Argentinian Securities Commission” - ALYC y AN Integral N°51). Austral-
ia: J.P. Morgan Securities Australia Limited (“JPMSAL”) (ABN 61 003 245 234/AFS Licence No: 238066) is regulated by the Australian Se-
curities and Investments Commission and is a Market, Clearing and Settlement Participant of ASX Limited and CHI-X. This material is issued
and distributed in Australia by or on behalf of JPMSAL only to "wholesale clients" (as defined in section 761G of the Corporations Act 2001).
A list of all financial products covered can be found by visiting https://www.jpmm.com/research/disclosures. J.P. Morgan seeks to cover com-
panies of relevance to the domestic and international investor base across all Global Industry Classification Standard (GICS) sectors, as well as
across a range of market capitalisation sizes. If applicable, in the course of conducting public side due diligence on the subject company(ies),
the Research Analyst team may at times perform such diligence through corporate engagements such as site visits, discussions with company
representatives, management presentations, etc. Research issued by JPMSAL has been prepared in accordance with J.P. Morgan Australia’s
Research Independence Policy which can be found at the following link: J.P. Morgan Australia - Research Independence Policy. Brazil: Banco
J.P. Morgan S.A. is regulated by the Comissao de Valores Mobiliarios (CVM) and by the Central Bank of Brazil. Ombudsman J.P. Morgan:
0800-7700847 / ouvidoria.jp.morgan@jpmorgan.com. Canada: J.P. Morgan Securities Canada Inc. is a registered investment dealer, regulated
by the Investment Industry Regulatory Organization of Canada and the Ontario Securities Commission and is the participating member on
Canadian exchanges. This material is distributed in Canada by or on behalf of J.P.Morgan Securities Canada Inc. Chile: Inversiones J.P. Mor-
gan Limitada is an unregulated entity incorporated in Chile. China: J.P. Morgan Securities (China) Company Limited has been approved by
CSRC to conduct the securities investment consultancy business. Dubai International Financial Centre (DIFC): JPMorgan Chase Bank,
N.A., Dubai Branch is regulated by the Dubai Financial Services Authority (DFSA) and its registered address is Dubai International Financial
Centre - The Gate, West Wing, Level 3 and 9 PO Box 506551, Dubai, UAE. This material has been distributed by JP Morgan Chase Bank,
N.A., Dubai Branch to persons regarded as professional clients or market counterparties as defined under the DFSA rules. European Econom-
ic Area (EEA): Unless specified to the contrary, research is distributed in the EEA by J.P. Morgan SE (“JPM SE”), which is subject to pruden-
tial supervision by the European Central Bank (“ECB”) in cooperation with BaFin and Deutsche Bundesbank in Germany. JPM SE is a compa-
ny headquartered in Frankfurt with registered address at TaunusTurm, Taunustor 1, Frankfurt am Main, 60310, Germany. The material has
been distributed in the EEA to persons regarded as professional investors (or equivalent) pursuant to Art. 4 para. 1 no. 10 and Annex II of Mi-
FID II and its respective implementation in their home jurisdictions (“EEA professional investors”). This material must not be acted on or re-
84
Olya Borichevska (1-212) 834-5398 Global Data Watch
Bennett Parrish
lied on by persons who are not EEA professional investors. Any investment or investment activity to which this material relates is only availa-
ble to EEA relevant persons and will be engaged in only with EEA relevant persons. Hong Kong: J.P. Morgan Securities (Asia Pacific) Lim-
ited (CE number AAJ321) is regulated by the Hong Kong Monetary Authority and the Securities and Futures Commission in Hong Kong, and
J.P. Morgan Broking (Hong Kong) Limited (CE number AAB027) is regulated by the Securities and Futures Commission in Hong Kong. JP
Morgan Chase Bank, N.A., Hong Kong (CE Number AAL996) is regulated by the Hong Kong Monetary Authority and the Securities and Fu-
tures Commission, is organized under the laws of the United States with limited liability. India: J.P. Morgan India Private Limited (Corporate
Identity Number - U67120MH1992FTC068724), having its registered office at J.P. Morgan Tower, Off. C.S.T. Road, Kalina, Santacruz - East,
Mumbai – 400098, is registered with the Securities and Exchange Board of India (SEBI) as a ‘Research Analyst’ having registration number
INH000001873. J.P. Morgan India Private Limited is also registered with SEBI as a member of the National Stock Exchange of India Limited
and the Bombay Stock Exchange Limited (SEBI Registration Number – INZ000239730) and as a Merchant Banker (SEBI Registration Num-
ber - MB/INM000002970). Telephone: 91-22-6157 3000, Facsimile: 91-22-6157 3990 and Website: http://www.jpmipl.com. JPMorgan Chase
Bank, N.A. - Mumbai Branch is licensed by the Reserve Bank of India (RBI) (Licence No. 53/ Licence No. BY.4/94; SEBI - IN/CUS/014/
CDSL : IN-DP-CDSL-444-2008/ IN-DP-NSDL-285-2008/ INBI00000984/ INE231311239) as a Scheduled Commercial Bank in India, which
is its primary license allowing it to carry on Banking business in India and other activities, which a Bank branch in India are permitted to un-
dertake. For non-local research material, this material is not distributed in India by J.P. Morgan India Private Limited. Indonesia: PT J.P. Mor-
gan Sekuritas Indonesia is a member of the Indonesia Stock Exchange and is regulated by the OJK a.k.a. BAPEPAM LK. Korea: J.P. Morgan
Securities (Far East) Limited, Seoul Branch, is a member of the Korea Exchange (KRX). JPMorgan Chase Bank, N.A., Seoul Branch, is li-
censed as a branch office of foreign bank (JPMorgan Chase Bank, N.A.) in Korea. Both entities are regulated by the Financial Services Com-
mission (FSC) and the Financial Supervisory Service (FSS). For non-macro research material, the material is distributed in Korea by or through
J.P. Morgan Securities (Far East) Limited, Seoul Branch. Japan: JPMorgan Securities Japan Co., Ltd. and JPMorgan Chase Bank, N.A., Tokyo
Branch are regulated by the Financial Services Agency in Japan. Malaysia: This material is issued and distributed in Malaysia by JPMorgan
Securities (Malaysia) Sdn Bhd (18146-X), which is a Participating Organization of Bursa Malaysia Berhad and holds a Capital Markets Ser-
vices License issued by the Securities Commission in Malaysia. Mexico: J.P. Morgan Casa de Bolsa, S.A. de C.V.and J.P. Morgan Grupo Fi-
nanciero are members of the Mexican Stock Exchange and are authorized to act as a broker dealer by the National Banking and Securities Ex-
change Commission. New Zealand: This material is issued and distributed by JPMSAL in New Zealand only to "wholesale clients" (as defined
in the Financial Markets Conduct Act 2013). JPMSAL is registered as a Financial Service Provider under the Financial Service providers (Reg-
istration and Dispute Resolution) Act of 2008. Pakistan: J. P. Morgan Pakistan Broking (Pvt.) Ltd is a member of the Karachi Stock Exchange
and regulated by the Securities and Exchange Commission of Pakistan. Philippines: J.P. Morgan Securities Philippines Inc. is a Trading Partic-
ipant of the Philippine Stock Exchange and a member of the Securities Clearing Corporation of the Philippines and the Securities Investor Pro-
tection Fund. It is regulated by the Securities and Exchange Commission. Russia: CB J.P. Morgan Bank International LLC is regulated by the
Central Bank of Russia. Singapore: This material is issued and distributed in Singapore by or through J.P. Morgan Securities Singapore Private
Limited (JPMSS) [MCI (P) 093/09/2021 and Co. Reg. No.: 199405335R], which is a member of the Singapore Exchange Securities Trading
Limited, and/or JPMorgan Chase Bank, N.A., Singapore branch (JPMCB Singapore), both of which are regulated by the Monetary Authority of
Singapore. This material is issued and distributed in Singapore only to accredited investors, expert investors and institutional investors, as de-
fined in Section 4A of the Securities and Futures Act, Cap. 289 (SFA). This material is not intended to be issued or distributed to any retail
investors or any other investors that do not fall into the classes of “accredited investors,” “expert investors” or “institutional investors,” as de-
fined under Section 4A of the SFA. Recipients of this material in Singapore are to contact JPMSS or JPMCB Singapore in respect of any mat-
ters arising from, or in connection with, the material. As at the date of this material, JPMSS is a designated market maker for certain structured
warrants listed on the Singapore Exchange where the underlying securities may be the securities discussed in this material. Arising from its role
as a designated market maker for such structured warrants, JPMSS may conduct hedging activities in respect of such underlying securities and
hold or have an interest in such underlying securities as a result. The updated list of structured warrants for which JPMSS acts as designated
market maker may be found on the website of the Singapore Exchange Limited: http://www.sgx.com. South Africa: J.P. Morgan Equities
South Africa Proprietary Limited and JPMorgan Chase Bank, N.A., Johannesburg Branch are members of the Johannesburg Securities Ex-
change and are regulated by the Financial Services Board. Taiwan: J.P. Morgan Securities (Taiwan) Limited is a participant of the Taiwan
Stock Exchange (company-type) and regulated by the Taiwan Securities and Futures Bureau. Material relating to equity securities is issued and
distributed in Taiwan by J.P. Morgan Securities (Taiwan) Limited, subject to the license scope and the applicable laws and the regulations in
Taiwan. According to Paragraph 2, Article 7-1 of Operational Regulations Governing Securities Firms Recommending Trades in Securities to
Customers (as amended or supplemented) and/or other applicable laws or regulations, please note that the recipient of this material is not per-
mitted to engage in any activities in connection with the material that may give rise to conflicts of interests, unless otherwise disclosed in the
“Important Disclosures” in this material. Thailand: This material is issued and distributed in Thailand by JPMorgan Securities (Thailand) Ltd.,
which is a member of the Stock Exchange of Thailand and is regulated by the Ministry of Finance and the Securities and Exchange Commis-
sion, and its registered address is 3rd Floor, 20 North Sathorn Road, Silom, Bangrak, Bangkok 10500. UK: Unless specified to the contrary,
research is distributed in the UK by J.P. Morgan Securities plc (“JPMS plc”) which is a member of the London Stock Exchange and is author-
ised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. JPMS
plc is registered in England & Wales No. 2711006, Registered Office 25 Bank Street, London, E14 5JP. This material is directed in the UK
only to: (a) persons having professional experience in matters relating to investments falling within article 19(5) of the Financial Services and
Markets Act 2000 (Financial Promotion) (Order) 2005 (“the FPO”); (b) persons outlined in article 49 of the FPO (high net worth companies,
unincorporated associations or partnerships, the trustees of high value trusts, etc.); or (c) any persons to whom this communication may other-
wise lawfully be made; all such persons being referred to as "UK relevant persons". This material must not be acted on or relied on by persons
who are not UK relevant persons. Any investment or investment activity to which this material relates is only available to UK relevant persons
and will be engaged in only with UK relevant persons. Research issued by JPMS plc has been prepared in accordance with JPMS plc's policy
for prevention and avoidance of conflicts of interest related to the production of Research which can be found at the following link: J.P. Mor-
gan EMEA - Research Independence Policy. U.S.: J.P. Morgan Securities LLC (“JPMS”) is a member of the NYSE, FINRA, SIPC, and the
85
Olya Borichevska (1-212) 834-5398 Global Data Diary
Bennett Parrish
NFA. JPMorgan Chase Bank, N.A. is a member of the FDIC. Material published by non-U.S. affiliates is distributed in the U.S. by JPMS who
accepts responsibility for its content.
General: Additional information is available upon request. The information in this material has been obtained from sources believed to be
reliable. While all reasonable care has been taken to ensure that the facts stated in this material are accurate and that the forecasts, opinions and
expectations contained herein are fair and reasonable, JPMorgan Chase & Co. or its affiliates and/or subsidiaries (collectively J.P. Morgan)
make no representations or warranties whatsoever to the completeness or accuracy of the material provided, except with respect to any disclo-
sures relative to J.P. Morgan and the Research Analyst's involvement with the issuer that is the subject of the material. Accordingly, no reliance
should be placed on the accuracy, fairness or completeness of the information contained in this material. Any data discrepancies in this material
could be the result of different calculations and/or adjustments. J.P. Morgan accepts no liability whatsoever for any loss arising from any use of
this material or its contents, and neither J.P. Morgan nor any of its respective directors, officers or employees, shall be in any way responsible
for the contents hereof, apart from the liabilities and responsibilities that may be imposed on them by the relevant regulatory authority in the
jurisdiction in question, or the regulatory regime thereunder. Opinions, forecasts or projections contained in this material represent J.P. Mor-
gan's current opinions or judgment as of the date of the material only and are therefore subject to change without notice. Periodic updates may
be provided on companies/industries based on company-specific developments or announcements, market conditions or any other publicly
available information. There can be no assurance that future results or events will be consistent with any such opinions, forecasts or projections,
which represent only one possible outcome. Furthermore, such opinions, forecasts or projections are subject to certain risks, uncertainties and
assumptions that have not been verified, and future actual results or events could differ materially. The value of, or income from, any invest-
ments referred to in this material may fluctuate and/or be affected by changes in exchange rates. All pricing is indicative as of the close of mar-
ket for the securities discussed, unless otherwise stated. Past performance is not indicative of future results. Accordingly, investors may receive
back less than originally invested. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument.
The opinions and recommendations herein do not take into account individual client circumstances, objectives, or needs and are not intended as
recommendations of particular securities, financial instruments or strategies to particular clients. The recipients of this material must make their
own independent decisions regarding any securities or financial instruments mentioned herein and should seek advice from such independent
financial, legal, tax or other adviser as they deem necessary. J.P. Morgan may trade as a principal on the basis of the Research Analysts’ views
and research, and it may also engage in transactions for its own account or for its clients’ accounts in a manner inconsistent with the views
taken in this material, and J.P. Morgan is under no obligation to ensure that such other communication is brought to the attention of any recipi-
ent of this material. Others within J.P. Morgan, including Strategists, Sales staff and other Research Analysts, may take views that are incon-
sistent with those taken in this material. Employees of J.P. Morgan not involved in the preparation of this material may have investments in the
securities (or derivatives of such securities) mentioned in this material and may trade them in ways different from those discussed in this mate-
rial. This material is not an advertisement for or marketing of any issuer, its products or services, or its securities in any jurisdiction.
"Other Disclosures" last revised April 09, 2022.
Copyright 2022 JPMorgan Chase & Co. All rights reserved. This material or any portion hereof may not be reprinted, sold or redis-
tributed without the written consent of J.P. Morgan. #$J&098$#*P
86
Completed 13 May 2022 08:08 PM EDT Disseminated 13 May 2022 09:43 PM EDT

JPM Global Data Watch Ep 2022-05-14 4094381

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

JPM Global Data Watch Ep 2022-05-14 4094381

Uploaded by

Copyright:

Available Formats

Economic Research

May 13, 2022

Global Data Watch

Cracks in the inflation moderation forecast Figure 3: Global financial conditions

and reduced refining capacity are generating unprecedented

is generating a quicker and more broadly based tightening in

Global economic outlook summary

G-3 economic outlook detail

Global Central Bank Watch

outside of China. That said, spillovers still could be felt with a

out of Asia through April and mobility data through early 3

Table 2: J.P. Morgan global aggregates -1

Source: J.P. Morgan Global Economics

Source: J.P. Morgan

Source: J.P. Morgan Global Economics

Selected recent research from

Base metals prices have hit a China-sized air pocket but

Economic Research Note Small size, strong impact

Figure 5: Consumer prices: heating oil

Overall, we expect the price pressure coming from energy

expect HICP energy price inflation to average -6.5%oya,

Figure 6: Commodity prices

100 Electricity 280

Figure 7: Brent and oil-related HICP

Economic Research Note Figure 2: Spain - GDP components

Spain: Consumption weakness 4Q19 = 100, shaded area shows forecast

remains a key concern 100

 Spanish growth has been disappointing since COVID, GDP

 A deep consumption contraction in 1Q22 aligns with a 80

costs % of total electricity generated

reduce energy costs, though not by much

Quite recently, the government announced that it will try to

Cost sav- Share of

2.4% in Case 2 (Figure 4). This would not be enough to sig-

Figure 4: Current account simulation by restarting nuclear plants

Remaining challenges and implications for

The simulation in this note assumes that the entire process of

Nuclear energy alone will not solve all of Japan’s energy

household savings rates, and a recovery in incomes as the

80 -10 Figure 18: EM Asia food services inflation

0 In an environment in which the sequential path of food ser-

Food services a useful metric of pass-

This sub-index provides a useful nexus that incorporates sev-

We expect the MYR to weaken against the US dollar into

100 3.00 0.4

tunately for the ringgit in 2017, a relatively healthy global

Malaysia is not the only country where exporters seem to be

Figure 8: USDMYR has relatively high beta to CNY

 Tightening financial conditions signal more moderation 100%

Figure 3: Core goods and core services CPI 0

Tue Industrial production

Wed Housing starts May 19 Diffusion indices, sa

economy and have a recession and have unemployment rise

Euro area Figure 1: Euro area manufacturing output Manufacturing,

 As Brent and gas futures are downward sloping, we ex- 10

The Ukraine conflict started in late February, and the large

Inflation forecasts: Key energy price as- 120 350

Data releases and forecasts External trade and payments

Financial activity and public finance

Review of past week’s data

Jan Feb Mar

Feb Mar Apr

Feb Mar Apr