Growing concerns about the Turkish economy are likely to force a rate hike but inflation and economic activity in Hungary will help keep rates on hold. Keep an eye out for EUR/HUF
There are growing concerns about the change in the direction of headline inflation. In our view, ongoing deterioration in inflation expectations and weakening real sector balance sheets with the Lira's depreciation given the high levels of FX debt in the private sector is likely to force the central bank to deliver a defensive hike in April.
We expect a 50bp hike with the framework simplification also on the agenda.
Macro momentum is to keep the Fed on track, the next ECB meeting is to be heated and pressures on NAFTA could mean a deal is signed by early May. All in all a busy week ahead for developed markets
In the US the main data release to watch will be the 1Q GDP report. It is likely to be softer than the 2.9% rate recorded in 4Q17, mainly due to a weaker consumer spending contribution. We have seen retail sales being hit by weather and tax refund delays, but the retail sales figures for March and the strong consumer confidence readings suggest there is decent momentum as we start 2Q18. Government spending is also likely to correct lower and investment may also be a little softer. However, we expect the net trade contribution to be more positive in 1Q and inventories should also provide a boost.
We are a little above market, forecasting overall growth of 2.5% versus the consensus forecast of 2.1%. Interestingly various regional Federal Reserve Bank “Nowcast” models suggest anything between 2% and 3.4% growth. Either way, the US continues to grow nicely, create jobs in significant numbers and is seeing inflation moving towards target. As such we continue to forecast three additional Fed rate hikes this year.
The evidence of any impact of a trade war on Asia’s GDP growth has been scant so far, while firmer exports support expectations of even stronger growth
We think the global trade war has displaced geopolitics as the main risk to Asia’s GDP growth coming into 2018. Evidence of any impact of a trade war on growth at least in the first quarter of the year has been scant, though the war was only triggered in early March when President Trump announced hefty tariffs on steel and aluminium.
China and Singapore’s GDP growth came in on the stronger side in the first quarter. We expect GDP releases from Korea and Taiwan next week to reinforce the message, with firmer exports growth leading us to forecast firmer GDP growth for both economies.
Discover what ING analysts are looking for next week in our global economic calendars